COLUMN ONE : Political Moves in Defense : Southern California loses as the aerospace industry locates plants in the districts of powerful politicians. Congress, not the military, is often viewed as 'the customer.'

By RALPH VARTABEDIAN

March 6, 1991 12 AM PT

TIMES STAFF WRITER

When the Union Army burned the South, it marched right past the isolated burg of Eufaula, Ala. But 120 years later, the historic town did not slip past the keen gaze of the Hughes Aircraft Co.

Hughes set up a factory in 1984 to produce tactical missile components in Eufaula, creating 250 jobs. Though dozens of miles from the nearest interstate, rural Eufaula offered many seductions to the Los Angeles-based firm--chief among them U.S. Rep. William L. (Bill) Dickinson, the town’s congressional representative.

For the record:

12:00 a.m. March 8, 1991 For the Record
Los Angeles Times Friday March 8, 1991 Home Edition Part A Page 3 Column 4 Metro Desk 1 inches; 33 words Type of Material: Correction
Defense plants--In a story Wednesday about the placement of defense plants in the districts of influential members of Congress, Rep. J. Roy Rowland (D-Ga.) was incorrectly identified as a member of the House Armed Services Committee.

Dickinson is just the sort of congressman who could help Hughes: the ranking Republican member of the House Armed Services Committee, the government panel that authorizes production of Hughes missiles.

The Los Angeles firm secured more clout than just one politician could deliver, however.

Hughes also opened a plant in Orangeburg, S.C., home to Republican Rep. Floyd Spence, another member of the Armed Services Committee. And a plant in Forest, Miss., home to Democratic Rep. G. V. (Sonny) Montgomery, another committee member. And a plant in Foley, Ala., home to then-Rep. Jack Edwards, another Republican member of the committee.

In all, Hughes built six factories in the South during the 1980s, each in the district of a member of a key congressional committee overseeing the firm’s business. What the company did is sometimes cynically referred to in the aerospace industry as “political diversification.”

The practice, which has become a cornerstone of the weapons business, provides a defense firm with the ability to string together votes from congressional districts across the country. Along with the older technique of spreading jobs by issuing far-flung subcontracts, political diversification can strengthen a defense program’s political support.

“As one element only, there were political considerations,” Hughes Chairman Malcolm Currie recalled in a recent interview. “And, you know, we ought to be up front with those. The fact that Eufaula, Ala., happened to be in Bill Dickinson’s district was a factor, and he was very supportive. He was on the Armed Services Committee in the House, of course.”

Such support, of course, often comes at the expense of Southern California.

While Hughes was creating hundreds of jobs in the South, it was cutting thousands in Southern California, for decades the focal point of the nation’s defense industry. Most of the Southland’s major defense contractors have made similar moves in the last decade, at a heavy cost to the region’s economy.

Although weapons production has always been tainted by pork barrel politics, a convergence of political and industrial trends in the 1980s elevated politics to a position of new importance.

The relocation of entire plants appears to be a significant escalation of the concept. And as the nation’s attention is riveted on the Persian Gulf War, both critics and supporters of the defense industry say the increased politics further jeopardizes the Pentagon’s ability to get the best and most economical weapons.

The efforts of California-based defense contractors to enhance their national political support has become a key reason that aerospace jobs are leaving for other states. Another key reason is the contractors’ conviction that California’s political delegation is unmindful of the industry’s importance to the state and unwilling to provide the same political support as other states.

Although Hughes’ political strategy was aggressive, it was certainly not unique. In addition to Hughes, Southern California contractors took these actions during the 1980s:

* Northrop Corp. built a missile plant in Perry, Ga., birthplace of Sen. Sam Nunn, the powerful Democratic chairman of the Senate Armed Services Committee. The Perry plant is also in the district of Rep. Richard Ray (D-Ga.), a member of the House Armed Services Committee.

Locating a plant in an area represented by members of both the Senate and House armed services committees is known in the industry as a “double hitter.”

But in this case, it turned out to be a double whammy for California, because Northrop is shutting down the Newbury Park plant that developed a controversial missile system which is slated to be built in Perry, though the program’s future is in doubt.

* McDonnell Douglas Corp. built an aircraft parts plant in Macon, Ga., home to Rep. J. Roy Rowland, a Democratic member of the House Armed Services Committee, another double hitter, counting Nunn. Rockwell International Corp. opened a plant in Duluth, Ga.--just a single hitter.

* Hughes Helicopters Co., which is now part of McDonnell Douglas, in 1983 opened a plant in Mesa, Ariz., represented by then-Sen. Barry Goldwater, for years a powerful member of the Senate Armed Services Committee.

* Most recently, Lockheed Corp. announced it would close its Burbank aircraft plant, eliminate 8,000 jobs and consolidate the plant with an existing facility in Marietta, Ga.--part of the district of Democratic Rep. George (Buddy) Darden, another member of the House Armed Services Committee. That was another Georgia double hitter.

Political diversification has become a tactic, in part, because power in Congress itself has become more dispersed, prompting defense contractors to seek support from more members than in the past.

