Three defense contractors create company to destroy nuclear arms Venture could herald a new industry


LOS ANGELES -- Lockheed Corp. and two other defense contractors have announced the creation of a jointly-owned company to dismantle and destroy nuclear weapons and other Cold War-era munitions.

Called International Disarmament Corp., the company is believed be the first of its kind and could mark the beginning of a new industry for defense contractors -- destroying the weapons they have spent nearly 50 years building.

IDC was formed by Calabasas, Calif.-based Lockheed; Babcock & Wilcox, a unit of New Orleans-based McDermott International Inc.; and Stamford, Conn.-based Olin Corp. Lockheed and Babcock & Wilcox work on nuclear programs, Olin on munitions systems.

The announcement yesterday comes less than two days after President Bush told Congress that the end of the Cold War would allow for a defense budget cut of $50 billion over five years.

The Bush proposal would eliminate about 2,000 U.S. warheads and 5,000 former Soviet warheads now controlled by the new Commonwealth of Independent States.

Russian President Boris N. Yeltsin called Wednesday for the United States and Russia to reduce their arsenals to as few as 2,000 nuclear warheads each from the current 20,000 or more.

"This new corporation can bring more expertise to bear on the problem, in a more timely fashion, than any capability now available to the U.S. government, Congress or the Commonwealth of Independent States," said Troy Wade, a Lockheed employee who was named president of IDC.

One defense analyst said that a key question facing the new corporation is whether the United States or the governments of the commonwealth will contract out the disposal of nuclear weapons to private-sector companies.

"It seems like a sensible combination of the necessary talent to address that market opportunity," said Wolfgang H. Demisch, an analyst at UBS Phillips & Drew.

Mr. Demisch estimated it would cost from $10 billion to $30 billion to disarm all of the world's 70,000 nuclear warheads.

IDC spokesman Hugh Burns acknowledged that there is no guarantee private contractors will be allowed to handle future contracts, but he added, "We don't think the government has the wherewithal to do all of it at one time."

The Defense Department has received $400 million to study the disarmament problem, and Mr. Burns said that International Disarmament is bidding for a piece of that funding.

Capt. Sam Grizzle, a Defense Department spokesman, said he was unaware of whether private companies would be allowed to bid.

"I haven't heard of anything like this," Captain Grizzle said. "I know the $400 million was approved. I am unaware of how that money will be allocated."

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