WASHINGTON – Pratt & Whitney Space Propulsion is poised to become the dominant U.S. maker of liquid-fueled rocket engines following the agreement by parent company United Technologies Corp. to purchase Boeing’s Rocketdyne unit. The $700 million deal could be the final step in the consolidation of the U.S. rocket propulsion industry, which for years has suffered from overcapacity.

Assuming the acquisition goes through, Pratt & Whitney would have just one competitor in liquid-rocket propulsion, GenCorp Aerojet of Sacramento, Calif. But with just one major production program in its portfolio, Aerojet’s liquid-propulsion business pales in comparison to that of a Pratt & Whitney-Rocketdyne combo.

Aerojet also is one of the two remaining U.S. suppliers of solid-rocket motors, but there too it faces a dominant competitor in ATK of Edina, Minn.

“It appears this is probably the last of these moves,” said Paul Nisbet, an analyst with JSA Research of Newport, R.I. “This certainly makes Pratt & Whitney the 1,000-pound gorilla of the industry.”

Boeing Co. of Chicago agreed to sell its Rocketdyne Propulsion & Power unit to United Technologies of Hartford, Conn., for about $700 million in cash, the companies announced Feb. 22. That figure is equivalent to Rocketdyne’s annual revenue, the companies said.

With the addition of Rocketdyne, Pratt & Whitney Space Propulsion of West Palm Beach, Fla., will have roughly $1 billion per year in revenue, Nisbet said. Aerojet reported $492 million in sales last year, but Nisbet said most of that came from solid-rocket propulsion work.

“The imbalance would be huge, so that could become a concern in the [Department of Defense], but probably not,” Nisbet said. “Because the industry is so depressed, it probably will save the government money to have consolidation.”

Rocketdyne, headquartered in Canoga Park, Calif., also has facilities in Alabama, Mississippi and Florida and employs about 3,000 workers, Boeing said. There are no immediate plans to make changes in Rocketdyne’s operations, but long-term consolidation opportunities will be explored, said Patrick Louden, a spokesman for Pratt & Whitney Space Propulsion.

Rocketdyne also has space power programs that will be folded into United Technologies’ Hamilton Sundstrand unit, which designs and manufactures life support, electric power and other systems for the space shuttle and international space station.

Rocketdyne’s major propulsion programs include the space shuttle main engine and the first-stage engines for Boeing’s Delta 4 and Delta 2 rockets. Pratt & Whitney supplies the RL10 upper stage engine used on the Delta 4 and Lockheed Martin’s Atlas 5 rocket, turbopumps for the space shuttle main engine and is a partner in RD Amross, the joint venture with NPO Energomash of Russia that supplies the Atlas 5 main engine. Both companies have assorted other work in missile defense and hypersonic vehicle research.

“We have a lot more product we can offer, not only for domestic customers but internationally,” Louden said. “For launching capability, we have to think about the next big phase, which would be [NASA’s] vision for space exploration. We see some real advantages by using Rocketdyne’s employees and their experience and the technology Rocketdyne would bring to the table.”

While large-scale engine development programs are few and far between , the new Pratt & Whitney will be well positioned to take advantage of emerging opportunities in cutting-edge technology work, said Brett Lambert, vice president for corporate service at DFI International, a consulting firm here . “When you talk about the size of the business, there are some attractive opportunities for research and development that could lead to new products,” he said.

The transaction is subject to U.S. regulatory approval, but analysts do not see any potential show-stoppers . “There are other levers the government can use to ensure competition across the range of products Pratt has to offer,” Lambert said. “There will still be enough leverage on the part of customers to ensure some level of competition.”

Aerojet’s main liquid-propulsion production program is the second-stage engine for the Delta 2, but the company also supplies spacecraft maneuvering thrusters, is refurbishing Russian-made engines for Kistler Aerospace’s K1 rocket program and is developing a liquid-fueled missile-defense target vehicle for the U.S. Army. Aerojet and Pratt & Whitney began exploring a joint venture in 1999, but were never able to come to terms and abandoned the effort.

Last year, Aerojet and ATK picked up some additional solid-rocket propulsion work when Pratt & Whitney closed its San Jose, Calif., Chemical Systems Division.

Although its growth opportunities in propulsion are now severely limited, Aerojet remains an important player, according to Lambert. “Small is relative in the defense industry,” he said. “They still have considerable leverage with the client. They are a valued provider and everyone on the buying and selling side will be cognizant of the desire initially to maintain two providers.”

Aerojet spokeswoman Susan Bassett declined a request for comment.

Boeing acquired Rocketdyne as part of its purchase of Rockwell International’s defense and aerospace business in 1996, but Boeing has since decided to focus less on hardware manufacturing and more on large-scale system integration.

“We just felt that Rocketdyne had a better future with Pratt & Whitney,” Boeing spokesman Fernando Vivanco said. “There will be better growth opportunities for the combined company.”

Because it is a propulsion shop, Pratt & Whitney will have opportunities unavailable to Boeing to squeeze more profit out of Rocketdyne, analysts said.

“By combining the two, you probably end up with a higher margin than what Boeing was getting, so both parties benefit,” Nisbet said. “It didn’t look like it was something that was going to grow for Boeing but it can for United Technologies. I think there are opportunities for them with this beyond what was available to Boeing.”

About one-third of Rocketdyne’s annual sales are to other units of Boeing, and that contracting relationship will continue , Vivanco said.