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From bitter rivals to budding friends

By Roger Fillion, Rocky Mountain News (Contact)

Published March 22, 2008 at 12:05 a.m.

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In the lobby of United Launch Alliance in Centennial, models of an Atlas V and Delta IV rocket flank Mark Wilkins, left, ULA's vice president of Delta programs, and James Sponnick, ULA's vice president of Atlas programs.

Photo by Ken Papaleo / The Rocky

In the lobby of United Launch Alliance in Centennial, models of an Atlas V and Delta IV rocket flank Mark Wilkins, left, ULA's vice president of Delta programs, and James Sponnick, ULA's vice president of Atlas programs.

The contrail of a United Launch Alliance Delta II rocket carrying a NAVSTAR Global Positioning System satellite spirals above the rising sun at Florida's Cape Canaveral Air Force Station in October.

Photo by Red Huber / The Orlando Sentinel/2007

The contrail of a United Launch Alliance Delta II rocket carrying a NAVSTAR Global Positioning System satellite spirals above the rising sun at Florida's Cape Canaveral Air Force Station in October.

An United Launch Alliance Atlas V rocket lifts off from Vandenberg Air Force Base, Calif., on March 13 carrying a classified satellite for the National Reconnaissance Office.

Photo by Patrick H. Corkery / United Launch Alliance

An United Launch Alliance Atlas V rocket lifts off from Vandenberg Air Force Base, Calif., on March 13 carrying a classified satellite for the National Reconnaissance Office.

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Joint Lockheed-Boeing rocket venture called for employees of the new United Launch Alliance to create a new culture of cooperation.

When their company opened for business, United Launch Alliance employees watched as a big jar was hauled out and displayed at meetings.

It would symbolize how bitter rivals Lockheed Martin Corp. and Boeing Co. planned to bury the hatchet and kick off their unprecedented, 50-50 rocket venture. Dubbed ULA, the joint venture began business in December 2006 with its headquarters here.

ULA builds big booster rockets. It uses them to deploy spy, NASA and other types of satellites for the U.S. government. ULA employs more than 4,200 workers nationwide, including more than 1,700 in the Denver area.

Two top executives - CEO Michael Gass and Chief Operating Officer Dan Collins - unveiled the large pretzel jar at a half-dozen big ULA meetings around the country.

The rule: Any employee or executive who mentioned how an engineering job or other task was once done "at Boeing" or "at Lockheed" would have to stuff a dollar into the jar.

Uttering the words we or they was a bigger no-no. Offenders would often have to part with more than a buck.

The message was that "Boeing" and "Lockheed" were history. ULA is the name of the game.

Gass, formerly with Lockheed, was among the first to lapse at an introductory presentation. Before hundreds of ULA employees in a large, rented room in a church in Denver, the new CEO popped a bill into the jar. The lighthearted move drew laughs. Collins, previously with Boeing, later followed suit.

The jar also was rolled out at smaller meetings. It would sit in the middle of a conference table. Over time, the jar filled with dollar bills.

"It was set up to help us change our culture," said Mark Wilkins, ULA's vice president of Delta rocket programs and a former Boeing executive.

"It served its functions very well," he added. "We don't have jars on tables anymore."

While it's still early in the joint venture's history, here's a look at how ULA is handling liftoff:

* Employees and executives from one-time rivals are sitting next to one another in office cubicles and together at meetings around the nation to swap what once were Lockheed and Boeing trade secrets.

* They're teaming up to solve engineering problems and fix glitches.

* They're brainstorming to develop common names for key engineering teams, facilities and programs.

* They're merging their old companies' vast computer systems so payroll, human resources and other areas are together in one system.

* And they're attending baseball games, climbing Colorado's James Peak and trading barbs about rival Colorado and California sports teams.

The merger of Lockheed and Boeing's rocket-launch operations has even had some wardrobe fallout.

Before Wilkins joined ULA, up to 70 percent of his shirts had Boeing written on them.

"When we became ULA, I gave them all to Goodwill," he said.

Key success factor

Bringing together two aerospace giants that long had tried to knock one another out of business has its pitfalls.

Paul Olk, a professor at the Daniels College of Business at the University of Denver, singled out a "key success factor" that's critical for ULA's future.

"Developing trust and making sure the two sides can trust each other," Olk said. "It speeds up the communications. It speeds up the decision- making."

He can't recall a similar joint venture in corporate history.

Before the truce, the Lockheed- Boeing fight had taken nasty turns.

In 2003, the Air Force suspended Boeing from launching rockets for 20 months after Boeing employees illegally obtained more than 25,000 pages of sensitive documents belonging to Lockheed.

Air Force officials charged that the trade secrets allowed Boeing to win the bulk of the launches awarded in a $1.9 billion government rocket- launch competition between the two companies in 1998.

Boeing's suspension, the longest for a government contractor, cost the nation's No. 2 defense contractor more than $1 billion in government rocket launches.

Soon after the Air Force ended the suspension, Lockheed and Boeing executives announced in May 2005 they were joining their rocket operations amid a slump in the global launch business.

The duo would launch satellites for Uncle Sam, they said.

The news stunned the aerospace industry.

"Some have compared this to Coke and Pepsi coming together," said James Sponnick, ULA's vice president of Atlas rocket programs and a former Lockheed executive.

"We really were strong competitors for many, many years."

Not everyone on board

In all, about 400 former Boeing employees transferred from that company's Huntington Beach, Calif., facilities to join ULA in Colorado.

By joining their rocket operations, Lockheed and Boeing argued they'd save Uncle Sam up to $150 million a year. Duplicate facilities and jobs would be shed.

Not everyone likes the idea, however.

