Defense Articles

Logistics Health Inc. announced Tuesday a tax credit package from the state that could effectively double its La Crosse workforce.

The company will receive a tax credit for every new job created, up to a total of $1.75 million, LHI Chairman and CEO Don Weber said.

That, coupled with an expanded federal contract, could mean 350 additional jobs in La Crosse, Weber said.

He hopes the company will employ about 1,000 people within the next few years.

With the state’s investment, LHI could increase the local tax base by $19 million, Gov, Jim Doyle added.

“We are going to return, many times over, that investment to the city and the taxpayers,” Weber said.
The expanded U.S. Department of Defense contract has the potential to take them from the minor leagues to the majors, Weber said.

“It’s not because we’re one of the larger contractors,” he said. “We got this contract because our employees stepped up for six years.”

Details on the defense contract remain under wraps, he said, but could be available this week.

About 80 percent of LHI’s employees are between the ages of 20 and 40, and 38 percent are graduates of one of La Crosse’s three higher education institutions, he noted.

“The challenge is going to be find the talent to grow it here,” Weber said.

The medical records management company was founded in 1999 with about 12 employees.

Its current headquarters at 328 Front St. S. opened in 2006, and a second building now is under construction along the riverfront, It’s possible LHI could grow into a third building by 2009, Weber added,

Once the second LHI building begins operation, the combined contribution to the local tax base will be about $30 million, Mayor Mark Johnsrud said.

After years of cutbacks, work on major defense programs such as the F/A-22 Raptor and the F-35 are bringing much-needed job growth to Southern California’s aerospace industry. (Both have Lockheed Martin Corp. as their prime contractor.)

In Los Angeles County, an estimated 2,200 new aerospace jobs will be created this year, bringing the total to 108,600, according to the Los Angeles Economic Development Corp.

That’s nowhere near the 1986 peak of 289,900 jobs. But it does mark the first year-to-year increase since 1996-1997.

“Aerospace-defense is back but in a different way,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. “We’ve lost most of the assembly lines. But in terms of subcontract work and advanced research and development, we’re still incredibly strong.”

Industry shift

L.A. is no longer a hub for prime contract work on military aircraft. The C-17 and smaller Global Hawk unmanned aerial reconnaissance plane are the only two planes assembled here. The 13,000 workers that once toiled on Northrop’s 21 B-2 Bombers in Palmdale has dwindled to 1,000 maintenance workers.

But after fighter jet programs by Lockheed Martin in Burbank and Rockwell International in El Segundo dried up, what remained were research facilities: Cal Tech, the Los Angeles Air Force Base, NASA’s Jet Propulsion Laboratory. In Palmdale, Lockheed Martin’s Skunk Works and Boeing’s Phantom Works also were kept on.

The decade-long transformation into an R&D hub has shown dividends.

“It’s hard to say somebody planned it,” said Philip Coyle, a senior advisor for the Washington-based Center For Defense Information, a research and policy group. “It just evolved that way. It’s the result of decades of investment in defense science and technology.”

Since the Sept. 11, 2001 terrorist attacks, there’s been a massive increase in defense spending — $382.2 billion for the year ending in September 2003 vs. $328.9 in fiscal 2002.

For political reasons, defense program work is notorious for being spread out across the 50 states. But other factors have given Los Angeles an outsized share of the pie, offsetting losses on the commercial side of the business.

One factor is the presence of Northrop Grumman, the major defense player that’s been winning significant roles in virtually every new defense program.

The other is an infrastructure that, despite lean times, never really went away.

“There’s a unique aerospace manufacturing capability that exists here in the Southland and always has,” said Gene Price, chief executive of Brek, which draws 70 percent of its $24.8 million in annual revenues from defense and aerospace work.

“Most of the service-related support services — painting, parts processing, metal cutting, metal forming — is here. If my company was in Nevada or Arizona, I’d have to come to L.A. because those types of services are not readily available there,” Price said.

