Aerospace giant takes to the sea; Lockheed Martin strikes unusual deal to build Navy vessel; Craft has unusual hull; Company sees chance to turn profit during slow time for industry; Military contract


If it moves and it has a Lockheed Martin nameplate, it's probably an airplane or a spacecraft.

But now the aerospace giant's last major facility in Baltimore is helping lead the company in a new direction as a builder of ships.

Last week, Lockheed Martin Launching Systems in Middle River won a contract to build a Navy research vessel. At $42.3 million, the job is not as huge as the multibillion-dollar contracts Lockheed Martin is used to winning for fighter jets or rocket boosters.

Many eyes are on it, though. Shipbuilding holds promise for a company struggling to meet financial goals. Also, hiring a facility other than a shipyard is new for the Navy, which is competing with the other services for precious military dollars.

"I am conscious that I am plowing new ground, and I am conscious that [high-ranking officers] are very interested in what we are doing," said Capt. Doyle R. Kitchin, Navy manager for the program.

Traditionally, the Navy strikes a contract with a shipyard for a vessel, and the shipyard buys components such as radar from a Lockheed Martin or a Raytheon.

The new contract flips that relationship on its head. Lockheed Martin Launching Systems will oversee the creation of the research vessel by acting as "systems integrator," linking various underlings through a computer network. The ship will be built at Atlantic Marine Inc. in Jacksonville, Fla.

"It's the first time that we have had an integrator actually managing a shipyard for us," Kitchin said. "It's something we are looking at for larger programs, but a lot depends on how this one works out."

The setup is unlike almost any previous shipbuilding contract. Instead of drawing plans and then seeking bids, the Navy told Lockheed Martin what it wanted, and the company and its partners did the designs.

The result is another first: a research vessel with an odd hull that Lockheed Martin first used in the early 1980s on its secret experiment in stealthy ship design, the Sea Shadow.

Called SWATH -- for small waterplane-area twin-hull -- the design puts the ship on stilts connected to two cigar-shaped hulls that stay submerged. It is almost as though the ship is riding piggyback on two submarines. Because the struts hold the vessel high above the water while the twin hulls are deep below, the deck stays relatively stable, even in extremely rough seas.

The Navy plans to lend the 2,500-ton ship, which will be 182 feet long and 88 feet wide, to the University of Hawaii for oceanographic research. The contract contains options that could lift its value to $45 million.

If the design and the shipbuilding experiment work, "we think it's going to be a great new part of our business here in Baltimore," said Mike Hughes, vice president and general manager of Lockheed Martin Launching Systems.

Lockheed Martin has been contracting with the Navy for decades, but almost exclusively in systems and services. The Baltimore shop, which is all Lockheed Martin kept when it sold the larger Middle River Aircraft Systems plant to General Electric in 1997, has sold deck-mounted missile launchers to navies worldwide. Other parts of the company assembled the Aegis sensor systems for a class of Navy vessels.

Last fall, Lockheed Martin transferred control of its California-based Marine Systems unit to the Baltimore launcher factory. The submerged-hull technology went with it, putting Launching Systems on the leading edge of the company's reach into shipbuilding.

"Shipbuilding is one of the areas we think is going to be an area of increased growth," said Todd B. Ernst, an analyst at Prudential Securities in New York. "This [research] ship is on a much smaller scale, but we nevertheless think the big picture for this is going to be pretty robust."

Naval services constitute about$2.5 billion of business annually for the corporation, he said.

With the Navy determined to maintain a 300-ship fleet, there will be plenty of work to go around, and only about a third of any ship contract involves construction of the vessel, he said. The rest is shipboard systems, "and that's where it looks like Lockheed Martin could play a big role," Ernst said.

The Launching Systems factory has grown to about 550 employees from about 360 two years ago, Hughes said. The figure could continue to grow, thanks to the variety of work that could be possible if shipbuilding catches on.

Commercial applications

Lockheed Martin is already looking at commercial applications for the submerged-hull technology, especially for a patented design that it calls Slice.

Instead of riding on two underwater hulls, a Slice ship rides on four. Engineers believe a Slice craft will travel at least twice as fast as the twin-hull version, which lumbers along at 15 knots.

Lockheed Martin produced a prototype Slice vessel with a company in Hawaii and has demonstrated it to West Coast cities looking for a stable platform for oceangoing ferries. This year, Hughes took representatives from several cities on a demonstration ride beyond the Golden Gate Bridge in San Francisco.

"You can stand on the deck outside without holding onto anything, traveling at 25 knots. There's no slapping motion passing through rough waves 8 to 10 feet high. Almost gone is the sensation of lurching up and down as you pass through a wake. You get a sense of sort of cutting through the water," Hughes said.

High stakes

If the cities aren't convinced they want to buy one of the ships as a ferry, the company is looking at another application requiring a fast, stable platform that seems appropriate for a high-stakes venture into a new industry. "We've talked with some people about the possible application of Slice as a gambling vessel," Hughes said. "Time is money to those guys."

The same can be said for Lockheed Martin. It has to master its new position as a shipbuilder, supervise the Florida construction yard, maintain its computer network of partners and deliver the Navy research ship in 23 months.

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