U.S. Downsizing Effort to Reduce Military

The United States is facing a downsizing effort to reduce the size of the military and the size of the military budget, which extends as well to defense projects. Southern California has long been the beneficiary of a large portion of that defense budget through the various defense contractors in the region, and the reductions in military spending are certain to have an effect on the defense industry in the Los Angeles region, an effect that will mean lost jobs, reduced expenditures, and reduced tax revenues for municipalities in the area. An examination of the issue should show the types of changes that can be expected for the defense industry in Los Angeles.

In truth, the defense industry in Los Angeles has been working at a reduced capacity for some time already. In 1986, the California aerospace industry generated between $97 billion and $113 billion in sales, and in 1987 between $103 billion and $121 billion. The industry employed at the time some 257,000 workers, according to the U.S. Department of Commerce; 451,000 workers, according to the Aerospace Industries Association; or 754,000, according to the state of California. The difference depended somewhat on how "aerospace worker" was defined. In any case, of the 14 major air-frame producers in the United States, companies manufacturing aircraft shells or bodies, six have substantial facilities in California, most in the Southland. This makes the Southern California region the most geographically concentrated a

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hanging as housing starts ere down and as real estate loans were in default across the state. Of all the sectors of the economy in California, the bleakest outlook was given for the defense industry. Many of the state's other industries were expected to rebound one day, but thousands of defense jobs were lost for good. Reductions in defense expenditures have been costing contractors and subcontractors billions of dollars and have produced an army of unemployed (Kerwin, Farrell, Yang, &Konrad, 1991, pp. 32-33). Job losses in the Los Angeles area due to changes in defense spending have been considerable, with large companies like Lockheed, Northrop, Hughes, and Rockwell International laying off thousands of workers. These large firms have developed strategies for restructuring, while smaller firms have had to scramble simply to survive. In 1992, Los Angeles County was to receive $5.75 million in federal funds to help jump-start programs aimed at preserving the region's large aerospace technology and manufacturing infrastructure. The region's complex of large and small companies comprises a "critical mass" of aerospace and defense expertise that is rapidly disappearing--since 1986, some 85,000 defense-related hobs had been lost

Category: Government - U