The Raptor will employ 250 L.A.-area subcontractors and suppliers, accounting for 65 percent of the plane’s contents.

Plans call for 18 Raptors to be constructed this year, up from seven last year, while the first Joint Strike Fighter test model will begin production by the end of the year while systems engineering and design work is in full steam.

Defense spending on aerospace production and research, concentrated in Georgia, Florida and Alabama, accounts for $8.7 billion of the $20 billion in military contracts awarded to the region as a whole. Rather than creating new jobs, however, these contracts will mostly serve to retain jobs.

Technology and communications expenditures could breathe new life into the struggling high-tech industry, which is especially important in Florida. Information technology, biomedical technology, modeling, simulation and training industries, and plastics industries have “attained critical mass” there, according to Business Florida, along with the aviation, aeronautics and defense industries. Aviation and aerospace industries alone generate more than $15 billion in annual sales in Florida. According to one research study cited in the Real Estate Journal (published by the Wall Street Journal), technology-related jobs account for $16.8 billion in wages annually, far outstripping the impact of tourism, which provides $9.6 billion each year.

In Tennessee, a state hard hit by the waning domestic apparel industry, an infusion of more than $1 billion in defense contracts to 2,000 companies will be a significant help. Apparel employment there has halved since 2000.

Contractors across the region will benefit from construction stimulus. In 2001 the Southeast received $1.7 billion of the $10.5 billion allocated for military construction in the nation as a whole. Analysts expect spending on military construction to increase slightly each year through 2005, helping to offset regional downturns in commercial construction that threaten to continue throughout 2003.

In addition, a 4.4 percent pay increase for armed services personnel will add to discretionary income and boost retail spending.

Defense spending remains important in the Southeast

The Southeast, which claimed about 16 percent of the nation’s direct expenditures for defense in 2002, has historically relied on military spending as an economic spur. In 1996 the Southeast was the third-largest regional recipient of defense contracts, behind only the Western and Mid-Atlantic states.

Cuts in defense spending in the late ’80s and early ’90s compelled manufacturers to turn military capacity toward civilian production. For example, global positioning systems have been widely adapted for civilian use in navigation and agricultural equipment, some shipyards building naval vessels turned to producing pleasure boats, and some airplane manufacturers producing military planes switched to making corporate jets. While the orientation of traditionally defense-oriented industries shifted, the clusters of technological expertise and skilled labor remain intact and have drawn defense contractors back to the region. Georgia in particular has benefited, moving from eighth nationally in the amount of defense contract dollars received in 1996 to fifth in 2001. Florida moved from fifth to fourth in 2001.

Although Louisiana, Mississippi, Alabama and Tennessee receive considerably fewer defense dollars than Florida and Georgia, military spending is nonetheless an important factor in these states’ economies.

Aviation struggles despite defense demand

The Lockheed Martin plant in Marietta, Ga., one of the region’s largest benefactors of defense spending, landed a $4 billion contract to produce 40 C-130J aircraft for the Air Force and 20 KC-130J aircraft for the Marines. However, the six-year contract will not produce any new jobs at the plant; rather, it will ensure that the plant’s 7,000 employees retain their jobs, according to a Lockheed spokesperson.

The story is similar to what’s going on elsewhere in the nation. Setbacks from the combined effects of terrorism and SARS as well as curtailed travel during the war with Iraq have cut commercial aviation production dramatically. Companies that would normally expand their facilities and workforce in response to the added demand of defense contracts currently have excess capacity. So instead of adding employees, the defense business is helping to forestall layoffs and shutdowns by contractors.

Boeing’s contract to assemble a missile interceptor in Huntsville, Ala., will also help maintain the status quo, providing jobs mostly for its existing employees. The Arrow 2 interceptor, developed jointly by the United States and Israel, will be produced along with the earlier Avenger system. Although Avengers are still being manufactured for export, demand is flagging. Thus, Arrow 2 production will fill the gap. Boeing employs about 2,600 people in the Huntsville area on various NASA and military projects.

