Litton Industries Oilfield Services |
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One of the remarkable things about Litton Industries was its interest in seemingly unrelated companies, like microwave ovens and frozen foods. In particular, during the 1960s just after Tex Thornton lost control of the company, Litton started purchasing seemingly odd companies. The idea was generally an economy-of-scale; unfortunately, many of these purchases put an unwarranted strain on the company, causing it to lose market share until it sold several segments in the late 1960s and the 1970s.
One item that was not a mistake was Litton Industries' dabbling in oilfield services. It first purchased Western Geophysical, a company that used reflection seismology to explore for petroleum. It was a perfect mix in some ways. It allowed Litton Industries to provide services to many of its current customers in the area of oilfield exploration, which was growing in value. At the same time, it gave Litton new challenges for the development of its own technologies, which were primarily about spatial orientation and finding stuff. Litton Industries never participated directly in the search for oil. Instead, they provided a variety of technologies for locating and acquiring oil, and the business acumen and information services to leverage the oil found into profit. Still, by the 1980s Litton found itself more interested in condensing its services down, focusing more on defense contracting. This was probably due to things happening in the market. It was growing less lucrative and considerably harder to locate oil fields using Litton Industries' technologies; the companies making money in oilfield services were those specializing in the extraction of oil from inhospitable locations, like the ocean floor or porous rock. But at the same time, things seemed to be heating up in the Middle East. The Cold War was ending, largely fueled by Reagan's focus on using Star Wars technologies (provided largely by Litton Technologies' laser services) to provide a strategic defense. The military was building up at the same time, and increasing technology was helping the country downsize the manpower of the military while maintaining supremacy. All these things coming together probably instigated Litton Industries' selloff of its main oilfield service subsidiary, Western Geophysical, as well as its spinoff of all of its private industry business, focusing its resources entirely on its government and military contracts. Litton and Dresser Industries jointly ventured to create Western Atlas, a new public company that was spun off in 1994; not only was this company inclusive of all Litton Industries' oilfield services, it also contained the industrial automation portion of the company, which at the time was much more applicable to oil drilling than to defense contracting. Another subdivision of Litton Industries, Gardner Machine Company, was also incorporated into Western Atlas. Western subsequently purchased Halliburton Geophyiscal Services, and was later incorporated into Baker. And Litton Industries got wholly out of the oilfield services business. |
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5/9/2008 3:13:13 |