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Possible Budget Cuts Peril Defense Jobs in Orange County

December 18, 1987|DAVID OLMOS | Times Staff Writer

A few days ago, officials at Rockwell International's Autonetics division in Anaheim proudly announced they had won a $484-million contract for work on the Midgetman nuclear missile.

Just two weeks earlier, McDonnell Douglas employees in Huntington Beach were celebrating their success in winning a huge $1.9-billion contract to build a major portion of the U.S. space station.

The contract awards were clearly good news for the two giant aerospace companies, but there were danger clouds on the horizon.

Impact on County

Both the Midgetman and the space station programs have been caught in the cross fire of a federal budget battle this week, and the outcome will have a significant impact on Orange County.

Rockwell and McDonnell Douglas, two of the county's largest employers, are among many Southern California companies that are watching the situation in Washington with more than casual interest.

Some of the effects of the budget battle are already evident.

Earlier this week, the Air Force recommended to Secretary of Defense Frank C. Carlucci that the $45-billion Midgetman program be scrapped. The Air Force said its recommendation was motivated by budget constraints and the need to choose between the Midgetman intercontinental ballistic missile system and a less costly version of the MX missile.

The Pentagon contends that the mobile MX missiles, which would be housed on railroad cars, would be able to evade enemy missiles almost as well as the Midgetman, which would be carried on blast-hardened trucks that could quickly be dispersed from bases in the Southwest.

The MX missile system would cost only $12 billion for 500 warheads, compared with $45 billion for 500 Midgetman missiles.

Rockwell, a prime contractor for Midgetman, has 900 employees working on the project and had planned to add 100 engineering jobs as a result of the $484-million contract award to develop the guidance and control system. A significant portion of the 1,000 positions could be jeopardized if the missile program is killed.

"It (Midgetman) is one of our key programs," said Tony Longo, a Rockwell spokesman in Anaheim, where the firm employs 9,000 people. "We're following the situation with interest."

The future of the Midgetman also concerns Kaiser Aerospace & Electronics, an Irvine company that is building a key switch for the missile under subcontract to Rockwell. About 110 Kaiser employees work on the project.

'Mild Layoff'

Cancellation of the Midgetman "would probably result in a mild layoff," a company official said.

For the time being, however, the Midgetman is still alive. On Thursday, congressional budget negotiators approved spending $700 million this year for development of the missile program.

But the Midgetman is expected to remain a topic of fierce debate in Congress. Sen. Pete Wilson (R-Calif.), an opponent of the missile, said recently that he doubts the missile will ever be built.

Proponents of the space station were dealt a blow this week when funding for the program was slashed by congressional budget-cutters.

House and Senate budget negotiators recommended Wednesday that NASA's budget for the space station be only $425 million for the current fiscal year, a 45% cut from the $767 million the agency had sought.

NASA officials said Thursday they plan to go ahead with the space station project, but the launch date is likely to be pushed beyond its 1994 target. Some changes in the station's design may also be needed.

A McDonnell Douglas spokesman said the firm is "disappointed" by the lower budget figure, but believes "there is enough money there that we can made significant progress and get started."

The spokesman, Jim Schlueter, said he didn't know how the NASA budget cuts would effect the company's hiring plans for the space station. McDonnell Douglas has said it plans to add between 1,000 and 1,300 jobs in Huntington Beach for the project. The company recently placed full-page newspaper advertisements for space station jobs.

McDonnell Douglas' Astronautics unit is heading a multicompany team that would develop the propulsion, navigation and communication systems for the station, plus its framework and two airlocks.

Earlier this month, when NASA announced the McDonnell Douglas contract and three other major space station contracts, the agency said the $14.6-billion program would create 12,000 jobs, nearly half of those in California.

Despite the drastic cut in station funding, a NASA spokesman said the agency was "pretty encouraged" by the $425-million figure. But that was only because the funding situation looked even bleaker a few days ago.

"The figures we were hearing earlier in the week were as low as $200 million," said Mark Hess, an agency spokesman. "At that level, the agency would have had to look hard to see if it was a viable program at all." He said the station is likely to face more budget hurdles in the years ahead.

"Everybody is wiping their brow and saying that at least the $425 million is enough to keep the teams together and keep working," said Andrew F. Lawler, editor of Space Station News, a Washington newsletter. "By underfunding the program initially, you're going to wind up paying higher costs in the future. It doesn't look like the major contractors will earn a lot from the program in the beginning."

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