AEROSPACE EMPLOYMENT OUTLOOK : Funding Cuts Hit Defense Industry

Signs of the decline in federal dollars for defense are showing up in employment levels in Orange County’s high-tech industries.

After 10 years of continuous real growth, peaking in 1985, increases in defense spending have hovered around zero since 1988. Since then, employment levels in key defense-related industries have fallen as much as 14%.

A recent study by the Chapman Center for Economic Research predicts further cuts in defense spending: 3% to 4% in 1990, 5% to 10% in 1991, and 5.5% to 11.5% in 1992. The study’s authors estimate that the country could lose as many as 6,000 aerospace industry jobs by 1992.

U.S. DEFENSE SPENDING: PAST AND FUTURE

After years of lagging behind a mounting inflation rate in the 1970s, defense spending entered an era of real growth that lasted for more than a decade. The future looks bleak, however, according to forecasts issued by the Chapman College Center for Economic Research. The chart below shows two scenarios: One anticipates moderate cuts in defense spending and the other, sharp cuts.

Source:Chapman College Center for Economic Research

AEROSPACE EMPLOYMENT

The number of jobs in Orange County’s aerospace industry declined in only three of the 17 years from 1972 to 1988--all during recessions.

‘72: 53,400

‘88: 96,900

Source: California Employment Development Department

1989 EMPLOYMENT CUTBACKS

In 1989, employment levels declined for a total net loss of 3,800 jobs.

In percentage change between 1988 and 1989 .

Computers & Office Equipment: -2.7%

Com. Equip. & Electronics: 1.3%

Aircraft & Parts: 8.2%

Missiles & Spacecraft: -2.6%

Search & Navigation: -13.9%

Instruments to Control & Measure: -1.2%

HIGH-TECH TOTALS:

1988: 92,400; 1989: 88,600. Percentage change: -4.1%

Source: California Employment Development Department