General Dynamics : Stinger Thrusts Firm to Fore in Missiles Market

On the White House roof, Marines carry the Stinger to protect President Reagan from air attack.

Bitter rivals in the Middle East prize the Stinger for its effectiveness and simplicity.

And British troops put the Stinger to the test in the Falkland Islands war, destroying at least one Argentine jet fighter.

The $70,000 missile that is launched from the shoulder is one of the hottest weapons on the international arms scene.

“The Stinger,” says Wall Street aerospace analyst Wolfgang Demisch, “is the sort of weapon every terrorist would love to lay his hands on but can’t.”

The missile is also the sort of product that has thrust its producer, General Dynamics Corp.’s Pomona division, to the forefront of the tactical missile market. The division has become one of the fastest growing and most technologically endowed parts of the firm.

Remarkable Growth

The division had sales of about $1 billion last year, capping a remarkable five-year growth rate of 20% per year, the division’s vice president and general manager, Ralph E. Hawes, said in a recent interview. The division shipped an average of a dozen missiles every day last year.

Although every type of Pentagon spending has grown enormously over the past seven years, the demand for sophisticated missiles has soared. Defense Department outlays for missile procurement alone, not including research funding, has increased to an estimated $9.1 billion this year from $1.8 billion in 1978, according to the Aerospace Industries Assn. of America, a trade group.

In addition to the Stinger, General Dynamics’ Pomona division builds an assortment of missiles and guns that the Navy and Army have ordered in sharply increasing quantities in recent years.

As a result, the company is set for what potentially could be one of the largest industrial expansions in the Southern California aerospace industry.

“We have been in a major growth mode for the last eight years,” Hawes says. “Our technical expertise has been there, and what we have been doing in the last seven or eight years is transitioning that into production programs.”

The division recently bought 320 acres in Rancho Cucamonga, on a site adjacent to the factory that produces the Stinger, for “anticipated future expansion” of production programs.

Another Center Planned

The firm’s long-range plans call for the construction of a major factory and a major engineering design center on the new site, developments that could add substantially to the division’s current 11,000-person work force, Hawes says. The company is already committed to building another major engineering center at the Pomona site.

The largest part of the Pomona plant is owned by the Defense Department’s Naval Sea Systems Command, which established the facility in a former walnut grove in 1951. The growth since has split the operation at its seams. The company has 250 trailers for temporary office space, and the firm’s parking lots are packed as tightly as a microprocessor chip.

The Pomona division has also become a major source of General Dynamics’ profits. Last week, the St. Louis-based firm reported net profits of $382 million for 1984, which included a $119.2-million operating profit from its missiles and gun business, work done primarily by the Pomona division.

Still, the Pomona division operates in relatively obscurity, part of its self-imposed “low profile” amid the national scandals that have enveloped its St. Louis-based parent.

“You mention General Dynamics to the average American and they think, ‘Oh, that’s the company that is doing all those fraudulent things,’ ” says Paul Nisbet, aerospace analyst at Prudential Bache Securities Inc. “But that hasn’t stopped them from tripling their profits in the last three years.”

General Dynamics is facing federal and congressional investigations into allegations that its current and former officers accepted and offered bribes, cheated on income taxes and overcharged the government hundreds of millions of dollars on military work.

The charges have been leveled primarily against the firm’s East Coast shipyards, but congressional investigators told The Times that allegations of wrongdoing have been made against all of General Dynamics’ divisions, including Pomona. Investigators on the House Energy and Commerce Committee say the allegations have not been fully investigated so far.

The company’s legal problems trace largely to P. Takis Veliotis, a former top executive who is now a fugitive in Greece and who is detailing a laundry list of illegalities allegedly committed by General Dynamics Chairman David Lewis and others.

A Favorite Target

“General Dynamics is a company that people love to hate,” Nisbet says. “It represents the epitome of the defense industrial complex and, if you want to tear down the defense Establishment, a good place to start is with General Dynamics.”

Hawes says the adverse publicity has not had any discernable effect on the firm’s local operations, its relations with its military customers or its ability to attract new employees.

Indeed, Pentagon officials and defense industry consultants say General Dynamics’ Pomona division has succeeded largely by establishing a solid reputation for keeping its programs on schedule and within budget.

Although the division has a normal share of problems in quality control and scheduling, the military offices that manage the unit’s contracts could not identify a single major program at the operation that is behind schedule or over budget.

A Navy spokesman at the Pentagon said the firm’s Standard missiles, the longest-running program at the division, have been delivered on schedule for the last nine years in the case of one model and always on schedule for another model.

Capt. William Stark, the Navy’s plant representative at the Pomona facility, describes the General Dynamics unit as an “engineering-oriented’ operation that “is very sensitive to quality problems.”

Minor Problems

The operation was cited for an average of 80 to 100 quality-control discrepancies per month last year, but none of the citations strayed from relatively minor problems.

The division also has had problems at its Camden, Ark., factory. Last year, the Defense Department threatened to suspend accepting Sparrow missiles built at Camden, according to a government contracting officer. But the manufacturing problems were quickly corrected, according to the contract administrator, who asked not to be identified.

Hawes says responsiveness to such problems is a key part of Pomona’s success in keeping military programs alive and preventing a major shutdown such as occurred last year at Hughes Aircraft Co.’s Tucson factory.

“I don’t know what happened at Hughes,” Hawes says. “I don’t think it could happen (here). If somebody wanted to come in here and shut us down maybe they could find something. The question is how would we respond, how much are we attentive to quality.”

The Pomona division is considered General Dynamics’ most technologically oriented division. About 4,000 of the division’s 11,000 employees are engineers, scientists or other professionals. The operation counts 78 Ph.D.s on its staff.

Creative Applications

Although the division does not have the reputation for exotic high technology that Hughes Aircraft, TRW Inc. and Rockwell International Corp. do, it has demonstrated a nimble ability to apply its technology in entrepreneurial ways.

For example, when the advent of sea-skimming missiles in the 1970s posed a new threat to surface warships, General Dynamics engineers invented the Phalanx gun as a ship’s last line of defense. The gun’s radar tracks the target and its own bullets and then reduces the distance between the two to zero.

General Dynamics took its idea to the Navy, Hawes said, and the result is a major production program to equip all the Navy’s major warships with the gun. The firm delivered 75 guns last year.

About 75% of the production work at Pomona involves either electronics or flexible wire harness production, according to William Gouette, vice president of fabrication and assembly.

The Stinger missile, for example, is controlled by four electronic circuit cards measuring about 2.5 inches in diameter. Each card, a so-called hybrid circuit, contains about 30 integrated circuits, an electronic density that is vastly more sophisticated than most commercial electronic devices.

The missiles that General Dynamics builds are not complete missiles. The company builds the guidance and control sections of the missiles, which represents the most costly part of the weapons. Warheads, motors and fuses are built elsewhere.

The division has also been helped, Hawes said, by its success in holding down wages through a two-tier wage structure. That was forced through in a 13-week strike in 1978 by the International Assn. of Machinists, which represents 3,000 workers at the division, according to Glen Woolsey, the directing business agent at the union. Woolsey estimates that the average wage in the production area is $9 per hour. New employees earn about $2 per hour less, he said.

Hawes says the company will continue to expand its operations in Southern California, unlike many prime defense contractors in Los Angeles who have grown discontent with the region’s business climate.

“We are in an educational-rich area. Our highly trained people want the ability to associate with colleges and universities,” Hawes says. “We have damn nice weather and damn nice roads.”