New B-2 Bomber Funds Give Lift to Southland

After teetering between success and failure in Congress, the B-2 Stealth bomber program emerged with new life in the fiscal 1996 military spending measure Friday, putting the Southern California military aircraft industry on solid footing for the first time in years.

The B-2’s appropriation--$493 million for initial production of what supporters hope will be 20 more aircraft in addition to the 20 already completed--became reality Friday when President Clinton permitted the defense appropriations measure to become law without signing it.

But gaining the fiscal 1996 funds is just the first step in what is likely to be an annual political battle over a program that carries enormous economic significance for Southern California.

The Northrop Corp. bomber program directly and indirectly supports 25,000 jobs in California and underpins the state’s military aircraft industry, which has taken a beating since Pentagon spending began to drop in 1986.

If Northrop eventually gets all of the $15 billion needed to build 20 additional aircraft, it would keep production lines going for another decade in Palmdale and stop the erosion of the subcontracting industry throughout the region. Without the additional production, the last bomber would be delivered in 1998.

With the B-2 funding and the Pentagon’s $18-billion order this year for the McDonnell Douglas Corp. C-17 cargo jet, the military aircraft industry in Los Angeles County now is in good shape.

“There has been more good news than bad news,” said John Harbison, an aerospace industry expert at the consulting firm of Booz Allen & Hamilton. “It has been a turnaround. The past year has been very positive for California.”

Northrop officials were circumspect in their reaction to the legislative success, reflecting the low-profile lobbying campaign that the firm has waged to win support among senior leaders in Congress.

“Naturally, we are encouraged,” said Ralph D. Crosby Jr., general manager of Northrop’s B-2 division. “This is another important step in the process.”

The Los Angeles aerospace firm overcame two enormous hurdles in winning the funding: The Pentagon remains bitterly opposed to the plan to buy more bombers, and Congress is fighting to balance the federal budget.

“We are over the hurdle this year,” Rep. Bob Livingston (R-La.), chairman of the House Appropriations Committee and a B-2 proponent, said in an interview Friday. “[But] this program is going to be threatened year after year.”

Indeed, there remain questions even this year over whether the Pentagon will actually spend the $493 million and whether House and Senate authorization committees may yet attempt to forbid the Pentagon from spending the money. An authorization conference committee has been stalemated for three months, largely over the B-2 issue.

But Livingston and other members of Congress called it highly unlikely that any last-minute actions would derail the B-2 spending or that Pentagon officials would attempt a bureaucratic maneuver to void the funding.

“They will be playing a silly game if they attempt to override the intent of their appropriators,” said Rep. Jerry Lewis (R-Redlands). “I doubt they will treat this action lightly by any means.”

The funding also will put Clinton in an exceptionally awkward position if he attempts to fight Congress on the issue as the 1996 presidential campaign approaches, according to Loren Thompson, a defense industry consultant.

“The Clinton Administration can’t claim to be a protector of California if it guts the biggest defense program in the state,” Thompson said. “They did everything they could this year to kill it and could not. It will be back next year during the middle of a presidential campaign, in which California is crucial to Clinton.”

Nonetheless, the hurdles that the B-2 must surmount get higher every year, as more and more annual funding is necessary to begin turning out completed aircraft.

Under Northrop’s previous proposals, the firm would need $1.5 billion in the next fiscal year. But Northrop and its supporters in Congress may seek just $500 million next year to avoid a high-stakes battle, according to an industry source who knows about the company’s lobbying plans.

Northrop stock is near its all-time high, gaining 50 cents Friday to close at $62 per share. But its price does not yet reflect the full confidence of investors that the B-2 is a sure bet, said Wolfgang Demisch, an aerospace analyst at BT Securities in New York.

“There is a little bit of hope in the price, but certainly not a conviction that it will build 20 more B-2s,” Demisch said. “My belief is that the program has enough momentum to squeak through.”

The next step is a campaign to convince the Clinton White House to back the B-2, said Rep. Norm Dicks (D-Wash.).