Martin Marietta Corporation
Martin Marietta Corporation
Martin Marietta Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Incorporated: October 10, 1961 upon the merger of the Martin Company and American-Marietta
Sales: $4.753 billion
Market value: $2.740 billion
Stock Index: New York
Martin Marietta is a corporation that will become increasingly better known in the next 50 years. Most recently, the company has become one of the most notable manufacturers of advanced technological equipment for the National Aeronautics and Space Administration (NASA); Martin Marietta is a leading contractor for a number of government projects, including the American space station. Yet, the company has its roots in the very foundation of American aeronautic history.
In 1905 a youthful Glenn Martin moved with his family to California. In the hills of Santa Ana, Martin built and flew his first experimental gliders. Not long afterwards Martin started a small airplane factory while working as a salesman for Ford and Maxwell cars. Martin’s earnings from the auto sales went to finance his airplane business. He later performed publicly as a barnstormer in order to make money for the company and, at the same time, to attract interest in his product. During this time he hired a man named Donald Douglas to help him develop new airplanes. Soon thereafter, Douglas and Martin collaborated to produce a small flight trainer called a Model TT which was sold to the U.S. Army and the Dutch government.
On the eve of World War I, Douglas was summoned to Washington to help the Army develop its aerial capabilities. Less than a year later, he became frustrated with the slow moving bureaucracy in Washington and returned to work for Martin who had relocated to Cleveland after dissolving a short-lived partnership with the Wright company. In Cleveland, Douglas directed the development of Martin’s unnamed twin-engine bomber. Neither he nor Martin was willing to compromise or shorten the period of time needed for the development of one of their airplanes. For that reason the “Martin” bomber, for lack of a better name, arrived from the assembly line too late to see action in World War I. When Martin moved to Baltimore in 1929 Douglas left the company once again, this time to start his own aircraft company in California.
Even after the war Martin continued to impress the military with his aircraft demonstrations. In July of 1921, off the Virginia Capes, seven Martin MB-2 bombers under the command of General Billy Mitchell sank the captured German battleship Ostfreisland. Continued interest from the War Department led Martin’s company to develop its next generation of airplanes, culminating with the B-10 bomber. The B-10 was a durable bomber, able to carry heavy payloads and cruise 100 miles per hour faster than conventional bombers of the day. For his work on the B-10 bomber Martin was awarded the Collier Trophy in 1932.
Through the 1930’s, on the banks of the Chesapeake, Martin continued to manufacture bombers. He also recognized a need in the commercial airline market for a large passenger “flying boat” to traverse long distances over the water. With substantial backing from Pan Am’s Juan Trippe, Martin developed the M-130 “China Clipper,” the first of which was delivered in 1932. The clipper weighed 26 tons, carried up to 32 passengers and was capable of flying the entire 2500 miles between San Francisco and Honolulu. Pan Am flew Martin’s planes to a variety of Asian destinations, including Manila and Hong Kong.
In the late 1930’s airplane manufacturers seemed to know that a second world war was drawing near. Germany was building planes for a commercial airline that didn’t exist while embarking on a massive remilitarization program. When World War II started Martin was prepared. The company produced thousands of airplanes for the Allied war effort, including the A-30 Baltimore, the B-26 and B-29 bombers, the PBM Mariner flying boat, and the 70-ton amphibious Mars air freighter. Martin invited some criticism in 1942 when he suggested that the United States could dispense with its costly two-ocean navy and defense of the Panama Canal if it had enough airplanes like the Mars.
After the war ended Martin continued to manufacture what few airplanes the Army and Navy were still ordering. In 1947 the company entered the highly competitive commercial airliner market with a model called the M-202. The development of later aircraft, the M-303 (which was never built) and the M-404, was a severe drain on company finances. Despite loans from the Reconstruction Finance Corporation, the Mellon Bank of Pittsburgh, and a number of other sources, the Martin Company was unable to generate an operating profit.
In July of 1949 Chester C. Pearson was hired as president and general manager of the company. Glenn Martin, at the age of 63, was moved up to the position of chairman. Despite the new management and an increase in orders as a result of the Korean War, the Martin Company was still losing money. There were two reasons: First, production of the 404 was interrupted which, in turn, halted delivery and therefore payment for the aircraft. Second, the company hired hundreds of new but unskilled workers, which lowered productivity.
By the end of 1951 George M. Bunker and J. Bradford Wharton, Jr. were contacted, probably by the Mellon Bank, and asked to take over the management of the company. As part of a refinancing plan Glenn Martin was given the title of honorary chairman and his 275,000 shares in the company were placed in a voting trust. Bunker was named chairman and president and Wharton was named financial vice president. Pearson was made a vice president and later resigned. Bunker and Wharton were successful in arresting the company’s losses and by the end of 1954 declared the company out of debt.
Martin substantially re-engineered a version of the English Electric Canberra bomber for the United States Air Force. Known as the M-272, the bomber was given the Air Force designation B-57. Martin built a number of scout and patrol planes, including the P5-M and P6-M flying boats, and expanded its interest in the development of rockets and missiles. One of Martin’s first projects in this area was the Viking high-altitude research rocket, followed by the Vanguard missile. By the 1960’s the company was a leader in the manufacture of second generation rockets like the Titan II.
Despite the company’s return to profitability after the Korean War, the larger airplane manufacturers such as Boeing, Douglas and Lockheed had the advantage of size, which allowed them to compete more effectively with smaller companies like Martin, Vought and Grumman. These smaller companies, however, retained very different kinds of engineering teams which allowed them to continue developing unique aeronautic equipment and weapons systems.
