Martin's internal strife helped sink Glen Burnie site Defense spending cuts were only part of story of plant's demise, insiders say

THE BALTIMORE SUN

In the month since Martin Marietta Corp. announced plans to close its Glen Burnie factory, the company line has held steady: Shrinking defense spending for anti-submarine warfare seriously undercut the factory.

But current and former workers -- including key managers -- tell a different story. They say that internal squabbling, misguided bidding strategies and other problems damaged the operation, which Martin acquired from Gould Inc. five years ago. They describe an "us vs. them mentality" that crippled cooperation between Martin executives and "Gould people."

Such conflict, they say, left the factory ill-prepared to fend off competitors that were becoming more aggressive as the defense budget shrank. And as that happened, hundreds of Glen Burnie workers lost their jobs.

In 1988, the northern Anne Arundel County complex was a thriving $110-million-a-year business with 1,300 workers who prided themselves on a near-monopoly in submarine-detection equipment, which accounted for about 80 percent of sales. Today, the factory has estimated annual sales of about $60 million and fewer than 500 workers; about 200 workers are likely to lose their jobs before production is shifted early next year to a Martin plant in Syracuse, N.Y.

No one dismisses the impact of defense budget cuts. The world has changed drastically since Martin -- as locals still call the former Glenn L. Martin Co. -- bought the Gould complex in 1988. The Berlin Wall has crumbled. The Soviet Union has disintegrated. And U.S. spending on military hardware has dropped about 65 percent.

Meanwhile, anti-submarine warfare, the Navy's top priority in the late 1980s, has slipped on the list.

Martin's chairman, Norman R. Augustine, used that background to explain the decline in business and jobs at Glen Burnie, as he announced the plant-closing and other restructuring moves for the $10 billion company.

"The Department of Defense no longer perceives a significant submarine threat, and as a result has greatly cut back on their undersea warfare spending," said Mr. Augustine, who once had termed the $117 million Gould acquisition better than anyone ever had expected. "And the sole line of business Glen Burnie was in was undersea warfare."

But that is just one chapter in the story of the Glen Burnie factory's demise, say former employees, some of whom asked not to be identified because they feared that their standing within the industry would be hurt.

Corporate mergers are never easy, and Martin's acquisition of the Gould complex was no exception. Almost from the beginning, the "Gould people" resented intervention by Martin managers at Middle River, a Baltimore County complex that handles other defense work and is the next step up on the corporate chain of command.

The former Gould managers felt they knew a lot more about making towed arrays, the long tube-like devices containing electronic listening equipment. Arrays are reeled into the water from submarines or surface ships to track the movements of deep-water subs -- the same technology featured in "The Hunt for Red October," a movie based on a Tom Clancy novel about the Navy's hunt for a Soviet sub equipped with a quiet propulsion system.

And the former Gould managers could point to past successes. After all, Gould had grown the business from a $30 million-a-year operation in 1983 to one that grossed $110 million and controlled 70 percent of the Navy's towed-array market by the time Martin came along.

So it's not surprising that they chafed at some of the orders from Martin managers.

"I can't remember how many times I was reminded, 'We bought you; you didn't buy us,' " said Charles Kennedy, a program manager at Glen Burnie who was honored by Martin's corporate headquarters as the outstanding performer of the year at the Anne Arundel County plant in 1991, not long before he left the company to take a job at the Johns Hopkins Applied Physics Laboratory. "That was a nice way to build teamwork," he added, sarcastically.

That attitude boiled over into some ugly encounters. Recalling one pressure-packed meeting between Mr. Kennedy and the managers at Middle River, an engineer said: "It was embarrassing. They were yelling at Chuck -- one of the most respected guys in this industry -- like high school kids."

The tensions increased after serious problems arose with the Glen Burnie factory's contract to produce a new TB-23 array for the Navy. The Navy canceled the contract in January 1992 after the design failed to meet specifications.

The contract had been awarded not long after Martin acquired the Glen Burnie complex from Gould, and Martin has since filed a suit in U.S. District Court in Baltimore, accusing Gould of violating the acquisition contract. The suit, which seeks $180 million, alleges that Gould knew, and failed to tell Martin, that its design could not meet Navy specifications.

Martin officials and former employees agree that the loss of the TB-23 contract was a major blow to Glen Burnie, but they decline to discuss the matter because of the lawsuit.

