Aerojet-General Corp - Booming in the Reagan Era

Booming in the Reagan Era

Sales were $349.4 million in 1980, with earnings of $26.6 million. The Reagan era defense buildup was just beginning. Aerojet was a supplier of solid fuel propulsion systems for the new MX missile system, among other projects. While rival Morton Thiokol Inc. won the initial contract to build solid fuel booster rockets for the Space Shuttle, Aerojet would supply the liquid fuel maneuvering engines. Aerojet also designed and produced elements of the Strategic Defense Initiative, a system designed to intercept incoming ballistic missiles.

In the early 1980s, Aerojet's corporate parent, General Tire, was, according to Business Week, considering spinning off its many holdings into three separate companies in order to raise its share price. Aerojet itself was divesting some of its subsidiaries as it refocused on its lucrative aerospace business. The General Tire and Rubber Company became GenCorp. in the mid-1980s.

Aerojet's 13,500-acre complex near Rancho Cordova, California, was designated a Superfund site by the Environmental Protection Agency in 1983, and the company was forced to spend millions treating the groundwater underneath it. Since the 1960s, it had been poisoned by 30 different types of contaminants, alleged one lawsuit by a local water supplier. Aerojet would commit to a $100 million cleanup program of its Rancho Cordova site even before the discovery of perchlorate contamination prompted the closure of 18 wells in California in 1997. (A 1992 report by the General Accounting Office estimated the potential total cleanup cost to be up to $1 billion.)

Aerojet had begun applying some of its technology to medical applications, such as a cryogenic brain probe. The company also had an artificial heart research program, which was spun off in the mid-1980s as Nimbus Inc. Aerojet employees formed a number of other enterprises, such as Clean Energy Systems, launched in 1993 to apply Rudi Beichel's ideas for developing steam power using rocket technology.

Aerojet reached sales of $1 billion in 1988, when it had 8,000 employees. A slowdown in defense spending soon resulted in layoffs and factory closings. During the year, the company traded 5,100 acres in the Everglades to the federal government for 53,000 acres near its testing site in Nevada.

In 1989, NASA chose Aerojet and Lockheed Corporation to produce solid fuel rocket motors for the Space Shuttle program, replacing Morton Thiokol Inc., which had been dropped after the Challenger disaster. However, the booster rocket replacement program was canceled by Congress in October 1993. Aerojet was researching a cleaner, nitrate-based oxidizer for solid rocket motors, which until then left a noxious trail of hydrogen chloride exhaust.