A graphic in yesterday's Business section quoted Martin Marietta Corp. Chairman Norman R. Augustine as saying the corporation's acquisition of GE Aerospace could be "a difficult, even traumatic experience" for employees, but "it's a win-win for our shareholders and out customers." He made those statements at different times and not in the same context. He has also called the merger a "win-win" for employees. (Published 3/27/93)

Martin Marietta Corp. has every reason to celebrate its $3 billion purchase of GE Aerospace, expected to be closed within the next few days: Marietta's stock has zoomed 27 percent since the deal's announcement in November because it brings together two of the defense industry's most powerful research and development teams.

But Bethesda-based Martin Marietta officials acknowledge the deal makes sense only if they eliminate overlap and slash staff from what they call "the new Martin Marietta."

It is hard to blend corporate cultures in the best of times, but it will be especially so in this case because Pentagon cutbacks will force the company to pare operations, industry analysts and Marietta officials say.

Martin Marietta shareholders voted to approve the deal yesterday by 99 to 1. As soon as the Justice Department clears the transaction of antitrust questions -- an action expected soon -- union activists, business executives and elected officials say they'll try to persuade the firm not to close former GE Aerospace plants in their regions and not to move work elsewhere.

They've spent months planning strategies to persuade Norman R. Augustine, Martin Marietta's chairman and chief executive, not to remove jobs, but he has said he can't discuss it until the deal closes.

He said he's made no decisions on what facilities may be squeezed or closed and he repeatedly has told GE Aerospace workers that they should be heartened by the Marietta purchase because the merger creates synergies between the two companies that will let Martin Marietta compete more effectively for government contracts.

Jim Reichardt, executive director of a government-industry group, the Volusia County Business Development Corp., said, "We're going to become most aggressive" in seeking to retain the 900-worker GE plant in Daytona Beach, Fla., that makes tank simulators for training.

The GE jobs pay an average $40,000 a year, well above most others in the region, he said, and, "should we lose those jobs, it would be a total devastation."

Reichardt said local leaders will offer Augustine incentives including employee training programs at a local aeronautics university, and construction of a new plant. "I won't say we'll give away the farm," he said, "but we'll discuss a couple acres."

"If the Defense Department continues to cut, it's not likely we'll be able to keep all the plants open," Augustine said yesterday.

He said that he will take offers of incentives by regions into account, but that the most important tests for any plant are productivity and low cost of operation.

"It's not a matter of which governor called," he said. "We're not out to twist arms and ask for favors."

But local officials persist, hoping that a tax cut here or a worker training program there will catch Martin Marietta's eye.

"All 28 GE Aerospace locations are saying to Martin Marietta, 'You've got to keep us here,' ... so we don't want to just send our mayor down to Bethesda to moan," said Tom Sherman, a Pittsfield, Mass., stockbroker and chairman of the local Chamber of Commerce.

He's helped form a government-business task force to try to ensure that Augustine doesn't move jobs from a Pittsfield plant where 1,600 workers make tank transmissions and liquid propellants for artillery.

"At some point, politics plays a role, and you can't ignore the fact Sen. Edward Kennedy {D-Mass.} is on the Senate Armed Services Committee," which oversees Martin Marietta's defense contracts, he said.

Augustine has visited all the GE Aerospace plants recently to talk to workers, and at Pittsfield, local boosters arranged lunch with 300 area worthies and a meeting with Kennedy, who once was an Augustine neighbor in Virginia.

Martin Marietta has earned a reputation as a lean operator by reducing its work force to 56,000 today from a high in 1987 of 70,000. The addition of 37,000 GE Aerospace employees will increase its staff by 66 percent -- and almost double its revenue -- just as new Pentagon reductions are expected.

Augustine said defense cuts will bring a 10 percent drop in the combined company's annual revenue by 1994, to about $10 billion.

Marietta may not be prepared for the kinds of savage cuts it will have to make to succeed in this merger, said Wolfgang Demisch, a defense analyst at UBS Securities Inc. "This is not going to be painless," he said.

GE workers are understandably restive, and one symptom is a class-action lawsuit filed recently in federal court in Connecticut seeking to stop their transfer from the GE pension fund to that of Martin Marietta. The plaintiffs fear that because Marietta is more dependent than GE on Pentagon contracts, Marietta's pension plan is less reliable -- an allegation strenuously denied by Augustine.

Rep. Curt Weldon (R-Pa.), who represents Valley Forge, where GE Aerospace's headquarters is located, wrote Augustine saying hundreds of GE workers had expressed concern about the pension transfer.

Augustine says it's impossible to overstate the deal's importance to Martin Marietta. "This is a turning point in its history," he said.

But in a televised in-house talk to thousands of company employees around the United States last month, he fielded numerous questions from people expressing deep anxieties about the future of their jobs.

Any rumors they've heard about closing facilities are wrong, Augustine said, because no decisions have been made. And then he acknowledged that the entire affair is, for the workers, "a difficult, even traumatic experience."

The new Martin Marietta will have "a fraction of the overhead of the two companies that created it." -- John F. Welch, chairman and chief executive of General Electric

It could be "a difficult, even traumatic experience" for employees, but it's a win-win for our shareholders and our customers." -- Norman R. Augustine, chairman and chief executive of Martin Marietta

NAME: GE Aerospace

HEADQUARTERS: Valley Forge, Pa.

EMPLOYEES: 37,000

MAJOR BUSINESSES: Radar, sonar, Navy battle management computers, weather and communications satellites, NASA spacecraft, Strategic Defense Initiative planning, management of government facilities.

MAJOR LOCATIONS: Syracuse, Niskayuna and Birmingham, N.Y.; Moorestown, East Windsor, Camden and Cherry Hill, N.J.; Pittsfield, MASS.; Washington area.

1992 REVENUE: $5.2 billion

1992 PROFIT: $420 million

NAME: Martin Marietta

HEADQUARTERS: Bethesda

EMPLOYEES: 56,000

MAJOR BUSINESSES: Classified spy satellites, Titan rockets, tactical missiles, infrared sensors, construction supplies, management of government facilities and computer systems, Strategic Defense Initiative testing, NASA spacecraft.

MAJOR LOCATIONS: Orlando, Fla.; Denver; Baltimore; New Orleans.

1992 REVENUE: $650.2 billion

1992 PROFIT: $345.4 million