Out At The Skunk Works, The Sweet Smell Of Success

The cold war is surely over. But you would never know it from the looks of Advanced Development Co.'s headquarters. Set among the Joshua trees and cactuses of the Mojave Desert, the company is housed in a windowless, bunkerlike facility. Entering through a series of thick metal doors that open by means of an electronic combination lock, visitors are greeted with flashing red lights set off to signal that a potential intruder is in the building.

Welcome to Skunk Works, Lockheed Corp.'s supersecret research and development subsidiary. Deriving its name from a foul-smelling plastics factory that once stood adjacent to its original site in Burbank, Calif., Skunk Works' record is so impressive that its very name has evolved into a kind of generic term describing most corporate R&D efforts. And Lockheed Chief Executive Daniel M. Tellep is betting that scientists and engineers at Skunk Works will maintain the company's technological edge as the defense industry becomes smaller and more competitive.

SMALL TEAMS. Other contractors also have top-secret R&D centers, but none can match Skunk Works' record. Way back in 1943, the unit's engineers cobbled together in four short months the XP-80 Shooting Star, the first operational U.S. fighter jet. During the cold war, they cooked up an assortment of odd-looking aircraft. The most famous: the U-2 and SR-71 "Blackbird" spy planes that soared at the edge of space snapping photographs of Soviet and Chinese military installations. The biggest moment for Skunk Works came in 1991 when Lockheed's F-117A Stealth fighter slipped through Iraqi radar undetected to deliver smart bombs with pinpoint accuracy.

Skunk Works' success has a lot to do with its unique culture. Purposely isolated from Lockheed's sprawling bureaucracy, the R&D unit specializes in a small-team approach to projects. Each team is headed by a manager who has wide latitude in recruiting in-house specialists, such as electronics experts and aeronautical engineers. Moreover, the team has direct contact with the military--without going through channels at Lockheed. And as the project progresses, engineers may alter their designs without the approval of umpteen executives.

Along with Skunk Works' management success go profits, thanks to lavish Pentagon spending. The Defense Dept. has said that it wants to continue funding R&D projects, even if those prototypes never lead to production planes. Indeed, while the procurement budget has plummeted, annual R&D funding over the past five years has remained relatively constant, at about $37 billion. That translated into roughly $700 million in revenues for Skunk Works last year, Tellep says. Although he won't give any details, Tellep says Skunk Works is among Lockheed's most profitable units.

Skunk Works President Sherman Mullin exudes confidence in the future. His engineers are already busy working on a supersonic Stealth fighter that can take off from a short runway and land vertically. Lockheed is competing with McDonnell Douglas Corp. and its Phantom Works R&D

unit for a 1996 contract to build two prototypes.

FASTEST YET? For the past year, there has also been persistent speculation that Skunk Works is building a spy plane that would travel four times the speed of sound--faster than any known aircraft.

"There is a national expectation that we are going to be a superpower forever," says Mullin, who won't comment on the reports. "And if you are going to remain a superpower as far as the eye can see, you can't just maintain the status quo." Judging by its record, that's one thing that Skunk Works hasn't let happen.