Defense firms defensively seek commercial jobs

They’re trying to apply their know-how in other fields

At Hughes Aircraft Co. thousands of workers produce high-technology radar systems for high-flying military aircraft. Soon, those workers may be building radars for use in automobiles.

At Datametrics Corp., a much smaller company, workers are developing a security device for facsimile machines. The device would previously have been sold to the military but now Datametrics is marketing the system to Xerox Corp.

Those two companies are part of Los Angeles County’s largest manufacturing segment, defense and aerospace contractors, an industry that is being forced to change because of political events halfway around the world.
Whether the changes will alter the Southland’s place at the center of the country’s military-industrial complex is uncertain. But one thing is clear, and that is thousands of jobs are at risk, as well as the future of Los Angeles’ industrial base.

With a shrinking defense budget, and predictions it will continue to decline, it’s no secret that military contractors are looking for new customers — and more hospitable places to do business other than Southern California.

There are some who question whether there is enough commercial business to replace defense work but as one industry analyst said, “What choice do they have? Maybe there isn’t enough work out there but the alternative could be going out of business. They have to try to develop new technology and maybe create new markets.”
But shifting quickly from military to commercial work is not an easy task. In addition to making new products for new customers, there is a “cultural” shift contractors must make when they move from working for the Pentagon to companies like Xerox or General Motors.

With so much at stake — between 20 percent and 25 percent of Los Angeles County’s 1.3 million manufacturing jobs are in aerospace and defense — local government is also getting into the act. Last week, the Los Angeles County Board of Supervisors decided to go ahead with a proposal to build joint public-private sector research facilities in Los Angeles to help contractors make the conversion.

The proposal is being developed by the Los Angeles Aerospace Task Force, a group of aerospace executives, government officials, educators and labor leaders formed earlier this year by the board of supervisors. The centers would be funded through Department of Defense grants and county subsidies, and would develop commercial technologies that could be used by defense contractors.

All of the major contractors have taken steps to offset the effects of defense cuts — from layoffs to closing facilities — and recently more companies have begun to outline plans to shift from military to commercial work. None of the companies has said it is abandoning defense work altogether, however. Rather, they say they want to reduce their dependence on government contracts.

Rockwell International Corp., based in El Segundo and California’s biggest defense contractor, was one of the first companies to start the conversion. In 1986, 50 percent of its annual revenues were from military contracts. Now, it’s down to about 25 percent of annual revenues that in fiscal year 1990 were $12.3 billion.

Early on, Wall Street analysts praised Rockwell’s move to reduce its dependence on defense contracts and now the company has one of the strongest balance sheets in the industry. Now, there are some analysts who wonder if it’s too late for other contractors to make the switch.

Some also question Northrop Corp.’s pledge to remain primarily a defense contractor. The Century City-based company is moving away from that position and has said it is looking for more commercial aircraft work besides its current program of building fuselages for Boeing Co.’s 747 aircraft.

Northrop has not publicly said by how much it wants to reduce its dependence on military contracts, which last year accounted for 90 percent of its $5.4 billion in revenues. But spokesman Ron Owens said Northrop recently created a new operation to seek out commercial work.

“We want to expand our percentage of commercial work,” said Owens.

Lockheed Corp., based in Calabasas, is also looking at commercial aircraft as an alternative to defense work, even though it won an Air Force fighter jet contract that could be worth $96 billion.

Chairman Daniel Tellep has said Lockeed will remain primarily a military contractor but over the next five years it wants to reduce revenues from the Pentagon to 60 percent from 74 percent. Last year, Lockheed had $9.9 billion in revenues.

Lockheed spokesman Bob Slayman said the company wants to expand its technology services group that consists of several corporate units involved in the commercial aircraft business. One is Lockheed Air Terminal Inc. that owns and operates commercial airports. Another unit is a Tucson company that services commercial aircraft.