Critics argue that the venture reduced competition and created a monopoly in the launch business. That, in turn, could cost the U.S. in pricier launches. ULA has performed 16 launches to date.

"It's hard to tell what kind of success the United Launch Alliance will have," said Pete Sepp, vice president for policy and communications at the National Taxpayers Union.

"But whatever happens with this initiative - wildly successful or marked by failure - the taxpayer subsidy will probably still be there," he added.

"It leaves taxpaying Americans to wonder what might have been if a little more competition had existed in the process a lot earlier," he said.

ULA's administrative and engineering activities are headquartered in Centennial.

Later this year, ULA's vast Atlas rocket production factory - now at Lockheed's Jefferson County campus - will begin moving to Decatur, Ala., to the former Boeing Delta rocket factory. The Atlas factory's fixtures, equipment and tooling will be shipped to Decatur on trucks and planes.

Once the task is completed, the Atlas and Delta rockets will roll off the line in Decatur. Atlas production is scheduled to begin there in 2009 and end here in 2010.

Meeting a milestone

Soon after ULA opened, executives heading the Atlas and Delta rocket "leadership teams" met in Huntington Beach, the former home of Boeing's rocket operations.

About 40 former Lockheed and Boeing executives huddled, with the former Lockheed executives flying out from Denver.

It represented a milestone.

Because federal trustbusters had blessed the deal, the two former rivals were free to share information they previously had kept under wraps.

"We could show how many employees we had working at each facility," recalled Wilkins, the head of ULA's Delta programs. "We were free to show all our lessons learned."

Sponnick gave a PowerPoint presentation on the Atlas programs he heads for ULA. He figured his "Atlas overview" would last about half an hour.

"It went on for at least four hours," said Sponnick. "Instead of spending a few minutes on each chart, we had 10- to 15- minute discussions."

Ditto for Wilkins' Delta presentation.

During the presentations, "ah-ha" moments erupted as former Lockheed and Boeing rocket gurus got an inside look at engineering challenges each faced. Test failures during the development phase of a project were shared.

Mother Nature intervened to end the Huntington Beach meetings on an unusual note: The Colorado contingent was forced to delay its departure a few days because of Denver's blizzard conditions in December 2006.

Wilkins hosted a get-together for the Coloradans at his California home. A wag dubbed it "the first Huntington Beach blizzard party."

"We cooked up two spiral hams," Wilkins recalled. "It was an interesting party."

Similar lighter moments have occurred since then. After the Oakland Raiders beat the Denver Broncos in a football matchup, a former Boeing executive brought blue and orange M&M candies to a staff meeting in Centennial to poke fun at the many Broncos fans at the company.

More than 1,000 ULA employees went to Elitch Gardens amusement park together last August. Company employees also attended a Rockies game last September.

"That mentality of being rivals is slowly disappearing," said Paul Abbott, a former Lockheed engineer who is a senior manager at ULA.

Cynthia Fukami, professor at DU's Daniels College of Business, said a joint venture probably is easier for two companies to handle than an outright merger.

"This is something where both have a mutually beneficial interest to do well," Fukami said.

Doing the unthinkable

Still, ULA's birth represents the once unthinkable for former Lockheed and Boeing employees: working for the same company.

The employees aren't total strangers, to be sure. Many had rubbed shoulders previously at industry meetings or spoken via business dealings.

Boeing engineers, for example, arranged to buy a specialized rocket battery from Lockheed for use in Boeing's Delta rockets.

During ULA's early days, Abbott traveled to California to visit his counterparts in Huntington Beach.

The introductory meeting brought together about 20 former Lockheed and Boeing officials. Some already knew each other. Good-natured ribbing occurred.

Abbott recalled words spoken at the gathering to the effect: "George, I remember when I saw you at that meeting two years ago. I never thought we'd be sitting in the same room together."

Less personal issues have surfaced.

Merging the Lockheed and Boeing information technology systems has been no small task.

Huge amounts of data about human resources, payroll and engineering operations from the two former companies must be transferred into one common IT system, ULAnet.

Then there's the less technical job of dealing with the different names and acronyms Lockheed and Boeing used to identify the same engineering system or work team.

"We've had to merge some names together," Abbott said.

Consider, for example, the different names for describing the engineering team that works on a rocket's telemetry system - the system that relays key data such as the rocket's speed and engine temperature back to the ground.

At Boeing, that team was called the Tracking, Telemetry and Communications Group. At Lockheed, it was the RF and Instrumentations Group.

The new name was put up for a vote.

"We're now calling it the RF and Telemetry Systems Group," Abbott said.

ULA executives point out that while Lockheed and Boeing were rivals, they also shared much in common. Both have been in the business of building and launching rockets.

"Our worlds weren't all that different," said Kevin Sinclair, a senior manager at ULA who previously worked at Boeing.

Echoed Wilkins, ULA's vice president of Delta rocket programs, "We're all rocket people."

fillionr@RockyMountainNews.com or 303-954-2467

Comments

  • March 23, 2008

    5:18 a.m.

    Suggest removal

    windbourne writes:

    While I was opposed to this merger since it would reduce competition and yes, it did lead to higher prices, NASA has fixed this. In particular, COTs fixed it.
    Spacex SHOULD within a year's time have several rockets that will launch at the same capacity as the bulk of the ULA's. And at the same top capacity, by the end of 2010. But it will do it for 1/3 of the price. ULA has fought having spacex come in, and forced DOD to play games with spacex, which has caused spacex's launch schedule to slip, but it appears that Spacex is still going to pull this off. In addition, Bigelow aerospace is trying to get ULA to lower their prices via promises of higher launch rates. In the end, ULA was a total disaster for USA, but true free enterprises save the day.