Anti-missile plan would fuel R&D, not jobs

Associated Press

LOS ANGELES — 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 such as 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, big-ticket defense projects, such as 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, because 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.