SYRACUSE-Radar development and other government contracts are fueling growth at Syracuse Research Corp. (SRC) The nonprofit research and development company is adding 80 jobs nationwide, including 28 at its Cicero headquarters. SRC employs more than 400 at eight locations from Syracuse to Denver. Most of the jobs are in the scientific and technical fields.

“We have 15 or 20 openings in the engineering department alone,” says Lisa Mondello, corporate communications manager for SRC.

The company’s radar research includes developing prototype radars based on new concepts. SRC has increased its building of “fieldready” units designed for military testers. The newer units, she explains, address problems discovered with previous radar technologies deployed by the armed forces.
In April, SRC landed a $12.6 million Army contract to develop a highly mobile radar unit. The company is working with Lockheed Martin Naval Electronics and Surveillance Systems on the project. In 2001, SRC won a five-year, $35 million contract to support the Foreign Electronic System Capabilities Program at the National Air Intelligence Center at Ohio’s Wright- Patterson Air Force Base.

In addition to its work with military technology and systems, SRC has an environmental-science division that provides chemical and environmental-hazard analysis.

Over the past year, says Mondello, SRC has competed with larger companies for military contracts. The help of Syracuse-area Congressman James Walsh, she adds, has been instrumental in retaining contracts and securing new ones.
In November, SRC received a five-year, $23 million Defense Department contract to provide technical services to the Air Force Information Warfare Center. SRC has already provided technical support for the center for more than a decade. Several of the new positions will fulfill duties under information technology and other support contracts.

SRC is looking to the Syracuse area first to fill the open positions, says Mondello. The company aims for long-term relationships with its employees and limits the use of temporary employees, she explains. Layoffs at some area companies have been good news for SRC, as the company has been able to recruit workers with special skills. SRC doesn’t plan to change the criteria for any of the jobs in an effort to fill the slots.

“We’re being careful not to lower the bar,” says Mondello. “We’re searching for only the best-quality workers.”

Most of the workers SRC has recruited from outside the area have had some type of tie to Syracuse whether through education or family, she adds.

Much of SRC’s work with the military involves classified information. SRC has won the Department of Defense’s Cogswell Award seven times. The Department of Defense uses the Cogswell to honor defense contractors that demonstrate superlative security practices. Finding individuals who possess the requisite technical skills and also have security clearances can sometimes be challenging, Mondello says.

Founded in 1957 by Syracuse University, SRC gained independence from SU in the 1970s. Since becoming independent, SRC has spawned its own spinoffs such as Web developer Purplewire, LLC. The company generates annual revenues of $40 million.

In the March-April issue of Defense AT & L, Michael W. Wynne and Mark D. Schaeffer, in their article “Revitalization of Systems Engineering in DoD,” stated that “our primary goal is to re-establish DoD’s systems engineering prowess.” One of the missions of the Naval Sea Systems Command’s Systems Engineering Development Program is to train and develop systems engineers based on competency-driven models.
Two years ago, NAVSEA’s Systems Engineering Development Program was evaluated for effectiveness. In October 2003, after the survey, a national engineering manager’s meeting was held to enhance and improve the program through the implementations of agreed-upon best practices. This year, 65 engineers from NAVSEA’s Systems Engineering Development Program were surveyed to evaluate our progress. How are we doing? Well, as Dr. Bob (Richard Dreyfeus) said to his client (Bill Murray) in the movie What About Bob? “Baby Steps.”

[ILLUSTRATION OMITTED]

While several areas, such as managerial awareness, downsizing, and the administration of the program, have showed some progress, there is plenty of room for continued improvement. The “intern” name still remains a sore point. The percentage of engineers who would enter the program again has decreased. Although managerial awareness has shown improvement, it still is the area identified as most frustrating and in need of work.
Two years ago, 86 percent of current engineers and graduates said they would enter the program again. In this year’s survey of current interns, 66 percent said that they would definitely enter the program again, another 15 percent said they would not; and 17 percent indicated “not sure.” As before, some of those who would not enter the program again cited faster advancement outside the program. According to some engineers, the current lower initial salary contributes to their reluctance.

