Defense Cuts to Hit Hard, Powell Says : Economy: Chairman of Joint Chiefs of Staff warns Southern California it must ‘wake up and smell the coffee.’

Gen. Colin L. Powell, the nation’s top military official, warned Monday that Southern California’s painful adjustment to the post-Cold War era has only just begun and predicted that the shrinking U.S. defense budget is here to stay.

On a brief visit to Los Angeles and Orange counties, Powell, chairman of the Joint Chiefs of Staff and leader of Operation Desert Storm, offered a blunt assessment of Southern California’s economic fallout from a world no longer polarized by dueling superpowers.

“Everyone needs to wake up and smell the coffee,” Powell told the editorial board of The Times in a morning meeting. “Anyone who thinks this is cyclical, I think is mistaken. It is not cyclical. It is a fundamental restructuring. It is going to affect many regions throughout the country, but especially here, in Southern California.”

Powell’s gloomy assessment came less than a week after release of a report by a Los Angeles County aerospace task force predicting widespread economic devastation in Southern California as Pentagon spending drops. The report predicted job losses in Los Angeles County could range from 184,000 to 368,000 by 1995 and estimated a loss of $84.6 billion in personal income in the county over the next nine years.

Although he did not mention the report, Powell sounded a similar theme.

The collapse of the Soviet Union, Powell said, has created a historic shift in U.S. defense posture--away from a costly arms race in high-tech weapon systems. New weapons systems, for years the bread and butter of Southern California’s aerospace industry, will be built only if there is “genuine need,” he said.

“We all share the concerns you have for a magnificent defense industrial base, which was the foundation of our Cold War victory,” Powell told an earlier breakfast meeting of the Los Angeles World Affairs Council. “We must take sensible measures to protect that base, but it cannot be protected at the expense of our operating forces, of our personnel, or of many other important domestic needs.”

“For 40 years we have chased Soviet technology and have felt the hot breath of Soviet technology on our back,” he said at The Times. “We were always trying to stay ahead of it, because we were a smaller force and quality was the difference. . . . Our whole industrial base, and their whole industrial base, kept churning out. That is gone.”

Powell said some defense contractors will survive the cutbacks--the Pentagon will spend about $50 billion in contracts next year. But competition for the dollars will be keen and the emphasis will shift from weapons construction to research and development.

A number of contractors, he said, have not accepted the harsh realities of the post-Cold War era. Powell warned that companies will face even tougher times if they fail to understand the need “to get smaller.” According to the county aerospace report, Los Angeles County received defense contract funds of $8.8 billion in 1990, but the funding is expected to drop to between $3.5 billion and $4.9 billion by 1995.

“I am telling my folks at the Pentagon: ‘Guys, we are having a hell of a fight this fiscal year, but it is nothing compared to what is coming next year,’ ” Powell said. “People will want even a bigger contribution from us next year.”

At the World Affairs Council meeting, Powell said the cuts in the U.S. defense industry will be painful and difficult. He called on business leaders in an audience of 700 in the Biltmore Hotel to help find jobs for troops being let go by the military, and to assist civilian workers left unemployed by the Pentagon cuts.

Powell, who served as national security adviser in the Reagan Administration, was appointed chairman of the Joint Chiefs of Staff by President Bush in October, 1989. He came to Los Angeles on Sunday to be honored by the San Fernando Valley Links, a group of African-American women who promote volunteerism. His two-day stay also included visits to the McDonnell Douglas plant in Long Beach, the El Toro Marine Corps Air Station and the Glen L. Martin Elementary School in Santa Ana.

Powell was ferried Monday afternoon by a fleet of three Navy helicopters to the Santa Ana school where his older sister, Marilyn Berns, is a teacher. He was greeted by thunderous applause and screams from about 850 students.

Despite the flashy arrival, the general’s message was simple: He urged students to “resist the temptation of the streets--violence, drugs and gangs.” He also encouraged the youngsters, 98% of them Latinos, to work hard in school and to listen to their teachers.

Students in Berns’ class got a special treat when Powell signed autographs and shook hands. “I’ll never wash my hands again,” said 10-year-old Elizabeth Smith.

Since overseeing Operation Desert Storm last year, Powell’s name has surfaced in political circles as a potential candidate for national office. His likeness has even appeared on collector bubble-gum cards.

Powell has routinely shied away from questions about politics, and he continued to do so Monday. At The Times, he refused to speculate about the November presidential election. When asked during his World Affairs Council appearance about his interest in the White House, Powell quipped: “I am going to keep signing bubble-gum cards.”

Times staff writer Eric Bailey contributed to this story.