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PARADE Magazine
WEDNESDAY, OCTOBER 4, 2006
HOME | NEWS | FORUMS | ARCHIVES | OBITUARIES | WEATHER

A Decatur-built Delta IV launches in 2002.
DAILY Photo by Gary Cosby Jr.
A Decatur-built Delta IV launches in 2002.

We’re ‘Space
Port America’

Lockheed-Boeing rocket deal may bring additional 250 jobs to Decatur

By Eric Fleischauer
DAILY Business Writer

eric@decaturdaily.com · 340-2435

It's official — almost. The United Launch Alliance has been approved.

The Federal Trade Commission on Tuesday unanimously approved the merger, subject to public comment. The FTC will vote on whether to finalize its decision, usually a formality, in 30 days.

Huge for Decatur, the ULA is a proposed merger of Boeing Co.'s and Lockheed Martin Corp.'s satellite-launch businesses. The home of the combined production facilities would be at Decatur's Boeing plant on Red Hat Road.

"Decatur might want to rename itself Space Port America," said Loren Thompson, Ph.D., a military and aerospace analyst at the Lexington Institute in Arlington, Va., and a Lockheed consultant.

"Decatur is now going to be the center of space-launch capability in the Western world," Thompson continued. "The town fathers a generation ago would never have imagined that in fact Decatur is now going to be the center of the universe when it comes to large-rocket launch capability. It's going to be where the technology is concentrated."

The Decatur Boeing plant will be home of the ULA, a proposed merger of Boeing Co.’s and Lockheed Martin Corp.’s satellite-launch businesses.
Courtesy Photo
The Decatur Boeing plant will be home of the ULA, a proposed merger of Boeing Co.’s and Lockheed Martin Corp.’s satellite-launch businesses.
Title to the Boeing plant would go to ULA, and its 630 employees would become ULA employees. More employees would come to Decatur, from Lockheed's rocket production facility in Denver, but the companies do not know how many. U.S. Rep. Bud Cramer, D-Huntsville, who has been active in the negotiations, has predicted an additional 250 employees.

"We're still working out the numbers on that, but we certainly think it's going to be very good for northern Alabama," said Boeing spokesman Dan Beck.

The ULA facility would have separate lines for Lockheed's Atlas-series rockets and Boeing's Delta-series rockets. The companies would continue to bid separately for government and commercial contracts, but rockets for both companies would be produced in Decatur.

Almost all governmental satellite launches are enabled by Evolved Expendable Launch Vehicles, a term of art describing rockets manufactured solely by Lockheed and Boeing. Commercial satellites often use cheaper non-EELV rockets, but the more expensive the satellite, the more likely its owner will elect to use the more reliable EELVs.

"The EELV is probably the most advanced expendable launch vehicle we will see anywhere in the world for the next 30 years," said Thompson. "For the types of vehicles the government wants to launch, EELV is as good as it's going to get for a long time to come."

And Decatur would make them all.

What happens next?

The process is not over, though. In addition to the FTC vote in 30 days, Boeing and Lockheed have lots of work to do.

An Atlas 3 rocket blasts off from the Cape Canaveral Air Force Station in May 2000. The proposed ULA facility would have separate lines for Lockheed’s Atlas-series rockets and Boeing’s Delta-series rockets.
Courtesy Photo
An Atlas 3 rocket blasts off from the Cape Canaveral Air Force Station in May 2000. The proposed ULA facility would have separate lines for Lockheed’s Atlas-series rockets and Boeing’s Delta-series rockets.
"What happens now," explained Lockheed spokesman Tom Jurkowski, "is there are over 100 documents that need to be signed at closing. We're working with Boeing to finalize those documents. Documents on banking, employee benefits, real estate and so on. I would not establish any timelines here, but we want to do this as soon as we can. This joint venture was very, very complex."

Additionally, said Boeing's Beck, Boeing needs to finalize negotiations with the Air Force on the so-called "Buy 3" contract, a two-year agreement for rocket launch support services that would pave the way for billions of dollars in launch contracts over the next decade.

