EXECUTIVE MEMO
Fallout From the Fighter Fight
he Pentagon's decision in November to eliminate McDonnell Douglas Corp. from the Joint Strike Fighter competition may serve as a catalyst to further consolidate the shrinking defense industry.
McDonnell Douglas' failure in what Harry Stonecipher, the company's chief executive officer, had called a "must-win" contract decision, may have a big effect on the defense industry. Some analysts predict McDonnell Douglas will combine talents with Boeing or Northrop Grumman Corp. to create a new aerospace firm that will rival the colossal Lockheed Martin.
Many industry experts expected McDonnell Douglas, the world's largest contractor of military aircraft, to fare well in the bid for the largest ever military jet fighter contract. The contract to build the next-generation fighter for the Navy, Marine Corps and Air Force could be worth as much as $750 billion over the life of the contract. It is viewed as a make-or-break deal for the bidders, including Lockheed Martin and Boeing Co., which remain in the competition.
The loss was especially keen for McDonnell Douglas, which focused on military aircraft at the expense of commercial aircraft.
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