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OCR Page 1 of 47TELCON
PriMin Heath/Kissinger
(secure phone)
8:40 a. m.
xxx 2/1/71
H: I am going to have a word with the President but I hear he is in the Virgin
Islands.
K: And very difficult to reach there. Can you hear me?
H: Can you hear me?
K: Fine.
H:
If's veryxxixxx difficult to hear you.
K: I can hear you very well.
H: Let me tell you what I want to tell the President. As you probably know,
Rolls Royce have a joint project with Lockheed on the
Star. The other
day we hear that Rolls Royce has difficulties wikx as far as the engine is
concerned. First, the actual time date of the production of the engien. And
second, an increase in the cost that Lockheed contracted for it. So it seems
a delay that could involve them in a penalty and a considerable increase in
the cost and this had meant a tremendous financial burgen on Rolls Royce.
Last October we agreed to 60 million for this project alone but its now obvious
that this will not be adequate. The situation therefore is that the whole position
of Rolls Royce because of this one engine has become difficult. Lockheed's is
also difficult. Some of my friends in Wall Street talked with me about it last
fall. We understand there's also problems on the C-5A. The President of
Lookheed is flying here, arriving tomorrow morning for discussions with
Rolls Royce. He is not aware of the full circumstances of the financial
thing
pobition
here.
The
fir XXIXIX is for the two companies is to discuss ways out
of difficulties. They can discuss that tomorrow. I felt if you could tell the
President the situation then if I wanted to talk with him urgently tomorrow or
Wed. he would be able to do SO. We realize the considerations for you as far as
Lockheed is concerned because it may imperil the
Star. That may
make more difficult the C-5A. I want to avoid instances of the past by talking
with the President about this. So if the firms don't see a way out, if then perhaps]
we can work it out.
K: It would help me enourmously if I had an idea what sort of decision you want
the President to make on the range of things box he will be asked to respond to.
Or just what the solution is.
H: It's difficult to say but from Rolls Royce's point of viewwould be if Lockheed
said that they could accept a delay in production of this engine and