Editors note: Charles Davidson covers the Atlanta tech scene for Local Tech Wire. His column appears on Mondays. When you drive by the sprawling Lockheed Martin airplane assembly plant in Marietta, among the first things you notice are acres of empty asphalt. The parking lot is like a lot of dot-com office space — half empty.
After climbing as high as 20,000 during the Cold War, the factory’s payroll is down to about 7,800. But with President Bush proposing the biggest defense spending increase since President Reagan, and with Lockheed Martin having secured two new jet fighter contracts in the past few years, more parking spaces could be filled soon.
That’s good for the torpid local economy. But if history is a guide, it will mean little for Atlanta’s technology industry. While it’s been an important piece of the area’s economy for decades, Lockheed Martin’s aircraft plant has spawned few startups.
“I can’t think of more than one or two,” says Sig Mosley, a longtime Atlanta tech investor.
Lockheed differs from Scientific-Atlanta
Don House, one of Atlanta’s first tech angel investors, says he can recall just one significant Lockheed-related tech startup. That was Healthdyne, founded 30 years ago by a former Lockheed engineer, Pete Petit.
“Unlike a Scientific-Atlanta, where a lot of people left and created their own businesses, I think Lockheed has spun off more skilled workers as opposed to entrepreneurs,” says John Yates, a technology lawyer who’s worked with startups in Atlanta since the early 1980s.
The business of Scientific-Atlanta, one of the metro area’s early startup mills, is quite different from Lockheed Martin. S-A makes communications technology. Lockheed Martin’s Marietta operation assembles airplanes for the military. That’s a business, unlike, say, communications software, with enormous barriers to entry and few customers.
“If you aren’t a big player,” says Mosley, “you aren’t going to get anywhere in that market.”
Like most defense contractors, Lockheed Martin and its predecessor, Lockheed, have never done much in finding commercial uses for their defense technologies. An Orlando, Fla.-based maker of broadband wireless gear, Triton Network Systems, was based on technology licensed from Lockheed. Triton went public in July 2000 with high hopes. Lockheed Martin owned 5.7 percent of the company’s stock.
‘Unblemished record of failure’ in commercializing
Triton is now defunct. Triton was launched by a group in Orlando called Milcom that aimed to build companies by commercializing defense technologies. In the fall of 2000, Milcom’s chairman and CEO, Mike Buffa, related to digitalsouth magazine a quote from a former Lockheed chairman about the company’s “unblemished record of failure” in trying to commercialize military technology.
Apparently, it’s still unblemished.
All this is not to say that the Lockheed Martin plant isn’t crucial to metro Atlanta’s economy. It is. With 7,800 workers, it’s the metro area’s 11th largest employer, according to the Metro Atlanta Chamber of Commerce.
It’s not just the quantity of jobs that’s significant. Most of the workers are high-paid people like engineers, points out Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University in Atlanta. Dhawan says that through economic ripples — buying houses, appliances, groceries, etc. – each Lockheed job probably generates two additional jobs. If he’s right, that means the plant is to thank for another 15,600 local jobs.
Those jobs, of course, aren’t all filled by $75,000-a-year engineers. Nonetheless, especially in a recession, jobs are precious. Ask the 500 people that Sprint PCS laid off this month at a call center in Cobb County, home to the Lockheed Martin plant.
More jobs likely to be added
Dhawan figures the Pentagon will start writing checks quickly. The Bush administration’s F-22 request includes 23 of the stealthy supersonic jets next year, the first full year of production. The F- 22 is the Air Force’s highest priority, and the service plans to acquire 339 of them, and put them on active duty in 2005.
Lockheed Martin spokesman Greg Caires says that as F-22 production accelerates, more people will work on assembling the jet fighter. Now, about 2,100 people at Lockheed Martin’s Marietta plant are dedicated to the project. However, Caires adds, it’s unclear whether ramped up production will mean additional hiring or simply shifting more current employees to the F-22 work.
Yet, the F-22 is not Lockheed Martin’s only massive warplane contract. In October, the company won what is widely billed as the biggest-ever conventional weapons-building program, the Joint Strike Fighter (JSF) for the Navy, Air Force and Marines. The original contract to develop and build the multi-role, multi-service aircraft is worth $19 billion, but the eventual value could well exceed $200 billion. Plans call for the JSF to be built at Lockheed Martin’s plant in Fort Worth, Texas.
As weapons making climbs back atop the national agenda, business will snap to for the weapons makers like Lockheed Martin. But more people piecing together advanced warplanes north of the city won’t necessarily mean much in the Atlanta technology startup community.