As morale deteriorated, experienced employees began leaving, including Joseph F. Luckey and John McDaris, each of whom had served as general manager. Other key losses: Peter Bruha, a technologist in digital telemetry; Jim Tinsley, operations manager on the TB-29 array project; and Mark Clements, a production supervisor.

Frank Lehman, chief engineer, also left, after the indignity of losing his corner office and being transferred to Middle River, where he was assigned to a seating arrangement "where he was surrounded by 20 kids right out of college," said an engineer.

"Before long," one former top manager said, "most of the good people were gone."

Michael B. Hughes, vice president of business development for the Middle River-based Martin Marietta Aero & Naval Systems, acknowledges the clash of corporate cultures.

He describes Martin as a company "very focused on technical excellence and mission success" and Gould as "more decentralized, laissez-faire, with limited oversight." He said "there was a lot of frustration on the part of the Joe Luckeys, John McDarises and Chuck Kennedys of the world, who were not accustomed to being asked questions" about their operations.

But he added, "I don't believe [these clashes] had a significant impact on the way business was won or lost."

A seemingly minor internal move -- consolidating cost centers at Middle River and Glen Burnie -- was damaging at a time when competitors were coming on like hungry wolves.

"[Middle River's] cost of doing business was higher than ours," said a former supervisor at Glen Burnie. "When we integrated the two, our rates went up, and their rates went down. In addition, there was a new layer of management that increased our overhead."

Hungry competitor emerges

As costs were rising at Glen Burnie, a West Coast competitor hungry for the towed-array business was moving in the opposite direction.

AlliedSignal Inc. was setting up a small independent plant near Los Angeles. The goal was to reduce bureaucracy and overhead to keep contract bids low, said a company spokesman, John V. Alexander.

Officials at AlliedSignal say there's plenty of towed-array business left. The Navy is spending as much on the equipment today as it did five years ago, they say, while acknowledging that the situation is expected to change as the Navy adopts new technology.

The Glen Burnie factory was also hindered by Martin's approach to contract bidding. Mr. McDaris, who succeeded Mr. Luckey as general manager, and other former Glen Burnie officials say that Gould had accepted more risk in vying for new contracts.

Under Gould, Mr. Kennedy said, "We would sit down and say, 'This is the price we need to win.' Sure, we took on a little more risk, but we made money. You can't argue with success."

But Martin's more conservative approach required earmarking money to cover problems that might pop up. That, along with the new layer of management from Middle River, boosted bids submitted by the Glen Burnie factory by as much as 10 percent to 15 percent, say former officials. And, as that occurred, other companies won key contracts.

The result: The Glen Burnie factory even had trouble retaining contracts that it had held for years. For example, in 1992, when the Navy let new contracts to upgrade the TB-16 and SQR-19 arrays -- models that the Glen Burnie factory had handled for years -- the work went to Westinghouse Electric Corp. and its subcontractor, AlliedSignal.

The TB-16, a submarine-towed array was a $15 million-a-year contract, says a former Martin executive. The SQR-19, an array towed by surface ships, was even bigger -- "on the order of $20 million a year for four years."

Mr. Hughes said the SQR-19 program was won by Westinghouse as part of a much bigger submarine combat system being produced at its plant in Sykesville. AlliedSignal, as a subcontractor, built the arrays.

The TB-16 program was lost in direct competition with AlliedSignal. "We probably bid more conservatively to ensure service to the customer," he said.

Another big blow came early last year, when a $31.4 million contract for a new airborne sonar was won by a division of Hughes Aircraft Co. in Fullerton, Calif. The award was just the first step in a Navy contract expected to lead to foreign sales and generate up to $1 billion in business over a 15- to 20-year period.

Martin had anticipated that the work would have added nearly 250 new jobs to Glen Burnie.

Martin spokesman Charles P. Manor defends the company's more conservative bidding approach, saying it's designed to avoid costly write-offs if something goes wrong. And he notes that the company had a 52 percent success rate in contracts it bid on last year -- compared with an industry average of about 30 percent.

Over the next few months, workers at Glen Burnie will complete production on two of the last three arrays still under contract. At that time, Martin will shift to Syracuse production on the lone TB-29 array that it won in 1990.

And that will close a short, turbulent history of a complex that once ranked as Anne Arundel County's 10th-largest employer.

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