Glenn Martin, who never married, died of a stroke in 1955 at the age of 69. He resigned his position in the company in May of 1953 shortly after his mother died, but remained as a company director until his death. Martin’s mother, Arminta, was a enthusiastic supporter of her son. The fact that Martin often looked to his mother for inspiration and support may have had something to do with his decision to retire. George Bunker succeeded Martin as president and chairman and directed the company for the next 20 years.
The company was largely unsuccessful in achieving diversification in anything but its number of government customers. Martin aircraft was subject to the whims of the Department of Defense with its unstable pattern of purchases. By December of 1960 Martin’s last airplane, a Navy P5M-2 antisubmarine patrol plane, rolled off the production line. From this point forward the company produced only missiles, including the Bullpup, Matador, Titan and Pershing among them.
The Martin Company’s solution to the problem of selling one line of products to one customer was to merge with the American-Marietta corporation in 1961. Marietta was a manufacturer of chemical products, paints, inks, household products and construction materials. After convincing the government that the merger would not reduce competition in any of either company’s industries, the two companies formed Martin Marietta. The diversification continued in 1968 with the purchase of Harvey Aluminum. The name of the subsidiary was changed to Martin Marietta Aluminum in 1971.
In 1969 Martin Marietta’s aerospace unit was selected to lead construction of the two Viking capsules which landed on Mars in 1976. In 1973 the company was awarded a contract to build the external fuel tank for NASA’s space shuttles. During the 1970’s Martin Marietta had become known for its space projects, but remained a major producer of aluminum and construction materials.
Thomas G. Pownall was made Martin Marietta’s president in 1977 and chief executive officer in 1982, succeeding J. Donald Rauth. The same year Martin Marietta faced the most significant challenge to its existence in its history —a hostile takeover bid from the Bendix Corporation. Bendix, which had earlier abandoned an attempt to take over RCA, was led at the time by Bill Agee. Agee’s director of corporate planning, Mary Cunningham, left Bendix when questions arose regarding her relationship with Agee (who was already married). Before she resigned her position, however, she assembled a list of takeover candidates for Bendix, including among them Martin Marietta. For several years Agee had been divesting Bendix of its residual businesses, and in the process accumulated over $500 million for an acquisition “war chest.” Agee later divorced his wife and married Cunningham, and together they instigated their $1.5 billion bid for Martin.
Martin Marietta responded by attempting to take over Bendix. Pownall invited his friend, Harry Gray of United Technologies, to participate in the takeover strategy. Pownall and Gray agreed to divide Bendix among them in the event that either Martin Marietta or United Technologies was successful in taking over Bendix. By a strange quirk of state incorporation laws in Maryland and Delaware (the companies’ legal domiciles), Bendix and Martin Marietta could conceivably have controlled each other.
The takeover was stalemated until a three-way deal was arranged wherein the Allied Corporation agreed to purchase Martin Marietta’s holdings in Bendix on the condition that Bendix abandon its bid for Martin Marietta. The deal left Allied with a 39% ownership of Martin Marietta, but it was agreed that Allied’s voting share would be directed by Martin’s board until such time that Allied could sell its interest in Martin. Bill Agee joined Allied’s board of directors but later left the company. In the meantime, Martin Marietta went $1.34 billion into debt as a result of its takeover defense.
In 1982 one third of Martin Marietta’s sales were in aerospace and two-thirds in the production of aluminum, construction materials and chemicals. Pownall’s first attempt to improve his company’s financial situation was to sell its cement and certain specialty chemicals operations; by 1983 the debt was reduced to $613 million. Due to the continuing deterioration of the aluminum market, Pownall sold the company’s aluminum subsidiary to Comalco of Australia. The sale produced a $365 million write-off, but also generated over $400 million in cash and notes. By 1986 debt was down to $220 million, giving Martin Marietta a comfortable debt-to-total capitalization ratio of 24%.
A reorganization was already in process when Bendix launched its takeover attempt. In defending itself from Bendix the reorganization was accelerated. In retrospect, Tom Pownall recognized positive results of Bendix’s takeover attempt. The company emerged from the fiasco as a more tightly managed and efficient business.
Martin Marietta would once again have been deprived of a wide base of operations were it not for astute management. Aside from its aerospace business, the company became active in the design, manufacture and management of energy, electronics, communication, and information systems, including the highly sophisticated level of computer technology known as artificial intelligence.
Even with this diversification, most of Martin Marietta’s business is with the United States government from which the company derives 80% of its revenues. The company supplies the Pentagon with a number of weapons systems, including the Pershing II missile; a major part of the MX missile; the Patriot missile, designed for air defense of field armies; and the Copperhead, a “smart,” or guided, cannon shell. Martin Marietta is also developing a series of night vision devices for combat aircraft.
The company continues to build external fuel tanks for NASA’s space shuttle program, despite the temporary suspension of that program following the Challenger tragedy. Martin Marietta is also a major contractor for the American space station scheduled to be built in 1993. In another public project, the company is working on a new air traffic management system for the Federal Aviation Administration.
Tom Pownall is grooming a successor, a man named Norman R. Augustine. Augustine was named president and chief operating officer and is expected to assume the positions of chief executive officer and chairman when Pownall retires. Having been assured of a smooth transition of leadership Martin Marietta is looking to the future with confidence not simply as a major aerospace firm, but as one which recognizes the importance of its unique technologies and systems.
Martin Marietta Energy Systems, Inc.; Hoskyns Group, Ltd. (UK); Martin Marietta Ordnance Systems, Inc.; International Light Metals, Inc. (60%); Chesapeake Park, Inc.; Orlando Central Park, Inc.
Conquest of the Skies by Carl Solberg, Boston, Little Brown, 1979; The Sky’s the Limit by Arthur Whitehouse, London, Macmillan, 1979.