Peace Brings Economic War, Hughes Chairman Says : Military: Malcolm R. Currie calls for national policy to help U.S. contractors stay competitive while converting their industries to new world climate.

Despite growing tensions in the Persian Gulf, the end of the Cold War could usher in an era of peace in which most international conflict will be economic, the chairman of Hughes Aircraft Co. said Wednesday.

To prepare for that change, the United States must formulate an industrial policy to help U.S. defense contractors stay competitive and ease their gradual conversion to non-military businesses, said Malcolm R. Currie, Hughes chairman and chief executive.

“To put it bluntly, I see peace not as the transition from military confrontation to tranquility and prosperity, but from military confrontation to economic warfare, based largely on technology-related issues,” he said. “Peace is a competitive struggle for us to win or lose.”

Currie’s remarks came during the opening day of a two-day conference titled “What If Peace?,” sponsored by Aviation Week and Space Technology magazine and the California Engineering Foundation. The conference’s stated purpose is to develop strategies for peace.

Despite a temporary boost in business from the U.S. buildup in the Persian Gulf, Currie said the defense industry will continue to “downsize and consolidate” as Pentagon budgets remain flat or shrink in the 1990s.

“The defense business is hanging out over the edge of a cliff and people will start falling off the cliff toward the end of 1992,” Currie said in an interview after the speech. “We see modest downsizing at Hughes, but I’m worried that in the 1992 time-frame production contracts will run out for many companies in the industry.”

Currie said Hughes, which earlier this year was an unsuccessful bidder for Newport Beach-based Ford Aerospace Corp., would consider defense acquisitions if they fit with Hughes’ current operations.

But he said Hughes would look to replace its current defense contracts with non-military business--for example, the international air-traffic control business--to help limit future layoffs. In June, 1989, Westchester-based Hughes announced it would cut more than 6,000 of its 75,000 employees by attrition to prepare for Pentagon budget cuts.

Currie said he personally believes it would be a “tragic mistake” to go to war in the Persian Gulf because of the potential loss of life and damage to U.S. relations with the Arab world.

“If it can be solved some other way, we should do it,” Currie said.

Donald Fink, editor-in-chief of Aviation Week and Space Technology, said Iraq’s invasion of Kuwait does not make the issues discussed at the conference irrelevant.

“I don’t think any of us seriously thought that with the end of the Cold War we would enter a period of total tranquility in the world,” he said. “We should look at this period as if it were similar to the world after the end of World War II.”