Pentagon funding won't improve outlook for jobs DEFENSE

January 01, 1995|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

Despite the recent promises by President Clinton to boost Pentagon spending by $27 billion over the next six years, this year is expected to be another tough one for the nation's defense workers.

"There will be more of the same," said Richard A. Bitzinger, a defense industry analysts with the Defense Budget Project, a Washington-based nonprofit research analysis organization.

"More layoffs, more down-sizing and more mega-mergers."

Mr. Bitzinger said that layoffs in the industry probably will continue through this decade as hundreds of thousands of jobs are eliminated by the year 2000.

His only words of encouragement are that as the general economy improves there will be more opportunities for defense workers to land jobs in other industries.

"But the new jobs will offer lower pay and lower benefits than defense workers are accustomed to," he said.

Donald Fuqua, president of the Aerospace Industries Association, a trade group representing defense and aerospace companies, including Westinghouse Electric Corp. and Martin Marietta Corp., recently forecast that the industry will shed another 34,000 jobs this year and that employment will drop to its lowest level since 1955.

Mr. Fuqua said Mr. Clinton's decision to increase defense spending would do little to ease the problems of manufacturers of military equipment anytime soon.

Most of that money, he said, will be used to maintain military readiness, which involves the defense industry only tangentially, and to improve the quality of life for military personnel.

It does not involve the purchase of new weapons or other equipment.

Mr. Bitzinger said he anticipates more of what he called "mega-mergers" on the scale of the Lockheed Corp. and Martin Marietta consolidation, as the industry moves to establish "one-stop shopping" where the Pentagon can go for its weapon systems.

The Lockheed/Martin merger, which he expects to be approved by the Federal Trade Commission, will put pressures on other companies to consolidate to achieve the economies of scale needed to remain competitive.

"This is just wild speculation, but you might see something along the line of Raytheon [Company] merging with TRW [Inc.]," he said.

"You might see a General Dynamics [Corp.]-McDonnell Douglas [Corp.] merger, or General Dynamics and Litton [Industries].

Mr. Bitzinger said that the industry will be fairly profitable again in 1995 but that companies will continue to trim operations and work forces to achieve greater profits.

On an optimistic note, Paul S. Lande, an economist with the Johns Hopkins University's Institute for Policy Studies, said the Pentagon's procurement budget (funds used for the purchase of weapon systems) may not be reduced as much as planned as a result of the recent elections.

He said that Republicans complained during the campaign that the readiness of U.S. military forces had suffered from military cuts, and he said that they are less likely to support system cuts proposed by the Clinton administration.

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