“We live in a political world, and that political support is a part of whether a program stays in the budget,” said Bard Allison, an executive vice president at Lockheed’s Georgia facility. “In the 1950s, power was more concentrated and there were singularly powerful people. Now, the structure is more diverse.”

Critics, however, assert that political diversification is a cancer on the defense procurement system, posing far higher risks than even campaign contributions or honorariums designed to curry votes for weapons.

“It is corrupting the bureaucracy and undermining our constitutional government,” asserts Charles Spinney, a Pentagon weapons analyst who recently completed a study of the increased politicization of defense procurement. “We are treating Congress like a whorehouse.”

As big weapons programs have become increasingly politicized in recent years, defense contractors have responded by developing greater political clout. Congress, rather than the military, is increasingly viewed as the “customer.”

“The reason it is happening is that weapons systems are so much more expensive and there is so much more debate on them,” said Lawrence Korb, a Brookings Institution analyst and former assistant secretary of defense. “It dawned on the defense industry that not only could they get Congress to support Administration positions that they liked, but to overturn Administration positions that they did not like.”

Indeed, Congress increasingly funds weapons that the military services do not want, such as the Boeing/Bell V-22 tilt rotor aircraft and the Lockheed C-130 transport. House Armed Services Committee Chairman Rep. Les Aspin (D-Wis.) engineered legislation that forced the Army to buy a truck built in his district that the service did not want.

“Political support for programs of any kind is important,” acknowledged Currie, the Hughes chairman. “That’s the way the system works. (Defense Secretary) Dick Cheney presents his DOD budget to Congress, and what comes out are dozens and dozens of little microdecisions, and the final product sometimes is quite different than what he sends over.”

Added Currie: “When I was in DOD, running the acquisition process there, I can’t tell you how many phone calls I got every week from senators and representatives, saying: ‘If you’ll support this, I’ll support you on that,’ or--more often than not--’You better support this, or I’ll kill you on something else.’ ”

Even so, Hughes’ investments in more than a half-dozen plants in the districts of key Southern congressmen was only partly a reflection of the political process, Currie said. “We did not do it just to get political support. We did it for a variety of other reasons, and this happened to just augment the rationale for it,” he said.

Other reasons cited by Currie are lower wages, cheaper land, less costly environmental regulations and better local government cooperation. The South has been so attractive politically and economically that Hughes transferred work there not only from California but other states, as was the case with the Eufaula missile components plant.

As political power has taken a more explicit role in defense contracting, the industry has concluded that it gets at best lukewarm support in California.

The state’s delegation does not exercise power on any of the key armed services or defense appropriations committees. It also suffers from a well-documented lack of political cohesion among its members in representing the state’s economic interests.

“I would sum up our political support here by saying I have never seen any,” said John Albin, Hughes’ vice president for operations.

Even worse to the industry’s thinking, in many cases California politicians have led the fight against weapons programs located in the state. The most notable example in recent years has been Democratic Sen. Alan Cranston’s fight against Northrop’s B-2 bomber, which supports 25,000 jobs in California.

Northrop President Kent Kresa said Cranston’s position is galling, even more so because he has spurned Kresa’s invitations to briefings on the program. “He made up his mind without our input,” Kresa said.

Cranston declined repeated requests for interviews.

To members of Congress from the South, such positions are inconceivable.

Ken Black, chief of staff for Rep. Spence, the South Carolina Republican whose district has a new Hughes plant, observed: “It is difficult for the Spences of the world to comprehend fighting military programs in their own state. If there is any chance to get industry--as long as it is not a rendering plant--we will go hard to get it. The delegation is very parochial.”

But parochialism is the very mentality that many California members of Congress find most abhorrent.

“It is not the role of a congressional delegation to be a chamber of commerce,” said Rep. Barbara Boxer (D-Greenbrae), a San Rafael-area Democrat on the House Armed Services Committee who is fighting to reform the procurement system. “We should make sure that California has a fair shot at getting programs, but we should not be boosters for local industry. When I took the oath of office, it did not mean supporting local contractors. It meant supporting the nation.”

Defense industry representatives dismiss such proclamations.

“All the other 49 states are going to say: ‘Well good, come to us,’ said Bastion Hello, a veteran Rockwell International executive who recently was president of the Aerospace Industries Assn., a trade group. “All the other 49 states have to act the same way, or California will lose. I don’t think there is any respect for California doing that.

“There are people out there saying: ‘Good riddance to that industry. We would rather have forest and streams and fish and birds.’ But to me, the Los Angeles aerospace industry is every bit as golden.”

To those enamored of industrialism, Southern California is a juggernaut of aerospace, turning out everything from microelectronic components to five-story-tall aircraft. The largest aerospace center in the Western world, it produces satellites, manned spacecraft, tactical missiles and aircraft. But perhaps more important, it produces a massive volume of the components inside those systems.

The Southland has a network of small subcontractors that can forge, cast, machine, heat treat and plate exotic metal parts. It is a leading center of composite plastic parts production. The Southern California aerospace industry builds computer, radar, navigation, guidance, environmental control and communication systems used on virtually every U.S. civilian and military aircraft and missile system.

