Kuwaiti Peace May Hold Big Payoff for U.S. Firms : Persian Gulf: America’s leading role in the war may give companies the edge in rebuilding the war-torn nation. The price tag is put at $40 billion.

From autos to engineering, construction to defense, large segments of American industry are likely to be major winners in the aftermath of the Gulf War and play the lead role in the reconstruction of war-ravaged Kuwait once the final shots are fired.

U.S. companies should get the lion’s share of the rebuilding business--at least 50%--because of the lead role that American troops have played in driving the Iraqi army out of Kuwait, many experts believe.

“The U.S. companies have the advantage because a lot of Kuwaitis believe they owe it to the Americans,” said Yukuo Takenaka, a Los Angeles investment banker.

Expected to cost $40 billion or more, the rebuilding effort stands, not surprisingly, to benefit such firms as General Motors and Bechtel, behemoths in their respective industries.

A Bechtel spokesman confirmed late Tuesday that the San Francisco-based engineering and construction firm has signed a letter of intent to help the Kuwaiti government rebuild its badly damaged oil fields. And the Big Three U.S. auto makers said they already have been asked to bid on contracts to resupply the war-torn country with cars and trucks.

But small companies will reap benefits as well--for instance, VTN Corp. in Orange County.

VTN, a small engineering and construction company headquartered in the city of Orange, is getting a lot of attention these days because it’s American and has extensive construction experience in Kuwait.

Major building firms in Europe have already approached VTN about being their partner in the reconstruction effort, according to company Chairman Dan Montano. “They want our pretty little face up front,” he said.

Though Japan has been accused in some U.S. quarters of offering only halfhearted support to the allied coalition, Japanese companies are also expected to aid in the rebuilding effort, in part because Kuwait and Japan have close trade ties.

In the planning stages since last fall, the Kuwaiti reconstruction work is expected to consist of an emergency phase designed to restore the country to working order within 90 days, followed by a long-term reconstruction effort expected to last as long as five years.

As the damage to Kuwait has become more apparent--particularly the deliberate torching of Kuwait’s oil fields by Iraqi troops--the cost estimates for the repair work have continued to rise. What appeared to be at minimum a $20-billion reconstruction effort several weeks ago now may cost $40 billion to $50 billion or more, Middle East experts are saying.

Kuwait is smaller than Massachusetts but has nearly 100 billion barrels in oil reserves, making it one of the richest countries in the world. The staggering costs of its reconstruction have drawn comparisons to the Marshall Plan, the U.S.-sponsored rebuilding of Europe after World War II that cost about $70 billion in today’s dollars.

“It’s very reminiscent of the Marshall Plan, with one very notable exception,” said Irene Saba, vice president of GulfAmerica, a U.S.-Arab trade promotion group in Champaign, Ill. “The Kuwaitis are going to be paying for this.”

One item they’re likely to be buying is cars. Though the cloud cast over U.S. auto sales by the Gulf War thus far has shown no sign of breaking up, auto makers say the prospect of post-war vehicle sales to Kuwait holds the promise of a silver lining.

The apparent loss or destruction of perhaps most of the cars in Kuwait has created a demand that General Motors Corp. is prepared to fill, said Jack Smith, GM vice chairman for international operations.

Smith estimates that Kuwaitis will buy more than 100,000 new and used cars in the first year after the war. Car sales in Kuwait in 1989--the year before the Iraqi invasion--totaled 35,000, according to GM.

GM hopes to do more than regain its former 35% share of the Kuwaiti market. The company is counting on Kuwaiti gratitude and loyalty won at the expense of American lives to help recapture some of the 45% market share held by Japanese car makers.

A Toyota spokesman did not want to be drawn into a debate Tuesday over the Kuwaiti auto market: “It really surprises me that GM is worried about business over there at this time. The gravity of the situation is much deeper than that.”

The rebuilding effort is expected to be a bonanza for large U.S. engineering and construction companies, such as Bechtel and Fluor Corp. in Irvine.

“The damage in Kuwait is enough to support both Fluor and Bechtel for the next 10 years,” VTN’s Montano said. “There’s enough business there for any 10 (engineering and construction) companies.”

According to spokesman Tom Flynn, Bechtel is planning to hire more than 4,000 people in Kuwait to help manage the reconstruction of the nation’s petroleum-production facilities. One of Bechtel’s jobs will be to build fresh-water pipelines to fight the oil fires, Flynn said.

Fluor has seen the value of its stock soar on speculation that it will also land major contracts. In recent days, Fluor’s stock has been trading close to $50 a share, a 52-week high; the stock is up $9 a share since late January.

The nation’s major defense contractors are likely to see a trickle of new business in the war’s aftermath, but certainly not the deluge of orders that would be needed to reverse the industry’s long-term downtrend.

U.S. forces have lost 48 aircraft so far during the war, but the Pentagon is unlikely to replace them. The armed services are planning for steep reductions in European forces that will create weapons surpluses significantly exceeding the Gulf War losses.

“Additional aircraft orders are unlikely to come as a result of the war,” said Michael Burch, McDonnell Douglas vice president. “The U.S. is in a downsizing mode.”

Underscoring that message, the Navy on Tuesday terminated the contracts held by three aerospace firms for F-14D interceptor aircraft, including prime contractor Grumman Corp. in Bethpage, N.Y. The Navy also terminated the contract held by Hughes Aircraft, which supplies the aircraft’s radar.

Two weapons programs that might be bolstered immediately by the war are the Tomahawk cruise missile and the Patriot missile, which have seen heavy service in the last five weeks.

McDonnell Douglas and General Dynamics, the two producers of the Tomahawk, are expecting a supplemental order to build an extra 400 missiles at a cost of $545 million. Patriot orders could increase as well.

Foreign military orders from the Middle East may also increase after the Gulf War. But there is expected to be a strong international effort to avoid creating a new arms race in the region. If orders do develop, American tanks, aircraft and ordnance will be the weapons of choice, having soundly outperformed French, British and Soviet systems, analysts said.

Although the Gulf War is unlikely to lead to a weapons buying boom by historical standards, it will have profound effects on defense procurement policy and will strengthen the case for high technology weapons systems, analysts said.

Northrop’s B-2 Stealth bomber is likely to gain significant political support from the successful record established by Lockheed’s Stealth fighter, which has gone out of production. Similarly, the Pentagon’s strategic defense initiative is getting new life from the Patriot’s demonstration that ballistic missiles can be shot down.

Times staff writers Ralph Vartabedian in Los Angeles and Amy Harmon in Detroit contributed to this story.