RICHARD FOSTER, President, Interstate Electronics Inc.

When Richard Foster began working at Interstate Electronics Inc. in Anaheim in the 1950s, the military was building its first generation of nuclear submarines and business was good. Now, as he prepares to retire in August, the industry is producing its last Trident submarines. Despite the success of sophisticated weapons in Desert Storm, Foster is troubled by the downward trend in the defense budget. He spoke with staff writer Dean Takahashi about his career and his advice for young engineers who are considering a defense industry career.

What was it like working in the defense industry when you first started in the business and how different is it today?

I began in 1957, and at that time it was still the early days in the defense industry. It was much smaller, and I got my first job at Interstate. We worked real hard, we played real hard, and we got a real sense of accomplishment out of what we could do. The industry was not bureaucratic and there wasn’t a lot of paperwork. We just went out and got the job done. In the past 34 years, it has grown to be very bureaucratic with lots more government oversight. We’ve been through a period when there were some scandals in the defense industry and so that oversight was probably appropriate. But it’s not as much fun.

What is behind your decision to retire?

Several things. I have had rheumatoid arthritis in my spine since I was 19 and last year I had more pain from that disease than I have ever had before. That got me thinking serious about it. I also had a longtime goal of retiring early if it was financially possible.

In the next 10 years, I think this industry is going to shrink dramatically. I don’t enjoy the times when this company is going down in size. The most painful part of managementresponsibility to me is when you are forced to lay people off. We’ve shrunk by about 250 people so far this year, through layoffs, retirements and attrition.

Have you had a chance to talk to many young engineers and are there some issues you think they should be aware of if they are considering a career in defense?

They are uneasy because our industry is going to shrink. But a lot of the younger people are some of our best and brightest. The young people coming out of the universities have all of the latest tools. But if I were advising a son of mine coming out of engineering school, I would not advise him to go to work in the defense industry. I think he would be better off in other parts of the industry.

Are there areas where jobs are being generated in defense?

If I look around this county, a year or two ago, my friends at McDonnell Douglas were still looking at growth because of the space program. A portion of our business comes from the National Aeronautics and Space Administration, and their budget is growing. So space and NASA-related business is healthy. Defense electronics is probably going to fare better than building ships, tanks and airplanes in the next 10 years because we will continue to modernize our defense and electronics are key to that. At best, though, defense electronics will be stable whereas most everything else will go down. Would you expect engineers these days would have to be prepared to be laid off at least once in their careers?

I think so, if they’re going into this industry. I spent most of my career with one company. That’s rare. As (military) programs come to an end, there are fewer new programs to replace them and so jobs come to an end.

If you had to talk someone into going into the defense industry, what would be your sales pitch?

When things look the bleakest, there are still going to be opportunities for the few who are willing to have a go at it. And maybe the opportunities will be better. If I were trying to recruit a young engineer today, I would make that point. I’d also say there are still some challenging programs in the defense industry and I’d say now is the chance to participate in them, even if later you want to go into some other area of business. There are still lots of engineering jobs, even though the total number might be shrinking.

Did Desert Storm make you change your opinion about where the defense industry is headed?

No. As the senior military officials in the Defense Department worry about how they are going to downsize the military, they used up some equipment there but won’t go on a massive campaign to replace it. I don’t think it (the war) had any effect on the budget realities and relatively minor impact on how the Congress is going to approach the defense budget. Everything worked well, but they have such a terrible budget problem that I think the decline in defense spending is almost preordained. That’s one man’s opinion.

Do you think the defense industry has always been this uncertain?

The defense industry has always been characterized by ups and downs. I can remember hard times in the early Nixon years. A young engineer always had to anticipate the possibility of being laid off. But the long-term trend was that there would be other programs coming along. I think the (budget) peaked in the early Reagan years. Some people will tell you we won the Cold War in those years by spending the Russians into bankruptcy and peace is breaking out as a result. But since 1986, we’ve been on a long-term decline.

What are your words for your successor?

Don’t come in and make a lot of changes. This is a company that has enjoyed a lot of success; it is relatively stable. Things are working well. It would be disappointing to me if my successor came in and made a lot of urgent changes. That may be an incumbent’s parochial view. More pragmatic would be to say to continue to search for diversification outside of defense.

On building weapons here. . .

‘California has always been at the top of the list. In the last few years, the new jobs are spread all over the country.’

On weapons used in the Persian Gulf. . .

‘I think we feel vindicated that the weapons systems in Desert Storm worked well. There were a lot of naysayers who were proven wrong.’

On defense cutbacks. . .

‘On the B-2 bomber, I’d still be nervous if I were working on the program. The Administration is behind it, but support in Congress is not.’

On finding defense industry jobs. . .

‘If I were a young engineer and looking, I would look for a company that had more than half its business in areas other than the defense market-- like commercial aviation.’

On business survival strategies. . .

‘Look for other government work outside the Pentagon, like NASA.’