Aerospace accounts for more than 200,000 jobs in Los Angeles County, representing one-third of all industrial activity. Moreover, the aerospace manufacturing sector supports a whole infrastructure of attorneys, accountants, bankers, government bureaucrats, educators and others--jobs not counted in industry employment statistics.

This vast network of aerospace firms forms an “industrial hive” whose efficiency will suffer if companies defect to other regions for political reasons, says Robert Paulson, director of the aerospace practice of McKinsey & Co., a consulting firm.

“In pursuit of political diversification, they have to be risking some lack of economic benefit,” Paulson said of the defense contractors. “I would argue that it is unnatural for economic reasons to have one-fiftieth of the aerospace industry in each of the 50 states. There are advantages of technology and manufacturing resources to have this national cluster.”

Added Paulson: “If the Japanese were building an aerospace industry, they would build Los Angeles. And we are dispersing it for political reasons.”

Many aerospace executives agree. But they say that the state’s political climate--combined with the high costs of doing business in California--have encouraged defections. Virtually every major prime contractor and many medium-sized contractors have relocated some work outside of California during the growth years of the 1980s.

“We could have been producing pots and pans for all anybody cared,” said Kenneth W. Cannestra, president of Lockheed Aeronautical Systems Co., the company that pulled the plug on Burbank and is moving to Georgia.

In a lengthy interview, Cannestra said that he meets with Nunn and Darden, the senator and congressman from his district in Georgia, as frequently as every three months.

Asked whether he received the same treatment from Cranston or from California Republican Gov. Pete Wilson when he served in the Senate, Cannestra responded: “Wilson? Forget it. I have never seen him. Cranston? Ha.”

Like Cranston, Wilson declined to be interviewed. However, a Wilson spokesman asserted: “It is mind boggling for anybody to say that Pete Wilson hasn’t been 100% there for the aerospace industry.”

Even when defense contractors have good news to tell, California politicians can be slow on the uptake.

In 1981, Hughes opened a massive industrial facility in El Segundo for its Electro-Optical Data Systems Group, which would employ 8,000 workers. Conspicuously absent from the dedication, Hughes officials recall, was the entirety of California’s congressional delegation and other political leaders.

“If we were faced with the prospects of building something like (that) today, I’ll guarantee you it would not be in Southern California,” said Currie, the company chairman.

By contrast, when Hughes in 1984 opened a small plant employing several hundred workers in Orangeburg, S.C., Republican Sen. Strom Thurmond, Democratic Sen. Ernest F. Hollings and Rep. Spence were all there.

Such gestures are considered important morale boosters by top executives. More important, access to friendly politicians means they will at least listen to requests for support of big-ticket weapons.

Nobody in Congress wields more influence in the defense arena than Sen. Nunn. A former top McDonnell Douglas executive said it was Nunn’s power in the Senate that led his firm to locate a plant in Macon, Ga., to produce parts for the Air Force C-17 cargo jet. The investment followed discussions with Nunn, said the former executive who requested anonymity.

“It was smart business to put a plant in Macon,” he said. “There wouldn’t be a C-17 without Nunn’s support. There is nothing illegal or immoral about wanting to keep your program funded.”

Kresa, the Northrop president, insisted that his firm was not seeking Nunn’s political support in its selection of Perry, Ga., as a production site for missiles. Rather, Kresa said it was Nunn, knowing that Northrop was looking for a new plant site, who encouraged state officials to recruit the company.

Nunn declined to be interviewed. A spokesman denied that Nunn had any involvement in the recruiting of any of the defense firms that have located plants in Georgia--a position disputed by a number of defense industry executives and Pentagon sources.

Many defense experts worry whether American soldiers will get the best weapons if powerful leaders like Nunn become committed to programs because of constituent job interests.

Lawrence Skantze, a retired four-star general who was formerly the Air Force’s procurement chief, termed political meddling a “headache” that the military must deal with.

Although he said he never succumbed to political pressure, Skantze recalled that when the Air Force purchased 50 Lockheed C-5B cargo jets in the early 1980s, it was a deal brokered by political appointees who pushed aside the military’s desire for another aircraft.

“I was on the outside of that looking in,” Skantze said.

Hello, the former Rockwell executive, is widely credited with masterminding the modern approach to political management of weapons programs in his handling of Rockwell’s B-1 bomber. Parts of the B-1 were produced in more than 40 states, pulling in political support from every corner of the nation.

But even Hello has concerns today.

“We are trying to supply our military with the best weapons at the least cost,” Hello said. “How can we do that if these weapons are chosen by constituent interests rather than pure military interest and need?”

DEFENSE FIRMS’ POLITICAL WANDERLIST

The aerospace industry calls it “political diversification”-a means of gaining the support of powerful members of Congress from throughout the country. Companies locate small plants in the districts of key members of Congress.

Sen. Sam Nunn

D--Ga.

Senate Armed Services Committee.

Lockheed, McDonnell, Northrop, Rockwell

Rep. George (Buddy) Darden

D--Marietta, Ga.

House Armed Services Committee.

Lockheed

Rep. J. Roy Rowland

D--Macon, Ga.

House Armed Services Committee

McDonnell Douglas, (as Douglas Aircraft Co.)