Keeping military machines rolling Changing defense priorities threaten jobs at area plants.


The throbbing metal-cutting machines fill the cavernous factory in Glen Arm where Grumman Corp. makes airplane parts.

Some of the 200 workers man the huge machines, while others use small power hand tools to do finishing work. Bill Emge makes white sparks fly as he polishes a titanium bulkhead for a Navy F-14 fighter that will be completed at a plant in Calverton, N.Y.

Emge has worked at the northern Baltimore County plant four years, making him a "kind of newcomer," jokes plant director Paul F. Causey. The average worker has been with Grumman 15 years, says Causey, an engineer who has worked for the company since 1967.

But the Pentagon's changing priorities and shrinking budget cloud the future of this plant and another Grumman plant in Salisbury. The Pentagon stopped ordering new F-14s and canceled a modernization contract for existing F-14As, although Congress is expected to approve legislation to save the contract.

Grumman isn't the only defense contractor affected. With the Cold War on indefinite hold and the federal deficit swelling, the Bush Administration and Congress are taking a fresh look at national defense needs.

The administration's proposed budget for 1992, $278.3 billion, would stop production of 81 weapons programs. The six-year defense budget plan would cut military spending by 25 percent. Adjusted for inflation, defense spending in 1996 would be 34 percent less than in 1985.

Yet some programs would be expanded, at the expense of others. For example, the Pentagon wants to spend $4.6 billion next year for strategic defense initiative (SDI) anti-missile research and an identical amount for the controversial B-2 bomber.

But these are still proposals, and Congress will play a role in shaping the defense budget. Lobbyists for contractors like Grumman will do their best to influence the outcome.

Thus far, most major Maryland defense contractors don't appear to have as much at risk as Grumman. Spokesmen for Westinghouse Electric Co., Martin Marietta Corp., AAI Corp. and Allied Signal Inc. say their firms have been diversifying into non-defense areas, especially since the military build-up begun under President Reagan tailed off at the end of the 1980s.

"We're not like Grumman, or Northrop [Corp.], where we're dependent on one or two huge contracts for our economic health," says AAI corporate communications director Adam R. Fein. "We're very diversified and very specialized so if one or two areas are hit . . . it doesn't have a big impact on the overall financial picture."

Diversification often means transferring technology developed for defense to civilian government projects. In November, Bethesda-based Martin Marietta won a $526 million contract to modernize telecommunications and data processing operations at the U.S. Department of Housing and Urban Development.

Westinghouse heads an international team developing a master plan for modernization of the Soviet Union's commercial air traffic system, a project that ultimately could cost $10 billion.

"We formed our commercial operations division . . . last year to consolidate our non-defense activities under one organization and focus our strengths in this area," says Jack Martin, spokesman for Westinghouse's Electronic Systems Group at Linthicum.

Martin Marietta spokesman Charles Manor says the company has been preparing for a downturn in military spending since 1985 and focuses on programs "that would be fairly invulnerable."

At Allied Signal, which operates a Bendix Communications division plant in Towson, "We are in a somewhat enviable position because we are very diverse in our product line," says spokesman Michael Ascolese.

"We are in a large number of programs, so that we are not so committed to one particular program that our business suffers -- is just knocked out of the box with the cancellation of a single program," Ascolese adds.

Johns Hopkins University's Applied Physics Laboratory in Columbia had $400 million in defense research and development contracts in 1989, the last year for which figures are available. Lab officials don't expect a decline.

The Pentagon has "us look at various programs and evaluate them and that's going to be needed no matter what projects there are," says spokeswoman Helen Worth.

But some Maryland contractors have suffered.

Bendix last month announced layoffs of about 250 workers as a result of an Air Force decision to halt development of the Mark XV electronic system for identifying military aircraft.

In November, Westinghouse's chairman predicted long-term stable employment in Maryland, but by mid-January he was eating his words. The Pentagon canceled the Navy's A-12 Stealth plane program and Westinghouse, which employed 16,000 workers in Maryland and was a Stealth subcontractor, responded by laying off 1,200.

The cancellation rippled down to smaller subcontractors like the Amecom division of Litton Industries, in College Park, which laid off 200 workers.

Grumman got its bad news last month when the Pentagon announced it was canceling the F-14A modernization contract and withholding $988 million Congress appropriated for it last year.

The cancellation, and Congress' expected rejection of it, illustrate the difficult political, strategic and financial decisions that must be made as the government adjusts defense planning and spending.

Although Congress wants to cut the defense budget, the Maryland and New York congressional delegations quickly challenged the cancellation. Lawmakers, who certainly wanted to save jobs back home -- 4,100 are at stake, most of them in New York -- claimed the cancellation was bad planning and potentially a costly mistake.

No one is disputing the quality of the plane, which saw service in the Persian Gulf war. And the Navy needs a carrier-based plane until production of a new generation fighter, dubbed the AX, begins in the late 1990s. But Pentagon central planners, overruling Navy officials, decided that an advanced version of McDonnell Douglas' F-18 Hornet would best meet the needs.

Sen. Barbara A. Mikulski, D-Md., criticized the Pentagon for canceling the Grumman contract even before Congress has a chance to review the future of naval aviation later this year. She took up Grumman's argument that the F-14D, as the modernized plane is called, can fly farther and carry a bigger payload than the F-18.

In a March 1 letter to Defense Secretary Richard Cheney, Mikulski also argued that loss of the contract threatens Grumman's ability to remain in the airframe business.

"Removing Grumman from a competitive posture will not be in the best interest of the U.S. industrial base or U.S. defense policy," she said.

Congress -- and Grumman -- appear to have won the remodernization battle for now, but Grumman also would like to see the Pentagon order more new F-14s. The fate of thousands of Grumman employees, including many of the 700 employed in Maryland, may be at stake.

Grumman makes more than F-14s and their parts. At Glen Arm, Grumman's principal production machining facility, the work includes components of the Navy's A6-E attack plane and the E2-C Hawkeye. But company officials say Grumman would shrink from a $4 billion enterprise to a $3 billion company without the F-14.

"I really think we have the right product at the right time," Causey says hopefully of the F-14, "and if we get people to listen to us, we might come out OK."

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