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VIEWPOINT : High-Tech Growth Isn't Dependent on Pentagon : Consumer Companies Would Likely Recruit Freed Pool of Experts

February 05, 1989|LENNY SIEGEL | LENNY SIEGEL is director of the Pacific Studies Center in Mountain View, Calif

Like old soldiers, new weapons systems never die. Instead, when funding is scarce, decisions are delayed, production is stretched out and concepts are sent back to the drawing board for extended research and development. And that is exactly where the Bush Administration is headed.

During the presidential campaign, George Bush couldn't think of any weapons programs to cancel, but there is now a consensus in Washington, in the offices of aerospace contractors and in the business press: Economic conditions, primarily the skyrocketing budget deficit, will force Bush to cut back sharply on Ronald Reagan's plans for new generations of high-tech weapons systems.

Billions of Reagan dollars are still in the contracting pipeline, but already there are plans to slow the production of the B-2 stealth bomber, consolidate new fighter-jet programs and further reduce "Star Wars" research.

California, which receives a disproportionately large 18% of all Pentagon outlays, should feel the full force of the budgetary transition within the next few years. In particular, the state's aircraft and space industries, which rely upon the Defense Department for a majority of their revenues--62% and 81%, respectively--will be hard hit.

Stockholders in the big aerospace and related electronics companies, however, should weather the storm. These companies will lay off workers, acquire firms with more stable contract flows or sell out to more diversified industrial giants. But what will the weapons slowdown mean for America's technological prowess? And how will the scientists, programmers and engineers who constitute the gray matter of America's high-tech industries fare?

Federal Share Drops

As it turns out, weapons program cutbacks--unless unthinkably drastic and rapid--are actually likely to benefit the civilian economy over the long run. Computer makers, software houses, superconductor labs and other stalwarts of non-military high technology need the resources now tied up by the military sector to overcome research and development bottlenecks.

Since the invention of the microprocessor in 1971, the commercial high-technology sector of the economy has outdistanced the military side of high-tech in market share, employment growth and technological achievement. A whole new industry, desktop computing, emerged. Despite periodic slumps, its long-term growth has paced high-technology industries' move away from dependence on federal dollars. Today, Pentagon funding makes up only 8.5% of California's gross state product, half its level of a quarter-century ago.

Meanwhile, advances in such areas as semiconductors and computers have made high-tech essential to virtually every type of economic activity, not just biotechnology research and high finance, but dairy farming and auto repair as well. Computer display screens, novelties found only in research labs in the mid-1960s, are everywhere, from fast-food kitchens to police cars.

The commercial side of high-tech does suffer repeated recessions. During the early Reagan years, military contracting bailed out high-tech industry during a major slump, and it provided employment opportunities for many recent college graduates who could not find jobs in the stagnating computer and semiconductor industries. Although many of those young engineers, scientists, and programmers had expected to work on civilian problems, they moved easily into weapons design and production.

Now growth has returned primarily to the civilian side. The California Commission on State Finance projects that the military's share of the state's combined aerospace and electronics businesses will fall to 15% in 1991 from 21% in 1988. But despite the cutbacks, the commission anticipates a growth in overall high-tech employment.

Can't Share Ideas

Unless we dip quickly into another recession, the commercial side of high-tech can easily absorb, within a period of months, the professional workers cast aside by the anticipated weapons program slowdown. Many, however, will need help making the transition.

Today, restricted by the intense secrecy and arcane applications that characterize the military sector, those engineers and scientists are under-utilized resources. For example, the stealth bomber project reportedly has made great strides in computer-aided design software and the development of fabrication techniques for non-metals. But the people working on that program can't share their ideas with colleagues working on different aspects of the same weapons system.

Releasing such qualified people into the civilian high-tech labor pool is likely to stimulate the commercial sector. Researchers often need little technical training to make the switch. For example, I've known electronics engineers working on radar-jamming to move easily into telecommunications.

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