Defense cuts could wound economy


February 02, 1992|By Ted Shelsby

Everybody loves a winner, and President Bush's declaration of an American victory against communism brought loud cheers from Congress during his State of the Union address last week.

Similarly, that victory's consequence -- Mr. Bush's dramatic listing of defense projects marked for cancellation or reduction -- won general applause. The president's budget calls for a $10 billion reduction for the next federal fiscal year, and $50 billion over the next five years.

There are other forces in Congress calling for even greater cuts -- something on the magnitude of $100 billion.

Everyone seems to welcome a peace dividend, but defense cuts could affect Maryland's economy more than those in most other states.

Maryland ranks ninth among the states in money received from Pentagon prime contacts. On any given day, defense contractors in the state are working on contracts totaling more than $17.6 billion.

Apprehension over the possibility of such cuts was expressed by the chief of one of the state's largest defense companies. Meeting with reporters in Denver just before the president's speech, Norman R. Augustine, chairman and chief executive of Martin Marietta Corp., attacked the administration, warning that upheaval in the defense contracting industry will cost millions of jobs over the next six years.

The local Westinghouse Electronic Systems Group, however, issued a short statement saying: "We are now reviewing the information released by the Pentagon,and our preliminary assessment is that the majority of our programs fared well."

Westinghouse said that the company would continue to assess the situation but added that it did not foresee a major impact on Maryland.

Westinghouse was hit hard early last year when the Defense Department canceled the Navy's A-12 attack plane program. Westinghouse, which supplied the A-12's radar and infrared target detection system, laid off 1,200 workers in a few weeks. The company laid off 1,300 more workers later in the year. That was also attributed in part to declining defense business.

And Westinghouse may not emerge unscathed in a new budget battle. The president's budget calls for the termination of a major anti-submarine warfare program that was to scheduled for production at the Westinghouse plant in Sykesville in the late 1990s.

The company has told members of the state congressional delegation that the program, the SQY-1, could result in 500 new jobs. The Carroll County plant has about 300 workers.

The SQY-1 shipboard system is designed to detect and track new submarines that are quieter than their predecessors and more difficult to locate. It can also destroy an enemy submarine by launching missiles or torpedoes.

SQY-1 is a $9 billion, 12-year program, said John Steele, a spokesman for Maryland Sen. Barbara A. Mikulski, a Democrat who serves on the Appropriations Committee, which considers funding for military programs.

Other programs on the president's termination list include the Navy's E2-C Hawkeye radar plane that accounts for a sizable percentage of the workers at Grumman Corp.'s plants in Glen Arm and Salisbury; Martin Marietta Corp.'s multibillion-dollar ADATS air defense and tank-killer weapon; and the Seawolf submarine made by General Dynamics Corp.

The administration said it also wanted to hold off production of the Army's new Comanche attack helicopter. With the focus shifted from a Soviet threat to regional contingencies, U.S. forces can be adequately supported with the existing Apache fleet, which is to be updated with a better radar, the Pentagon said in explaining its decision to defer production. The move is expected to save $3.4 billion through 1997.

Westinghouse and Martin Marietta are major subcontractors for the Comanche. Westinghouse was awarded a $100 million contract last year to develop equipment that would serve as the electronic brains of the helicopter.

The system would use high-speed computers to gather massive amounts of information from the craft's radar and other electronic sensors and provide the pilot with needed target information almost instantly.

Martin Marietta received a contact last year for its Orlando plant to produce an advanced night navigation and targeting system for the Comanche. That contract would be worth $17 billion over more than 15 years.

Plans to cancel production of the Seawolf submarine made by General Dynamics would affect Martin's operations at Middle River and Glen Burnie. Martin spokesman Raymond Bartlett said that about 118 people work on the TB-29 towed array made at Glen Burnie for use on the Navy's new attack submarine.

At Middle River, Mr. Bartlett said, 70 people work on a wide aperture array sonar system used on the submarine. He noted, however, that the two systems are not limited to the Seawolf and that a termination of the submarine contract would not necessarily mean a halt in work on the two systems, which are used to detect and track enemy submarines and surface ships.

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