Demise of SDI Would Hit O.C. Defense Industry Hard
The proposed grounding of the “Star Wars” missile defense system would further devastate the Orange County and Southern California economies, possibly meaning the annual loss of more than $1 billion in federal contracts and the end of thousands of defense industry jobs, area economists predicted Thursday.
Defense Secretary Les Aspin’s call on Thursday for “the end of the ‘Star Wars’ era” would surely take a severe toll on Southland defense contractors tied to the program, officially known as the Strategic Defense Initiative.
Among those affected: Rockwell International Corp. divisions in Seal Beach and Anaheim; McDonnell Douglas Corp. in Huntington Beach; TRW Space & Electronics Group in Redondo Beach; and Hughes Aircraft Co. in Westchester, near Los Angeles International Airport.
Besides defense companies, major research universities in California also stand to lose money.
“That is going to have a major impact on California,” said Brad Williams, executive director of the Commission on State Finance. “We don’t know a lot of the details, but it is probably true that we were getting a third of the contracts on SDI.”
In 1991, California companies won $331 million in strategic defense contracts, not including subcontracts to smaller companies or classified military contracts. More recent figures were not available, but Williams estimated the state’s portion of the $4 billion in contracts last year was more than a third. Since 1985, the Defense Department has set aside about $29 billion for SDI work.
Aspin said the Clinton Administration won’t alter its $3.8-billion fiscal 1994 strategic defense funding request, but future requests likely will change as the program’s focus shifts from fielding anti-missile weapons in space--the original vision of the Reagan Administration in 1983--to deploying weapons on the ground that would offer regional, rather than global protection.
This is more bad news for the Orange County economy, coming less than a month after Aspin said he was considering the closure of the Marine Corps air stations in El Toro and Tustin.
“It will have a significant, long-term impact on the defense employment in Orange County and Southern California,” said Anil Puri, economist at Cal State Fullerton.
Puri has predicted that Orange County will likely lose 11,000 to 17,000 defense-related jobs over the next several years.
Thursday’s announcement caught area defense contractors unprepared, and most declined official comment. But economists said that the contractors are well aware that “Star Wars” was unpopular with Congress and that the Clinton Administration would likely scale back the program.
“It shouldn’t be a surprise since the Administration has talked about defense cutbacks, given the demise of the Soviet Union,” said Esmael Adibi, economist at Chapman University in Orange. “This is not positive for Orange County, and it means layoffs are likely and that the loss of these defense jobs is likely to be permanent.”
Sheila Carter, a McDonnell Douglas spokeswoman in Huntington Beach, said, “It’s too early to tell what the effect will be.”
Carter said the aerospace company has $200 million in active strategic defense contracts, producing work for several hundred people in Orange County. Last year, the Pentagon canceled the company’s $594-million contract to produce a missile tracking system for the program.
Rockwell International, which has won $1.5 billion in contracts since the program began, also employs hundreds of people on “Star Wars” programs; its operations are in Anaheim, Downey, Canoga Park and Seal Beach. Last year, Rockwell and TRW won contracts worth up to $500 million to develop the so-called Brilliant Eyes system. The companies said at the time that the awards had saved about 1,160 jobs in Southern California.
Brilliant Eyes, which is a planned multibillion-dollar network of space-based satellites for tracking missiles, could be canceled. As a sensor system, however, it does stand a chance of surviving cancellation, said a Rockwell official, adding that the company was assessing the impact of Aspin’s comments.
TRW would also suffer another blow if it loses its Brilliant Pebbles contracts, which call upon it to produce the space-based weapons to knock enemy missiles out of space. It won a development contract for about $340 million on the program last year.
Sparta Inc., a secretive Laguna Hills company with a number of “Star Wars” contracts, employs about 500 people. The company, which declined comment Thursday, won $7.6 million in unclassified strategic defense contracts in 1991.
Lockheed Corp.’s Sunnyvale-based Missiles and Space division in Northern California could be a winner. In the 1970s, the company decided to focus its resources on ground-based programs, said spokesman Jim Graham.
Last year, the division won a $700-million contract to build another regional defense system to cripple short-range missiles. Litton Data Systems in Van Nuys and Rockwell’s Rocketdyne division in Canoga Park are subcontractors on that project.
Taking a Hit
Some of the largest Southern California companies hold Strategic Defense Initiative contracts worth the following amounts: In billions Rockwell: $1.5 Lockheed: $.70 TRW: $5.6 Hughes Aircraft: $.30 McDonnell Douglas: $.20 Source: Individual companies; Researched by DEAN TAKAHASHI / Los Angeles Times
