Expected Gains From Jet Orders Tempered by Cuts

By DAVID GREENBERG
Staff Reporter

The local windfall from three major defense programs may not be what it seems.

The Pentagon plans to trim fiscal year 2004 requests for the F-35 Joint Strike Fighter, F-22 Raptor and F/A-18 Super Hornet projects that would have generated up to 17,000 jobs locally.

Now, the proposed cuts are likely to produce just 12,000 jobs, industry officials said.

Discussions are underway to reduce the number of fighter jets as the military puts more focus on homeland defense systems and "transformational technologies," such as satellite surveillance systems, unmanned aircraft and informational technology, Pentagon officials said.

"(Cuts) are under consideration. No final decisions have been made," said Pentagon spokesman Glenn Flood.

Northrop Grumman Corp. stands to get hit the hardest $4.9 billion and $3 billion in cuts, respectively, from the F-35 and F/A-18 programs.

Its El Segundo and Palmdale operation had planned to hire 1,200 workers for the F-35, for which the company will design and manufacture the center fuselage, weapons bay and hydraulic and electronic subsystems.

Northrop already employs 1,400 workers who build the F/A-18's center and aft fuselages.

Northrop officials had little to say about the proposed cuts, set to take shape in the fiscal 2004 budget. But officials at Boeing Co., which makes the F/A-18, lashed out at the plans.

"Any decision to downsize Super Hornet procurement would seriously degrade the aircraft's (foreign military sales) potential and directly impact Boeing's future ability to serve as a tactical fighter design and manufacturing entity," Jerry Daniels, president and chief executive of the Military Aircraft & Missiles unit, said in a prepared statement.

Effect on subcontractors

The F-35 and F/A-18 cuts also would take their toll on subcontractors such as Moog Inc. in Torrance.

Its 400-employee Aircraft Group in Torrance already generates $625,000 for each of its mechanical systems that drive the leading edge flaps and wing fold systems on the F/A-18. Moog had planned to hire an additional 150 workers to create the same components for the F-35, generating $350,000 per plane.

Honeywell International's Torrance operation stood to make $421 million to create environmental control systems for the F-22, while BAE Systems' Santa Monica plant was to make $371 million for a major flight control system component.

Much of the increased defense budget for fiscal year 2003 is going toward various non-hardware initiatives such as homeland defense measures and raises for military personnel. "It's logical," said Lt. Col. Ken McClellan, a spokesman for the Office of the Assistant Secretary of Defense. "I don't see anyone trying to take on this country conventionally. And when you buy a lot of planes, tanks and ships, you're basically getting ready for someone to take you on conventionally. That may not be the world you're fighting in."

The U.S. Marine Corps, which is under the Department of Navy, stands to get hardest hit by the cuts. Proposals call for a 60 percent reduction in Marine F-35s, while the Navy would see a 10 percent reduction. This is part of a cost-savings plan in which the Navy and Marines integrate programs.

The Air Force is holding firm to procurement plans for 1,763 F-35s, at an average cost of $35 million each. But Pentagon officials acknowledged that reductions in the Navy and Marine programs would force the Air Force to make cuts of its own.

"If the Navy cuts back on their quantities, the Air Force would have to take a look at that because the Air Force's unit costs would go up," said Gloria Cales, an Air Force spokeswoman. "We're still waiting to see about the decisions from the Navy and what impact that will have on the Air Force."

As for the local effects, Jack Kyser, chief economist of the Los Angeles County Economic Development Corp., said "A lot of people were saying this is exciting all this money coming in. Then you have to ask what the budget realities are. We're not going to get as much money as we thought. You always knew it was too good to be true."

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