Aerospace industry leader predicts 'gloom' for '93

December 17, 1992|By Ted Shelsby | Ted Shelsby,Staff Writer

WASHINGTON -- The new year promises more of the same old gloom for the nation's defense and aerospace companies: more layoffs and lower sales "in every product category," the industry's top spokesman warned yesterday.

In his annual speech looking ahead to the coming year, Donald Fuqua, president of the Aerospace Industries Association, told industry executives that the nation's producers of such things as commercial jet liners, fighter planes and radars are expected to eliminate another 47,000 jobs next year.

This is on top of the 117,000 jobs lost by the industry this year. Over the past three years, Mr. Fuqua said, its members, including Martin Marietta Corp., Westinghouse Electric Corp., General Dynamics Corp. and Grumman Corp., have eliminated one in every five jobs.

The association is projecting a 10 percent decline in Department of Defense purchases next year.

"The long-term outlook for the aerospace industry is for a continued decline in overall sales volume for the rest of the decade," Mr. Fuqua said at a gathering of more than 400 industry officials at the Grand Hyatt Hotel.

He said it was difficult to project the industry's defense activity beyond next year, noting that President-elect Clinton had called for defense reductions to levels below those contemplated under the Bush Administration's restructuring plan.

"However, an administration committed to boosting the national economy and maintaining a strong industrial base may find it difficult to make deeper cuts in defense acquisitions."

Mr. Fuqua provoked a controversy when he criticized the federal government's depot maintenance program, which overhauls and maintains military equipment, for taking work away from the private sector.

These depots, whose work involves more than $20 billion a year in business, also involves modifying, converting and upgrading the military equipment. There are even reports, he said, that the Air Force was looking at constructing a manufacturing plant that could assembly its new F-22 fighter plane.

Not surprisingly, he continued, the government wins most of the competition for this work because it writes the requests for proposals, creates the rules of selection and then picks the winners. "In other words, the U.S. government participates as a player, a rule maker and judge. This is inherently wrong," he said.

J. Daniel Howard, undersecretary of the Navy, took exception to Mr. Fuqua's comments about the maintenance depot system. Mr. Howard, who was sitting in the audience, said the AIA executive's remarks were "not on the mark."

Mr. Howard said industry needs to do a better job bidding for this business and being competitive.

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