Best Experiences

Systems Engineering Education

Two years ago, 90 percent of managers indicated that engineers were learning systems engineering, as did 63 percent of current engineers. This year, 100 percent of the managers said that the engineers were learning systems engineering, and 73 percent of the engineers agreed.

Rotations

Two years ago, rotations–the core of NAVSEA’s Systems Engineering Development Program–were cited as the most valuable aspect of the program by 60 percent of the engineers surveyed. This year, 81 percent indicated that rotations were valuable, with 55 percent citing the rotations as “extremely valuable.”

In answering the question “What has been your best experience in the program?” the predominant number of responses were related to the opportunity to rotate and the flexibility to rotate through different assignments, especially those rotations that brought the engineer closer to the sailor and the Navy’s products. Fifty-four percent cited rotations and another 22 percent cited the flexibility that the program offers. Since rotations are a major aspect of the flexibility, one might argue that 76 percent of the positive indicators pointed to rotations. Some comments:

* “The main reason I entered the program was the ability to rotate within NAVSEA.”

* “Rotations provide you with the background to understand the Navy organization.”

* “External rotation at SubPac Pearl Harbor. I learned how the Navy ‘really works’ from the guys in both blue and khaki.”

Some engineers found the rotations to be career-defining:

* “Freedom to explore the Navy’s acquisition system, the opportunity to mold my career path, and the chance to get a graduate-level education are fantastic aspects of the program.”

* “[The program] gave me an opportunity to work many different kinds of engineering jobs and work with many different kinds of engineers. This helped me sculpt what an ideal job for me would be, where I could contribute the most.”

Hands-on Experience

Two years ago, 20 percent indicated that hands-on experience from events, trips, and SEA trials was one of the more important aspects of the program. This year, the number was up to 48 percent. Ninetyfour percent indicated that hands-on experience was, at the least, “valuable,” if not more than valuable. Unhappily, some engineers stated that they hadn’t had the opportunity for hands-on experience. Some of the engineers reported that hands-on experience enabled career-defining realizations. A representative comment from one engineer: “By being hands on, I was able to determine what kind of position I would like to pursue once I’ve graduated from the program and enter the regular government civilian workforce.”

I. INTRODUCTION

[C]ivilians have established themselves as an integral and vital part of the Department of Defense total force team. With distinction, they perform critical duties in virtually every functional area of combat support and combat service support, both at home and abroad. (1)
During the last decade, the U.S. Armed Forces have continually encountered a wide variety of civilians across the deployment and conflict scenario, a trend that will only increase in the 21st Century. (2) As the armed forces have been called upon for ever-increasing support for Military Operations Other Than War, (3) and to privatize and outsource (4) many functions previously performed by military personnel, judge advocates now address complex issues arising out of increased numbers of deploying government civilian employees and contractor personnel. Once in a deployed location, commanders and their judge advocates interact with civilians working with intergovernmental organizations (IGOs), non-governmental organizations (NGOs), private voluntary organizations (PVOs), international refugees, stateless persons, and internally displaced persons (IDPs), each with unique statuses under various international agreements. This article examines the legal statuses of three primary groups of civilians and introduces m ajor issues deployed commanders and their judge advocates are called to address as a result of the civilian presence at the tip of the spear.
The article begins by identifying and defining the three primary groups of civilians encountered across the spectrum of conflict: Department of Defense (DOD) civilian employees; three sub-categories of contractors; and non-affiliated civilians including the media, NGOs, PVOs, IGOs, refugees, stateless persons and IDPs. Each primary group of civilians is examined to assess their importance to commanders and consequently judge advocates.

