The Pentagon goes shopping for ships, planes, missiles and more
A the Bath Iron Works in Bath, Me., officials anxiously await the Government contract order for more new $200 million guided-missile frigates. At Litton Industries in Beverly Hills, executives are putting final plans together for a $64 million expansion to accommodate expected new Pentagon business. A few miles away in Hawthorne, Calif., the Northrop Corp. is preparing to quadruple production of the Navy's F/A-18 fighter plane to two per month.
These are some of the increasingly frequent signs of the growing boom in America's defense industry, as contractors await a sales bonanza from the Reagan Administration's military buildup. The sums of money involved are immense. The President wants to boost the Pentagon's budget from the $171.2 billion allocated by the Carter Administration this year to $226.3 billion in fiscal year 1982. That amount is twice as much as Saudi Arabia earned from crude oil exports last year and twice the gross national product of Switzerland. Moreover by 1986 Reagan wants to increase the defense budget to a staggering $374.3 billion, or more than double this year's level.
The President now seems likely to get most of what he wants. Last week Democrats in the House of Representatives proposed their own version of the 1982 budget, but it cut defense expenditures by only $4.3 billion. Even those minor reductions are unlikely to remain in the final House bill. In the Republican-dominated Senate, the Budget Committee last week approved spending even more on defense in fiscal 1982 than the President had requested.
The full impact of the new Pentagon spending, however, will not be felt for several years. Military expenditures in peacetime always involve long lead times because of the problems involved with developing new weapons and starting up production facilities. Executives at General Electric's aircraft engine division in Lynn, Mass., do not expect to receive big payoffs from the Reagan spending before 1984 or 1985. The Army, for example, wants more of GE's T-700 engines for its Black Hawk helicopters, but it will be at least a year before any additional machines can be produced. Said one company executive: "You know it's not like making more toasters or light bulbs."
The biggest share of the new military orders will go to the giant aerospace and shipbuilding companies. Some of the major gainers from the Reagan buildup: