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Call to arms.

Call To Arms

In December 1941, with the United States suddenly a participant in World War II, the federal government broke ground on a facility to manufacture hand grenades near Redfield.

Seven months later, production began at the Pine Bluff Arsenal. Since then, the arsenal has supplied munitions for the Korean War, the Vietnam War and now the conflict in the Persian Gulf.

Its 1,400 civilian and 75 military employees now are busy refurbishing gas masks and manufacturing most of the smoke devices that will be used to obscure troop movements during a ground war.

Stock analysts warn, though, that it is far too early to tell if they conflict will bring more funding for Arkansas-based programs and protections against future cuts. In fact, a majority believes the defense budget will continue to decline.

"The boom days of the 1980s will not be back," says Lior Bregman, a defense analyst at Oppenheimer & Co. in New York.

The East Camden operations of LTV Missiles and Electronics Group went from a high of 1,400 employees in 1987 to about 950 employees today.

"The war will not have an immediate effect on our employment levels," says LTV's Tim Deaton. "If an order were given to us today, it would take 12 to 13 months to complete the work."

A Thriving Defense Industry

The Pine Bluff Arsenal is not alone in Arkansas when it comes to supplying weapons and equipment to the Department of Defense.

During the 1970s and early 1980s, a thriving defense industry sprang up at East Camden, just across the Ouachita River from Camden. There are eight companies with defense contracts employing almost 2,700 workers in the Highland Industrial Park.

A few miles down U.S. 79 at Magnolia, meanwhile, American Fuel Cell and Coated Fabrics Inc. (Amfuel) employs 650 people and manufactures many of the fuel cells used by Air Force, Navy and Marine aircraft.

The early and mid-1980s were the glory days for defense contractors in Arkansas and elsewhere. The Reagan administration viewed a military buildup as one of its primary mandates, and Congress responded by pouring billions of dollars into defense.

A rapidly growing budget deficit and the lessening Soviet threat, however, brought those glory days to an end for the military-industrial complex. The financial implications of the spending cuts reached Arkansas. Layoffs ensued, and unemployment rates in south Arkansas rose.

Also affected were thousands of Arkansas with stock in defense-related companies. Investors bailed out, but the current conflict has sent some stocks soaring again.

The Bloom Is Off

LTV's Arkansas operations are a perfect example of the bloom coming off the defense rose.

LTV was selected by the Army in April 1980 as the prime contractor for the Multiple Launch Rocket System. LTV invested more than $40 million in its Arkansas facility to build a mobile rocket system requiring a crew of three.

Twelve surface-to-surface rockets with a range in excess of 18 miles can be shot before reloading. Each rocket can cover an area the size of six football fields with thousands of grenade-like munitions capable of penetrating light armor.

MLRS will play a key role in any ground war, according to congressional defense experts. The system was developed as a joint effort between the United States, France, West Germany, Italy and Great Britain. The first rockets were delivered in May 1982 with the first MLRS launch vehicle delivered in August of that year.

The Army fielded its first battery of nine MLRS launchers as part of the 1st Infantry Division at Fort Riley, Kan., in early 1983. Additional MLRS units were deployed at other posts in the United States, West Germany and South Korea. LTV reached a full production rate of 6,000 rockets per month in 1986.

Employment Levels Fall

Even with the spending cuts of the past several years, MLRS has fared better than most other weapons systems.

For example, General Dynamics once employed 2,000 people to assemble guidance systems for the Navy and Air Force's Sparrow missile at East Camden. Employment levels there are down to 700.

General Dynamics shared the Sparrow contract with the Raytheon Co. The Pentagon then began to phase out the Sparrow, replacing it with the Advanced Medium-Range Air-to-Air Missile (AMRAAM). General Dynamics was not awarded the AMRAAM contract.

General Dynamics had received its first Sparrow production contract in 1973. Tests were completed in 1976, and deliveries on the original contract were completed in 1981.

Late that year, General Dynamics began production of the AIM/RIM-7M, an advanced version of the Sparrow, at its Arkansas plant. Production rates reached 100 per month in 1983 for weapons now being used in the Persian Gulf on F-15, F-4, F-14 and FA-18 aircraft.

General Dynamics has managed to keep its Arkansas plant open by moving other weapons systems such as the Phalanx to East Camden. The Phalanx, a modern form of the Gatling gun, fires 100 rounds per second and is a ship's last line of defense against missiles.