The body of the article addresses major civilian issues judge advocates may confront. In particular, it examines the physical and functional proximity to hostilities, status upon capture, status under host nation law, wear of uniforms, carrying weapons, force protection concerns and obligations, and medical and legal support for civilians. Even so, some issues leave more questions than answers. Although the U.S. military has been encountering civilians in rapidly increasing numbers since Operations Desert Shield and Desert Storm, doctrine and regulations are only now starting to address many issues judge advocates have been addressing for years. (5) This article compiles relevant information on civilians in one location so judge advocates will have a single resource to quickly answer major civilian issues.

II. CATEGORIES OF CIVILIANS

Never has there been such a reliance on nonmilitary members to accomplish tasks directly affecting the tactical success of an engagement… the military is facing a fundamental change in the way it conducts warfare, and there is little evidence that the players have been adequately prepared for that change. (6)

Members of the U.S. Armed Forces have met many challenges in recent years to create infrastructure in places where none had previously existed. From experiences in Bosnia, Haiti, Somalia, and elsewhere, those planning and executing operations have expanded their considerations to encompass METT-TC: mission, enemy, terrain, troops, time available, and now adding civilian concerns to the formula to reflect the changing nature of military operations. (7) To succeed in military operations, Joint Task Force Commanders are now taught that they must consider civilians. (8) Civilians fall within three main categories: DOD civilian employees; contractor personnel which includes personnel under contract with or employed by an organization under contract with the DOD; and non-affiliated persons–a broad group of civilians who share overlapping interests with the military. (9) Each group has varying statuses, rights and responsibilities under international and domestic law, and under DOD and service regulations. Analysis of issues is therefore predicated upon understanding the different types of civilians.

A. Department of Defense Civilian Employees

The DoD civilian work force shall be prepared to respond rapidly, efficiently, and effectively to meet mission requirements for all contingencies and emergencies. (10)

Civilian employees are an integral and essential part of the military total force structure. They comprise a quarter of the force and serve in over seventeen nations. (11) DOD civilian employees, as “partners in national defense,” regularly go into harm’s way to support military operations. (12) Recently, the General Accounting Office (GAO) estimated that 14,391 civilians deployed to the Middle East in support of Operations Desert Shield and Desert Storm, and 5,900 civilians supported 6,000 uniformed Army personnel in Bosnia for Operation Joint Endeavor. (13) As U.S. forces downsize, and as the operations they perform increase, the need to deploy civilians has grown. (14) Judge advocates must prepare to encounter civilian employees in the battlespace of the twenty-first century.

At long last, it seems the cycle is turning. Both Lucent and Cisco, those key barometers, have reported good quarters. Semiconductor sales are up. The stock markets are up, and Google is heading for an initial public offering. Economic growth isn’t sustainable at 7 percent, hut 25 to 4 percent seems realistic for 2004. Our own polling of CEOs suggests they are 40 percent more confident today than they were last October and are planning to expand their work forces in 2004.
The challenge for CEOs is to maintain an emotional even keel and not be swept up in false expectations on the upside any more than they jumped off cliffs when earnings tanked.

A lot of very tough challenges remain, as our CEO Agenda 2004 notes, starting on page 27. The global climate is still a major question mark, and politics in a presidential election year at home could be tricky. Spurring global economic growth and getting corporate top-line growth both remain challenges.

And look at some of the industry-specific challenges: Although General Motors in particular seems to be making headway, Detroit as a whole faces brutal global pressures. Eastman Kodak hasn’t made a convincing turn for the better, while Motorola seems to be still looking for direction. Some major tech players, such as Sun Microsystems, face worlds of hurt. The major airlines can’t seem to break out of their woes and Boeing seems at risk of losing its leadership role in aircraft manufacturing to Airbus, which once would have been unthinkable. But challenges aside, we at Chief Executive do think it is time for CEOs to take a slightly higher risk in terms of investing in research and plant and equipment, not to mention rebuilding their work forces. Aside from making more money, we think that increased leadership of this sort will help ease the bunker mentality that has beset so many CEOs. After all the scandals and reform efforts, CEOs have been on the defensive. That has created a cycle of diminished risk-taking, which in turn results in less economic growth and a further souring of the public image of companies and their leaders. That’s a vicious cycle. No one wins.

