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Plane Dealings : Pentagon to Narrow Contract Contenders

November 08, 1996|JAMES F. PELTZ | TIMES STAFF WRITER

Come Nov. 18, Southern California's aerospace industry will likely get a better view of its future.

That's the day the Pentagon is expected to narrow the competition seeking to build the next-generation U.S. fighter jet, the Joint Strike Fighter. Currently, three groups are vying for the contract, and the Pentagon will cut the competitors to just two.

The JSF is expected to be worth tens of billions of dollars to the ultimate winner, which will be chosen around the year 2000. The competitors are: Boeing Co., Lockheed Martin Corp. and a team made up of McDonnell Douglas Corp., Northrop Grumman Corp. and British Aerospace.

If Boeing and Lockheed Martin advance, it's unlikely either would build the plane in the Southland; their aircraft facilities are elsewhere. But if the McDonnell/Northrop team advances, Southern California might have a shot at being the production site.

That's because Northrop currently builds about half of McDonnell's F/A-18 Hornet jet fighters at its plant next to Los Angeles International Airport.

The F/A-18 is a Navy/Marines jet commonly flown from aircraft carriers, and because the JSF is expected to be used by the Navy, Marines and the Air Force, observers say the McDonnell/Northrop team has a strong chance to stay in the JSF program. Indeed, McDonnell and Northrop are the only two firms that have built carrier-based combat aircraft in recent decades.

Boeing's Job Blitz

After all the painful layoffs endured by Southern California's aerospace industry in the last six years, guess who's now recruiting the region's workers? Boeing Co.

The world's biggest producer of commercial aircraft, responding to a surge of new orders for its jetliners, is using newspaper advertising, radio spots and local job fairs to recruit workers to its Seattle-area plants.

Budget Predictions

As President Clinton settles into a second term, many aerospace executives are bracing for more declines in U.S. defense spending.

A survey of 42 senior industry executives last month showed 53% expected defense spending to fall further if President Clinton was reelected and Republicans kept control of Congress--which they did. An additional 29% anticipate the Pentagon budget will show little change.

The executives were polled by Aerospace Daily, an industry newsletter, and First Equity Inc., a Stamford, Conn.-based investment firm that specializes in the aerospace industry.

The Pentagon's budget, which stood at $301 billion in fiscal 1990, dropped to $266 billion in the fiscal year that started Oct. 1 and is expected to slip further to $259 billion in fiscal 1998, according to the Center for Strategic and Budgetary Assessments, a nonpartisan research firm that focuses on defense spending matters.

And the item most aerospace executives worry about--procurement, or how much the Pentagon spends for planes, missiles and other weapons--also keeps falling. Procurement is set for $39 billion in the current fiscal year, down 52% from fiscal 1990.

Times staff writer James F. Peltz can be reached at james.peltz@latimes.com

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