Lockheed Martin to Manage Argentine Military Aircraft Center : Aviation: The work is intended to boost the nation’s and the company’s presence in the growing South American market.

BUENOS AIRES —  Lockheed Martin will soon assume management of Argentina’s main aircraft factory and maintenance center, completing what is billed as the biggest privatization of a military enterprise in Latin America.

The takeover, scheduled for July 1, is part of an agreement that gives Lockheed Martin contracts worth more than $400 million to modernize and maintain Argentine military planes. The deal is intended to boost both Lockheed Martin’s and Argentina’s presence in the growing South American aviation market.

Final financial arrangements were announced June 13 at the Paris Air Show.

“This agreement fulfills President Carlos Menem’s commitment to rebuild the air force’s capabilities and to fully develop the aerospace industry in Argentina,” Argentine Defense Minister Oscar Camilion said in Paris.

“It is the most important privatization in the defense area, I believe, in South America,” Camilion said in an earlier interview in Buenos Aires.

J.A. (Micky) Blackwell, president of Lockheed Martin’s Aeronautics Sector, said the Bethesda, Md.-based company--formed by the merger this year of Calabasas-based Lockheed Corp. and Martin Marietta Corp.--hopes to make the center in Cordoba, 400 miles northwest of Buenos Aires, a world-class complex for rebuilding and repairing planes from all over South America.

“Based upon our business analysis, we project a substantial international market for aircraft modernization,” Blackwell said. “Cordoba offers the resources, skills and proven expertise to be highly competitive in the global marketplace.”

One of the contracts between Lockheed Martin and the Argentine Defense Ministry is for refurbishing and refitting 36 A-4M Skyhawks that Argentina is buying from the U.S. Navy. Eighteen of the attack jets will be modernized by Lockheed Martin Aircraft Services in Ontario, Calif. The other 18 will be done at Cordoba.

Argentina will pay a total of $280 million for planes and modernization work. About $40 million of that will be paid to the U.S. government for the Skyhawks, spare parts, ground-air support equipment and technical publications. About $30 million will go directly to Westinghouse, which will supply high-tech radar systems for the planes; Lockheed Martin will receive the rest.

The other contract, valued at $200 million, is for maintenance, repair and overhaul of Argentine air force craft at the Cordoba center over the next five years.

Lockheed Martin has formed a subsidiary, Lockheed Aircraft Argentina, to run the center, which has 211 buildings on 520 acres. “This is a monstrous facility,” said Harry Radcliffe, president of the subsidiary.

Lockheed Martin, which will operate the center under concession, has agreed to invest at least $30 million in it during the next 10 years. But “we may do that in a couple of years,” Radcliffe said.

He said Lockheed Martin hopes that Cordoba will become a major maintenance center for South American aircraft, not just those made by Lockheed.

The Cordoba center, which once employed more than 10,000 workers, built Pampa jet trainers and Pucara light attack planes. Production has been discontinued, and before Lockheed Martin agreed to take over the center, all jobs there were expected to be lost.

“The alternative that was expressed to me by the Ministry of Defense was that if they didn’t find a father for this baby, they were going to shut it down,” Radcliffe said.

Lockheed Martin will receive the center with 2,100 employees, but Radcliffe said only about half that number will be needed for the next two years at currently scheduled work levels.

The agreement between the ministry and Lockheed was signed Dec. 15. The Skyhawk contract called for an initial payment by Argentina of about $60 million. The Defense Ministry was negotiating with the Ministry of Economy for the funds, to be raised through government bonds, when the financial crisis in Mexico began spreading to other Latin American countries, including Argentina. Argentina put the Skyhawk deal on hold while Lockheed Martin and the Defense Ministry negotiated a new schedule of payments. Argentina will make monthly payments beginning at about $10 million a month, Radcliffe said. Lockheed Martin will receive $212 million over 36 months for refurbishing the Skyhawks.