O.C.’s Military Contractors Are Vulnerable but Hopeful

Orange County’s sizable defense industry could experience some job losses as a result of the Pentagon’s proposal to halt new weapons production, but contractors involved primarily in weapons research and development should see little or no effect.

Almost 82,000 people work in the county’s technology industry, according to the state Employment Development Department. About half of those employees work for firms largely devoted to defense and aerospace projects.

SRS Technologies, a Newport Beach defense contractor, specializes in weapons research and testing and evaluation of weapons systems. “(The initiative) wouldn’t affect us badly because we don’t produce hardware, but I’m sure there would be some falling out against us,” said A. T. Tisdail, vice president of finance and administration.

SRS, which has 350 employees, tested the Patriot missile defense system that was used during the Persian Gulf War against Iraqi Scud missile attacks. It also has been involved in research for the Star Wars missile-defense program.

Tisdail agrees that a cut in defense spending is needed. “It’s pretty inevitable, given the world situation,” he said. “When we began building missiles, we had major opponents that are no longer there. But rather than just taking a blunt approach, there has to be careful consideration of the cuts that are made.”

McDonnell Douglas Space Systems Co. in Huntington Beach expects little impact from the Pentagon proposal. “In reality, although our company is involved in (Department of Defense) work, a good portion of it is in R&D;,” said Tom Williams, a company spokesman.

The firm, which has 7,000 employees in Orange County, builds the Delta rocket used to launch satellites and other payloads into orbit and is a contractor on the space station.

“When the defense budget comes out, I’m convinced that our company will not be affected (because the space station) is very integral to the defense of the nation and to our national space program,” Williams said.

Rockwell International Corp. officials said they will wait for President Bush’s State of the Union address next week and examine his budget proposal before commenting.

“I don’t want to speculate on how this will affect Rockwell,” said George Torres, a company spokesman in Anaheim.

The Anaheim defense electronics division employs 5,400 people. Two of its major projects involve upgrading electronics equipment on fighter jets for both the U.S. Air Force and the Royal Australian Air Force.

Mitchell Thomas, president of L’Garde Inc., a small Tustin research and development company, is concerned by the Pentagon initiative. His company is a subcontractor to Rockwell on a ground-based system that is part of the Strategic Defense Initiative, or “Star Wars,” program. A freeze on weapons manufacturing could jeopardize the company’s only production contract, he said.

“Congress has mandated that this system be deployed in 1994,” Thomas said. “So it sounds like this White House initiative is going against congressional desires.”

Cheryl Morosco, a spokeswoman at Parker Bertea Aerospace in Irvine, said any cut or freeze in the government’s aerospace programs will ultimately affect the company. Defense work accounts for 44% of the company’s business.

“We have a strong presence on many of those (weapons programs) currently being discussed as part of the freeze,” including the B-2 Stealth bomber and the C-17 cargo jet, she said.

“We are very bullish, however, on the commercial aerospace market and believe there will continue to be strong business potential there,” she said.

Most of Anaheim-based Interstate Electronics Corp.’s defense work involves research and development projects. The Pentagon initiative would, however, curtail its production of missile parts.

“We’re heartened by the fact that the government is talking about maintaining a strong research and development base because about 50% of our business is in that area,” said Len Jacobson, vice president of business development.

The firm, which has about 1,200 employees, last November won a $47.9-million contract to provide engineering, logistics and field services support for the submarine-launched Trident missile. “Any cuts in the nuclear submarine program would affect us,” Jacobson said.

At its peak in 1986, Interstate Electronics had 2,000 employees. That number has since dwindled to 1,200, after a series of layoffs prompted by defense budget cuts.

In recent years, he said, the company has been trying to diversify into commercial businesses. “We’re looking at other marketplaces like NASA and commercial airlines,” Jacobson said.

Jacobson is wary of the Pentagon proposal. “People are looking at the defense budget as a honey pot to steal money from for their favorite programs,” he said. “That’s the wrong way to look at it. We should look at how much defense we need for future potential threats out there. What if some of these Russian republics start (firing) nuclear weapons at each other?”