Less and less defense spending seen

October 17, 1990|By Orlando Sentinel

SAN DIEGO -- Even war on the horizon cannot stop the "de-Reaganizing" of the U.S. defense budget as it continues to recede from the hefty levels of the early and mid-1980s, defense electronics officials say.

By the year 2000, defense spending will decline by one-third and dip even below pre-World War II levels in terms of share of the gross national product, the Electronic Industries Association said yesterday in an annual 10-year market forecast of the U.S. defense industry.

The national trade group released its study at a conference at the Hotel Del Coronado. About 340 people attended the conference, including defense company executives, managers and financial analysts.

The association's forecast was for fiscal year defense budgets from 1991 through 2000. Congress is now debating the 1991 defense budget, which the association predicts will be $277 billion.

Despite the continued cuts expected in troops, tanks, strategic missiles and other military hardware, the study said there will still be a viable multibillion-dollar market for defense electronics in coming years.

A smaller army in terms of troops will need the help of sophisticated electronic battle systems that multiply force strength, the study said. Defense spending on electronics, therefore, is expected to hold its own in a shrinking budget, and the study predicts that the government will spend up to $420 billion on military electronics in the next decade.

Substantial layoffs have occurred; overall defense employment has decreased 10 percent since 1988; and employment is expected to drop another 10 percent by 1993, said Michael Rich, vice president of National Security Research, a Rand subsidiary in Santa Monica, Calif.

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