It didn't take McDonnell Douglas long to start taking advantage of the Legislature's appropriating $10 million for the Industrial Assistance Fund, a fund intended to attract new business to Utah.
Officials at Hercules Aerospace Division in western Salt Lake County have confirmed they have been awarded a $60 million contract by MD to build Delta II Gem (graphite epoxy motors) that will be used in commercial and military space programs.The fund was created specifically for MD in an attempt to entice the company to transfer equipment to its Salt Lake plant from Long Beach, Calif., where fuselages of the MD-80 commercial airliners will be assembled. MD officials had requested a $10 million loan for that purpose.
However, legislators passed a bill that allows any company credit against repaying the loan if the company spends millions of dollars in the state with Utah subcontractors and creates hundreds of new jobs. Even though the law says any company can borrow from the fund, its provisions apply to very few companies in the state.
Last week, U. Edwin Garrison, president of Thiokol, a competitor of Hercules for the Delta II Gem contract, was quoted as saying he was "very upset and unhappy" over the fund, because taxpayer money was being used to subsidize private business.
When asked about Hercules being awarded the contract, Steve Lawson, public relations manager for Thiokol, said the contract isn't an issue and considered it coincidental the contract was awarded shortly after an agreement between the state and MD had been signed by which MD will borrow some money from the fund.
Lawson said Thiokol officials feel it is unfair competition created by the subsidy to MD and the solution lies with the state.
Although final figures on the contract haven't been determined, Dave Nicponski, government affairs manager for Hercules, said the contract has the potential for additional business later.
Delta II is a significant program for Hercules because it has military and commercial application and company officials hope the commercial side will remain intact as military use is scaled down by reduced funding.
Nicponski said Hercules already has $300 million invested in the Bacchus West facility and the contract will ensure Hercules' presence in the state. "This is the beginning of a bright new future for space programs at Hercules," said Nicponski.
He said six of the Gem motors are attached to the main booster as strap-on boosters and once the rocket reaches a certain altitude they are jettisoned and three other Gem motors are fired to carry the payload to its destination.
In 1987, Hercules won the contract with the U.S. Air Force for the Gems, which gave the rockets a 15 percent greater payload capability, and the latest contract is for continued production, Nicponski said.
Ed Mayne, president of the AFL-CIO in Utah, said he was pleased with Hercules new contract because it means the work will remain in Utah. Mayne said after the $10 million proposal by MD was presented, his union people at Hercules suggested the Industrial Assistance Fund was good for the state and after investigation the AFL-CIO decided to support the effort.
Mayne said the fund will create new jobs and keep money in Utah when companies get Utah subcontractors involved in the work. He said Thiokol would have shipped out the work to its plant in Huntsville, Ala.
When asked if the work would have left the state, Lawson said Thiokol builds Castor IV series motors in Huntsville in support of the Delta program and "you can make up your own mind on where the work would have been done."