Without falling prey to any euphoric temptations, it’s time to go back on offense. We think an economy that’s growing and generating jobs will go a long way toward overcoming the current obsession with holding management and boards accountable to the false standards of Sarbanes-Oxley. Let’s create some real, sustained growth and start a positive cycle. All it takes is solid, long-term leadership.

Restaurateurs in states targeted by the Pentagon’s proposal to close more than 150 military installations said they would fight the cutbacks to ensure continued economic growth of businesses and communities in those areas.

The Base Realignment and Closure plan, or BRAC, which Secretary of Defense Donald Rumsfeld said would save $48.8 billion over a 20-year period, calls for the closure of at least 33 major military bases around the country and a loss of more than 29,000 jobs. While more than 14,000 of those job losses would occur in Maine and Connecticut alone, with cuts taking place over a six-year period beginning in 2006, almost every state is affected by the realignment plan, with some gaining locations. A nine-member commission will make final recommendations this fall.
“This is a horrific disaster for our industry,” said Dick Grotton, president and chief executive of the Maine Restaurant Association. “People go to restaurants with disposable dollars, and if we put 7,000 people out of work [in Maine], it will be profoundly felt throughout the economy.”

The Maine installations slated for closing include the Portsmouth Naval Shipyard in Kittery, the Defense Finance and Accounting Service in Limestone, the Naval Reserve Center in Bangor and the Naval Air Station in Brunswick.
“Hospitality here is a $2.5 billion-a-year industry,” he said, adding: “Restaurant sales per year are about $1.7 billion of that. We need to understand that dining out is not simply done on special occasions anymore. Families and social mores are changing. Today 47 percent of the food dollar is spent on products obtained outside of the home. Take that kind of percentage and place it at risk, and it’s going to be a serious blow to Maine’s economy. I don’t know if people realize how bad it’s going to be.”

On-site contract feeders serving military bases, however, said the closures would not impact their businesses negatively.

“Our business will be unaffected by the proposed closing of military bases,” said a spokeswoman for Charlotte, N.C.-based Compass Group USA, whose Eurest Support Services division provides services for the U.S. Navy and Marines.

Officials at Philadelphia-based Aramark said the company’s business would be unaffected, too.

“None of the handful of military facilities where we provide business dining is slated for closing,” a spokeswoman said. She further stated that those businesses that possibly would experience more economic woes were the “small business set-asides,” or subcontractors who provide foodservice at the military bases.

Sodexho had not returned calls by presstime.

The Army and Air Force Exchange System, or AAFES, which operates a number of commissaries and retail shops for the military, said it is not yet known whether any of their operations are subject to closing.

“AAFES is monitoring the BRAC process,” a spokeswoman said. “No decisions regarding AAFES operations in relation to BRAC will be made until the process is finalized.” She added that the list of closings wouldn’t be finalized until Sept. 23, “when the president either would accept or reject the list in its entirety.”

Though Grotton said it’s still too early to determine the impact of the closings on local business, he noted that entire communities would suffer, not just restaurateurs.

“This will cause an explosion into the entire economy,” he said. He added: “It will affect the local market for sure. Those military personnel who buy cars and furniture provide money for the people selling them those products. And those people take that money and dine out with it. So it ricochets into the economy in a major way. In the case of the shipyard, it’s civilians who work at Kittery. If they lose their jobs, that will ricochet into southern New Hampshire’s economy, too.”

For some restaurateurs, however, the closings represent more than possible economic woes. They’re worried about the emotional impact on their communities.

Michael Landgarten, owner of Bob’s Clam Hut, a fast-casual seafood shop in Kittery, said local residents have great affection for the base and its employees.

