LOS ANGELES (AP) - While pie-in-the-sky to critics, President Bush's missile defense plan could deliver billions of dollars to a handful of states as the Pentagon moves to develop the system.
However, spending on the multifaceted program would create fewer jobs than other lucrative defense contracts that regularly buoy the economies of states like California and Texas, analysts say.
Instead of jobs, the money would fund highly focused research and development efforts and later lead to ``boutique'' production of the small number of aircraft, rockets, lasers, radar and satellites that would make up the system designed to intercept and destroy incoming missiles.
Although far more advanced technologically, the work would require less labor than more traditional, large-ticket defense projects, like the production of aircraft, ships or tanks.
``They're not bending a lot of metal,'' William Hartung, a senior fellow with New York's World Policy Institute said about the missile defense program. ``The same amounts of money might not generate as many jobs as previous defense contracts.''
Nor might the money - perhaps as much as $200 billion over the next few decades - flow to as many states, since consolidation in the defense industry has left fewer companies positioned to do the work.
``Where you might have had five choices to send a contract to, and geography might have ruled, today you might have only two choices,'' said Jon Kutler, chairman and chief executive officer of Quarterdeck Investment Partners, a Los Angeles investment bank focused on the aerospace and defense industries.
Hartung said analysis of past missile defense contracts show two-thirds of the work went to just four firms: The Boeing Co., Lockheed Martin, Raytheon Co. and TRW Inc.
Although all four have facilities scattered throughout the United States, work on developing the missile defense program is likely to stay highly focused in only a few states. That means politics may have little to do with where the contracts eventually go.
``I don't think it's going to have a lot to do with Republicans or Democrats. There's going to be a small number of people who can do it, and they'll get the contracts,'' said Martin Anderson, a senior fellow at the Hoover Institute who advised Bush on missile defense during his campaign.
In fiscal 2000, 42 states shared $2.4 billion in unclassified
missile defense contracts. However, just three - Alabama, California and
Virginia - captured 83 percent of that total, according to Eagle Eye Publishers
Inc.
``That's a highly stratified market,'' said Paul Murphy, president
of the Fairfax, Va. company, which crunches government contract data.
Total spending, classified and unclassified, on the program could hit $5 billion this year. That number could increase in the next several months, when the Bush administration announces how it intends to proceed with the program, said Pentagon spokesman Lt. Col. Rick Lehner.
Even if annual spending on missile defense doubles, as some predict, it will not necessarily translate into a net increase in military spending.
``I'd expect there would be some element of a zero-sum game to this: The money you spend on this program will come at the expense of other programs,'' Quarterdeck's Kutler said.
If money to fund missile defense should come from the budgets of traditional weapons programs, it could benefit California, since little of that current work is done in the state.
``Anything that shifts from traditional platforms to space, to electronics, to rockets is probably advantageous to California,'' said Michael O'Hanlon, a senior fellow with the Brookings Institution in Washington, D.C.
Even limited amounts of spending could lift the lagging defense industry in Southern California, which has shed 200,000 workers in Los Angeles and Orange counties alone over the past 15 years.
``You're not going to create as many jobs, but the jobs you do create will be great jobs,'' said Jack Kyser, chief economist for the nonprofit Los Angeles County Economic Development Corp.
©The Associated Press May 20 2001 8:51PM