Profiting in the Sinai--and on Mars

Few conglomerates grew so rapidly as Ling-Temco-Vought, Inc. in the late 1960s, and few have come apart so spectacularly in the 1970s. Today the company is no longer a high flyer, and Founder James J. Ling, having created and failed with another conglomerate, Omega-Alpha, is fighting stockholder fraud suits. But thanks to Ling's penchant for corporate spinoffs, parts of the old LTV have emerged to flourish as independent companies. The one with the most exotic projects is Dallas-based E-Systems Inc., a company with a meaningless name, an ultrasophisticated product line and operations that extend to such recherche places as the Sinai desert and the planet Mars.

As part of the Ling empire, the company was known as LTV Electrosystems Inc. After its spin-off four years ago, it needed a new name, but a San Francisco company hired for the purpose could not invent one that pleased Chairman and President John W. Dixon, so Dixon in frustration decided on E-Systems. What does the letter stand for? Says Dixon: "Any word that starts with E and is good."

The initial might well stand for electronic. E-Systems produces or services a wide range of civilian and military electronic gear. Samples:

> On Mars, the Viking Lander is supposed to make a Bicentennial touchdown July 4--soft-landed there by an E-Systems thrust-control device.

> In the Sinai, E-Systems is building a base station where about 140 technicians and construction workers have installed sensors to monitor movements of Egyptian and Israeli troops and trucks along a 20-mile corridor. This is part of the peace-keeping arrangement worked out last September by Secretary of State Henry Kissinger.

> In Greenville, Texas, E-Systems has converted three Boeing 747s into "advanced airborne command posts." Crammed with electronic equipment and trailing antennas five miles long, the aircraft can be used to direct the movements of ships, planes and troops should ground communications fail in a war. The Secretary of Defense would probably be aboard one, and the President might be too.

> In Huntington, Ind., the company's Memcor division is the largest supplier of backpack Army radios: 84,000 last year. Memcor also installs radios in helicopters and planes.

> In Falls Church, Va., another division, Melpar, builds radar jammers and pilotless "drone" aircraft that can be programmed to fly over an enemy's turf, photograph installations and drop bombs. Another division in Dallas makes high-technology civilian products, including tiny devices that can be used to foil bank robbers. Placed in a teller's drawer, the device will trigger an alarm when a teller removes the last bill in a stack, thus reducing pressure.

E-Systems also has nonelectronic operations. When the CIA sold its Air America airline after the Viet Nam War, E-Systems bought the line's maintenance base in Taiwan. The base, called Air Asia, now services commercial airliners and U.S. Navy fighter planes.

Its varied activities brought E-Systerns sales last year of $254 million--almost $100 million more than in the spin-off year of 1972. Profits during the same period have risen from $3.2 million to $7.2 million. The company employs 10,000 people round the world and is the 55th largest U.S. defense contractor among the thousands of companies that do work for the military. Still, it is little known outside the military-industrial complex, and for understandable reasons. The biggest chunk of its business--some $91 million last year--is in "electronic warfare" gadgetry, not all of which company officials can talk about. Many people might not understand if they did. The company's annual report reads in part like a Pentagon paper: it bristles with such locutions as "reactive measures" and "threat neutralization requirements."

Still, Dixon, a tough, steelyeyed, 56-year-old Kentuckian who is an economist by training, has trimmed the company's dependence on military business from 90% four years ago to about 55% now; his target is 50%. Reason: the defense business has always been boom and bust, and Dixon is aiming for steady growth. He has lopped off unprofitable operations, and as general marketing manager, has used Pentagon contacts to link up with major weapons-systems contractors for chunks of subcontractor business.

Part of his motivation is to erase the LTV taint that still clings to the company, restore Wall Street's confidence and build E-Systems' image as a responsible, tightly managed organization. This month E-Systems will take another step toward doing exactly that: at the annual meeting in Dallas, Dixon will reveal the best first-quarter results in the company's history. They could be called Excellent.

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