“We’ve been here a long time–50 years–and the Navy Yard’s been here a long time as well,” he said. “It’s a known institution. So first and foremost it’s like losing a friend, part of our identity. Feeding those guys, getting them back to work on time, is a great thing for us, especially since the rest of our business is so transient; most of it comes in the summer [during tourism season]. I certainly can’t imagine that this is going to help our business.”

Landgarten estimated that his restaurant, which boasts annual sales of more than $2 million, feeds about 5 percent to 10 percent of the personnel at the Navy Yard.

“We’re a good hit for lunch for a lot of the guys,” he said. “They do major calls with us–they’ll place $100 orders at times–especially in the off-season, so they’re a good call for us.”

Northrop Corp. will cut 2,700 jobs, boost efforts to win more non-defense contracts

Anticipating “flat sales for the next several years,” Northrop Corp. Chairman Kent Kresa announced that the beleaguered aerospace firm will cut 2,700 jobs this year from its Los Angeles and Ventura County plants. In all, the Century City-based company — which has eliminated 2,500 jobs over the last year — will cut 3,000 employees from its 41,000-member work force.

Disclosure of the new layoffs came at Northrop’s annual shareholders meeting May 16 at the Stouffer Concourse Hotel near Los Angeles International Airport. The chairman addressed about 1,000 shareholders who control more than 78 percent of the company’s stock.

After touching on painful cuts being proposed for the federal defense budget, Kresa ominously remarked, “This is not business as usual.”

Nonetheless, the chairman said the United States is not getting out of the defense business and neither is Northrop. He pointed out that the company is a world leader in certain “leverage technologies” that will be important to manufacturing regardless of how deeply defense contracts are slashed.

Kresa indicated, though, that Northrop is looking to diversify its business into commercial aircraft manufacturing. After hailing the increased fuel efficiency and aerodynamic design of the company’s landmark B-2 “Stealth” Bomber” technology, he pointed out, “That’s the way airlines look at decisions about new equipment. They are buying billions of dollars in new commercial airliners. Not because they carry more people or fly farther, but simply because modern technology offers enormous economic operating advantages.”

Northrop executives are currently negotiating with Boeing Co. to manufacture elements of the Seattle-based company’s 747 jetliners. If an agreement is reached, Northrop’s portion of the 747s would be assembled at its Hawthorne plant.

Besides the coming layoffs, Kresa said Northrop will reduce its operating overhead and $1 billion debt by continuing to sell its nonproductive assets. The most significant example of that was the recent sale and partial leaseback of Northrop’s corporate headquarters complex in Century City. That sale produced a gain of $90 million after taxes, he said, and shaved $218 million off short-term debt and a $20 million reduction in Northrop’s annual interest bill.

Present projections claim the company will eliminate its $1 billion debt by the mid-1990s.

The company is concentrating its efforts on improving cash flow and earnings, Kresa said. “I have set a goal of returning, over the next few years, to at least a 20 percent return on equity.”

Kresa said the company is currently under contract for 16 B-2s. Northrop is already more than 50 percent complete on each of the first 11 bombers, he said. However, cuts in the B-2 program’s budget have dropped manufacturing requirements from 132 copies of the bomber to 75. That means Northrop plants will manufacture B-2s at one-third the production rate originally planned.

Northrop is also working hard to defeat the Calabasas-based Lockheed Corp. to win the federal development contract for the F-23 Advanced Tactical Fighter, Kresa said. Prototypes of the aircraft have been designed at Northrop’s Production Development Center in Hawthorne, and are now being prepared for flight at Edwards Air Force Base. Kresa said winner of the fullscale development program will be decided in April 1991.

“We are planning for success and (are) capitalizing on the reduced requirements for B-2 manufacturing,” Kresa proclaimed. “We have decided to carry out the F-23 Advanced Tactical Fighter fullscale development program at our facilities in Pico-Rivera.”