Restructuring / Turnaround Strategies Case Study

Case Title:

Boeing: Lockheed Martin JV: Together to Survive

Abstract:

In June 2003, Lockheed Martin sued Boeing alleging that the company had resorted to industrial espionage in 1998 to win the EELV contract. It accused Boeing of possessing 25,000 of its classified documents. In July 2003 Boeing was penalized, with the Pentagon canceling $1 billion worth of rocket launch contracts only to award them to Lockheed. Boeing was also barred from bidding for rocket contracts for a twenty-month period which expired in March 2005. By May 2005, both competitors in spite of pending legal disputes between them announced the joint venture. In early September 2005, it was reported that Boeing was negotiating a settlement with the U.S. Department of Justice in which it would pay up to $500 million to cover the espionage issue and the Darleen Druyun scandal.

On May 2 2005 Boeing and Lockheed Martin announced a 50:50 joint venture called the United Launch Alliance (ULA) by merging the operations and production of both their government space launch services. Boeing Integrated Defense Systems ’ Delta IV and Lockheed Martin Space Systems ’ Atlas V were both rocket launchers developed for the Evolved Expendable Launch Vehicle (EELV) program intended to provide the United States government with competitively priced private spaceflight and assured access to space. In September 2006, the Pentagon renewed its support for the ULA and the Federal Trade Commission (FTC) gave its anti-trust clearance on October 3, 2006. Operations of the new company officially began on December 1, 2006. The case attempts to highlight the complex nature of the US Defense and Space launch missions and the highly competitive market of international space launches. The background of the partners, the US government, the competitors for these launch vehicles like Northrop Grumman and Space and situation analysis on the joint venture is also presented.

Pedagogical Objectives:

• To understand the space launch market in US
• To discuss Boeing's and Lockheed Martin’s stature in space launch vehicle manufacturing
• To discuss US defense contract awarding mechanism
• To understand growing competition in global space launch business
• To understand various technologies in Boeing and Lockheed Martin’s space vehicles and
• To discuss the future of US space launch vehicle’s market and players.

Keywords :  Boeing; Lockheed Martin; Atlas V; Delta IV; Evolution of expendable launch vehicle; Integrated defence systems; Northrop Grummans satellites launches; Restructuring / Turnaround Strategies Case Study; Space X and Falcon rockets; DOD (Department of Defence) and NASA (National Aeronautics and Space Administration) space launch contracts; FTC (Federal Trade Commission) approval for joint venture; Heavy payload lift rockets; Commercial space launch market; Pentagon's role in space joint venture; Shavit; GSLV (Geosynchronous Satellite Launch Vehicle), H-2A, Ariane rockets; DARPA (Defence Advanced Research Projects Agency) funding for rocket development