Can Lockheed-Martin's Joint Venture With Boeing End Years Of Bitter Rivalry?

It's a bit of a shock. Not that the aerospace arms of Lockheed-Martin and Boeing aren't struggling to some degree -- in the post telecommunications boom era, that's a given. It's not even that the two have spotted economies of scale in a partnership that would produce most of the launch vehicles for NASA and the Air Force. What's surprising is, after years of bitter rivalry, executives from these two aerospace behemoths could even sit in the same room, much less strike a deal.

But strike one they did, after 15 months of negotiation. The end result: United Launch Alliance, a company that will not only produce launch vehicles for military and science missions, but will end a two-year long rivalry that observers say wasn't unlike that little tiff in the Ozarks -- you know, the one between the Hatfields and McCoys.

As ANN reported yesterday, Lockheed and Boeing announced they'll merge their launch providers before the end of the year. Neither will shut down. Instead, United Launch will continue to develop both Boeing's Delta rocket and the Lockheed Atlas.

"The venture will maintain two separate hardware families; that's really at the crux of the appeal to the government," said Jeffrey MacLauchlan, Lockheed's vice president of financial strategies. "Should there be a problem with either, the other is available as a backup resource." MacLauchlan was quoted by the Washington Post.

Forming the alliance was touch-and-go for awhile. Back in December, Boeing defense unit chief James Albaugh let a bit of the animosity between the two companies peek through when he told an interviewer, "We don't have any interest in forming any kind of joint venture with Lockheed Martin."

The root of that bitterness? Boeing was discovered to have thousands of proprietary Lockheed documents that the Chicago-based company simply shouldn't have had. For that, as ANN reported two years ago, two Boeing workers were fired and later indicted on federal charges.

Boeing was also suspended from the launch contracts the military said it unfairly won. The company was stripped of such contracts, worth about $1 billion, which went to Lockheed.

The conflict between the two aerospace giants has cooled to some degree. Both sides have dropped their lawsuits and counter-suits. Boeing, which was suspended in 2003, was reinstated at the launch pad in March.

The United Launch Alliance deal still must be approved by the government. But both Boeing and Lockheed expect it will gain regulatory approval before the end of the year.

FMI: www.lockheed-martin.com, www.boeing.com