Tuesday's approval took the form of a consent decree drafted by the FTC and approved by Boeing and Lockheed, subject to various conditions.

"The conditions are no surprise," Jurkowski said. "Our lawyers were familiar with them; we've agreed to them."

The Pentagon told the FTC that national security interests outweighed the anti-competitive effect of the merger. Boeing and Lockheed argued that the merger would save the government $150 million annually in EELV costs.

Those savings may not come at the expense of local Boeing salaries.

"I'm not aware of any discussions related to layoffs in Decatur," Beck said.

Beck said his understanding is that a collective bargaining agreement between Boeing and the local International Association of Machinists and Aerospace Workers union, completed after a three-month strike in late 2005, would control employment at the ULA facility. Machinists' negotiator Bob Wood said he was not sure, and other IAM officials did not immediately return calls.

Likely antagonists during the FTC's public comment period are Northrop Grumman and Space Exploration Technologies Corp.

Northrup Grumman has expressed concern that ULA would squeeze it out of the satellite manufacturing business, since Boeing and Lockheed are competitors. The FTC ruling specifically required equal treatment of other satellite producers.

Vocal opponent

SpaceX, the most vocal opponent of the merger, has been vying for a piece of the EELV business, but has yet to successfully launch one.

"Look at SpaceX," said Thompson, who expects no obstacles to finalization of the FTC order. "That's like a condo complaining this will make it harder for them to become a superpower. Let's be realistic. This is not a business for people who do not have very deep pockets."

Cramer, who has pushed the merger from the beginning, said he was relieved by the decision.

"There were a couple times in there where we would hear nothing and I would begin to lose my confidence," Cramer said. "So we would renew our inquiries. We felt confident that eventually they would do it, but until you know, you don't know."

Great news for Decatur

Cramer said it's great news for Decatur and North Alabama, and it comes at a remarkable time. Expansions at Redstone Arsenal, and a revitalized NASA program that puts Marshall Space Center's propulsion program in a central role, promise to bring in thousands of employees and many suppliers.

Cramer said he has had contacts with Boeing and Lockheed officials that give him hope that the companies will consolidate some of their other operations into North Alabama.

"I think the contracting community is looking at North Alabama as the new home of propulsion and the new home of the launch business," Cramer said. "You may see this synergy where (Boeing) says, 'Let's go ahead and consolidate other elements here, too.' "

Cramer said he expects many aerospace operations now based in California to gravitate to North Alabama, with its lower cost of business.

"It's just like California Lite," Cramer said.

He said the announcement would help connect the successes of Huntsville and Decatur.

"It will make (Decatur) feel not so competitive with Huntsville-Madison County," Cramer said. "It will make them feel like, 'We can win this, too.' ... There's so much for Morgan County to gain, Limestone County to gain, all of North Alabama. ... We've got a lot to sell for ourselves, Morgan County as much as any."

U.S. Rep. Robert Aderholt, R-Haleyville, also was effusive.

Heart of 'rocket country'

"North Alabama has become the heart of rocket country in the United States," he said. "Today's announcement offers further proof regarding the business environment and high quality workers that are available to the aerospace industry here in the state. I'm pleased that these good, high paying jobs will be coming to Decatur."

ULA approval might be even more important to Decatur than it appears at first blush. Thompson believes the EELV program could not support two producers; the only question was which one closed shop. Decatur's 630 employees were at risk, he believes.

"There was never any doubt that the government would embrace a joint venture," Thompson said, "because, without such a combination, one of the two producers was likely to drop out of the business."

Beck said Decatur's Boeing employees deserve much of the credit.

'Outstanding work'

"Decatur becomes the rocket manufacturing center for government launches in the United States," Beck said. "A lot of it's based on the outstanding work that Decatur employees have done on the Delta program."

Jurkowski said Lockheed's willingness to consolidate rocket production in Decatur was not casual.

"It's an honor," Jurkowski said. "You are part of the city that's going to be a key part in assured access to space. It's a feather in your cap. You deliver quality products and have a quality work force. You should be very proud."

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