Into New Territory

Anxious to hedge against future uncertainties, U.S. aerospace companies have lately been moving to diverse and often unfamiliar fields. Last week huge North American Aviation Inc. not only staked out some particularly down-to-earth territory but got ready to pick up a new name as well.

President and Chairman J. Leland Atwood, 62, of North American, and Willard F. Rockwell Jr., 53, president of Pittsburgh's automotive-parts-making Rockwell-Standard Corp., announced plans to merge into a new corporation to be known as North American Rockwell Corp. With sales of some $2.6 billion a year, the combine will rank among the top 15 U.S. corporations.

No Plums in Sight. For some time, North American has been fretting about its dependence on Government contracts, which now account for more than 95% of its business. Though space and Pentagon orders have swollen annual sales beyond $2 billion for the past three years, in 1965 the company lost its No. 1 spot to rival Boeing, which also happened to be fat with commercial orders. If and when the supersonic-transport program gets under way, North American will assemble wing sections for the prime contractor (Boeing again), but so far its only sizable commercial airframe business is building Sabreliner corporate jets.

As yet, there is no plum in sight to replace North American's rich NASA contract for Apollo Moon Project hardware, worth $676 million in fiscal 1966 alone. To cushion a potential slide in Government business, which could push total sales down as much as 15% this year, Atwood began making plans to expand "into the commercial and industrial sector." At one point, he made a strong but unsuccessful bid for Douglas Aircraft Co.

In Pittsburgh, at the same time, Rockwell had been planning to get into space-age technology, breezily predicting that Rockwell-Standard would soon be "a $1 billion corporation." Axles, springs and other vehicle parts still account for 65% of Rockwell-Standard's $636 million sales, though Founder and Chairman Willard Sr., 79, got a diversification drive off the ground in 1958, when he bought what is now the company's plane-making Aero Commander division. When Willard Jr. read of North American's plans in the press last September, he invited Atwood to Pittsburgh for talks, met him again a few weeks later on a TIME-sponsored tour through Eastern Europe with other businessmen. Many of the merger details were worked out during a limousine ride through Rumania.

Not in 20 Years. Atwood was moving ahead with the Rockwell-Standard deal as his bid for Douglas was pre-empted by McDonnell (see cover story). But if Rockwell was second choice, it is hardly second best. While its sales, which have nearly doubled since 1963, are less than a third the size of North American's, last year Rockwell earned almost as much ($41.5 million) as its new partner ($48.6 million). Rockwell Jr. is delighted to have North American's electronics and space savvy. "You could acquire companies for 20 years," he says, "without approaching this combination."

As far as management goes, the combination will involve no noticeable changes. Atwood will remain at his El Segundo, Calif., headquarters as president and chief executive officer of North American Rockwell. The Rockwells, Sr. and Jr., will be based in Pittsburgh as chairman and vice chairman. And, what with North American's $1.2 million Sabreliners and Rockwell's $575,000 Jet Commanders, distance should be no problem.

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