Aviation history's best bargain might just be Lockheed

As printed in the Burbank Leader, May 15, 2002. By Sherm N. Mullin

Almost 70 years ago-on June 21, 1932-a group of investors led by Robert E. Gross purchased the bankrupt Lockheed Aircraft Corporation for $42,000. The Burbank company turned out to be the corporate bargain of the century, but that was not predictable in the early days.

The history of Lockheed Aircraft prior to 1932 is complicated. There were many successes along the way from 1912 to 1932. However, there had also been many problems, mostly financial, which finally led to the company going bankrupt. The company founders were brothers Allan and Malcolm Loughead (pronounced Lockheed: later the name was legally changed to Lockheed). They were born in Niles, Calif., near Oakland, Malcolm on Nov. 15, 1886 and Allen on Jan. 20, 1889. They were raised by a divorced mother who moved frequently and worked hard to support them. They developed an intense interest in aviation very early.

Allen taught himself to fly in 1910. Not much later, Allen and Malcolm started their own aircraft company in San Francisco and designed the first Lockheed airlane; the Model G seaplane. Allen made the first flight on June 15, 1913, launching from San Francisco Bay. They later moved their operation to Santa Barbara, then to Hollywood, and finally moved to Burbank in 1928. Allen Lockheed left the company in anger in 1928 when it was acquired by Detroit Aircraft in exchange for stock. Malcolm left earlier.

In 1929, 60 Lockheed Vega aircraft were produced in Burbank. Despite this success, the financial collapse of the company startd in late 1929, when the U.S. stock market self-destructed. The company went downhill rapidly, and by early 1932 was bankrupt. This sad turn of events set the stage for the Lockheed takeover by Robert Gross and his tightly knit group of associates in June 1932. The day they took over, the only Lockheed employee was a young man named Harvey Christian.

Robert E. Gross, born in Massachusetts in 1897 and educated at Harvard, had become convinced well before 1932 that there was a great future in the aviation business. The fact that the U.S. was in deep economic depression did not change his belief. His small management team proved to be remarkably competent in all aspects of the aircraft business, including sales, engineering, manufacturing, product support and financial management. Between 1932 and 1938, they recruited an equally talented group of people, many of whom became the senior management of the company well into the 1970's

After the takeover, the company continued to build and sell existing-design single-engine aircraft with wood structures until 1937. However, the most important decision was to design a new, all-metal, two-engine commercial aircraft, which was named the Lockheed Model L-10, followed by the L-12 and L-14. These sold well. In 1938, the British ordered 200 Hudson bombers, an L-14 derivative. Lockheed growth accelerated, and the company rapidly became one of the major aircraft companies in the world.

The initiation of the modern Lockheed Aircraft Corp. at Burbank in June 1932 by Robert Gross and his associates was obviously, in retrospect, the most important event in Lockheed history. In the fullness of time it would be seen not only as a major event in world aviation history, but also as a significant event in the technoligical and economic history of the United States. None of this was evident in June 1932.

Sherm N. Mullin

Burbank

As printed in the Burbank Leader, May 15, 2002, written by Sherm N. Mullin