David Rosenthal: evaluation

Transcript context

…The DC-10, I think, was the McDonnell Douglas competitor. Lockheed partners with Rolls Royce to make the engines right as Rolls Royce goes bankrupt and gets nationalized by the UK Government. All told, we won't go into the whole history here, but the L-1011 airliner project loses Lockheed $2½ billion. As we said a few minutes ago, this is not a super profitable company. They don't have $2½ billion in other earnings just sitting around to soak up the losses here. At the same time, Lockheed also gets caught up in really nasty bribery scandals around the world, but these are nasty political scandals themselves. Basically, Lockheed comes out looking at least to the American public as a corrupt arms dealer. What happens is Lockheed and lots of people would argue that this is just the way you needed to do business in foreign countries, our allies that Lockheed sold these weapons to. In the Netherlands, in Japan, and in Saudi Arabia, it comes to light that Lockheed employees and contractors are paying bribes to political officials to win contracts. This actually brings down the Japanese Prime Minister at the time. This is a huge scandal in Japan on the order of Watergate in the US. Huge scandal. Sega actually makes an arcade game about it called I'm Sorry about the prime minister at the time. It's so funny. Lockheed also, on the military side, the main Lockheed divisions, engaged with a couple of helicopter projects with the military and then the C-5 Galaxy transport plane. Those projects go horribly. They have huge cost overruns. The C-5 at least, I think, does ultimately become a good airplane, but costs way more than the initial bidding. All of this conspires that, especially postVietnam period, the American public starts to view Lockheed as this corrupt vampire, octopus, military, industrial complex, squid sucking on America. Things get really bad. Lockheed's finances at the same time were so bad. They need a bailout from the government. The government has to guarantee a $250 million loan to Lockheed to keep them afloat, mostly because of the L-1011 disaster. It requires a vote of Congress to do this. It almost doesn't pass. This is really bad. I didn't realize how dark it got there.…

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