Unless the war lasts much longer than expected, analysts don't expect companies such as LTV and General Dynamics to receive large replacement orders.

"If you look at it in terms of pounds, Arkansas is as well represented in Desert Storm as any state," says an aide to Sen. Dale Bumpers, D-Ark. "There are a lot more MLRS than there are Patriot missiles over there. You have to understand, though, that the Defense Department has high inventory levels.

"Congress approved 36,000 MLRS rockets for this fiscal year, compared with 48,000 last year and 72,000 per year for seven years in the 1980s. God knows what the total will be for fiscal 1992."

Another defense analyst says the military buildup of the 1980s was geared toward a possible war with the Soviet Union.

"Saddam Hussein may be Hitler, but Iraq is not Naze Germany," he says. "Considering the inventories and the fact that Iraq has not fought back in the early going, there has not been a lot of consumption of Arkansas-made weapons. This is basically a cone-as-you-are party. There won't be massive new employment as was the case during World War II. Don't expect to see Rosie the Riveter. And don't forget the budget deficit is still hanging over us. I don't see people out protesting in favor of a war tax."

Other Companies Involved

Other Desert Storm contributors in the Highland Industrial Park at East Camden are:

* Atlantic Research Corp., which makes the MLRS rocket motor and motors for the Army Tactical Missile System (ATACMS). LTV is the chief contractor for ATACMS but does not produce the system at East Camden.

* Brunswick Defense, which makes the MLRS launch tube.

* BEI Defense Systems Co., which makes the Hydra 70 hand-held rocket used by the Army, Air Force and Marines.

* Hitech Inc., which loads explosives into the Patriot missile.

* Tracor Aerospace Inc., which makes flares.

At Magnolia, Amfuel recently bought out its largest competitor, the Mishawaka, Ind.-based Engineered Systems Division of Uniroyal Plastics. Amfuel, which had about $40 million in sales last year, is the largest employer in Columbia County.

"Despite Desert Storm, we expect our defense contracts to fall anywhere from 25 percent to 40 percent," says a company official. "This war may take six months or it may take a year. Regardless of what happens, the Defense Department has large inventories of everything we make. In order to survive, we had to maintain sales at a certain level. That meant we had to buy out a competitor. Defense spending fluctuates to such an extent that you can't afford to have all your eggs in one basket. We'll be making more than fuel cells."

Amfuel received a blow in early January when Defense Secretary Dick Cheney canceled the Navy A-12 attack plane program. The Magnolia company had been awarded the contract to produce fuel cells for the A-12.

A group of six Arkansas investors owns Amfuel, which was purchased a decade ago from Firestone.

The Smoke People

The busiest Arkansas defense-related facility is the one owned by the government, the Pine Bluff Arsenal.

The arsenal is producing the 81mm red phosphorus mortar round, the 60mm white phosphorus mortar round and the 155mm white phosphorus projectile. The three weapons obscure troop movements.

An order recently was completed for colored smoke grenades, and production may resume soon, says arsenal spokesman Dewey Spencer. Production also will begin soon on a 40mm smoke cartridge that is fired from a grenade launcher placed beneath an M-16.

"We produced several million of them in the 1980s before the Army closed the production line," Spencer says. "We've been in the smoke business for 50 years. There are more than 40 items we can produce, but we need lead time since some of the production lines have been closed for years."

The arsenal does not make the hardware for smoke weapons. It fills hardware that is shipped from outside the state with smoke. By the same token, the arsenal does not make gas masks. It repairs and updates them.

The job of refurbishing gas masks was assigned to the facility in 1984. The work picked up when thousands of American troops were sent to the Persian Gulf in August. Soon after that deployment, 85 additional employees were hired.

Twenty civilian employees volunteered to go to the Persian Gulf in December to refurbish masks. Twelve are still there. Nine additional civilian employees left for Saudi Arabia on Jan. 21 to perform various maintenance duties.

While the arsenal seems to be booming, the fact remains it is owned by the government. Concern among Arkansas businessmen centers on the private corporations with operations in the state.

Will layoffs continue or will Desert Storm bring back the golden days of the 1980s?

"Will it be a long war or a short war?" asks the Bumpers aide. "Will it be mainly an air war or a ground war? There are a lot of questions that still have to be answered before we start appropriating more money up here."

PHOTO : IN THE GULF: The Multiple Lauch Rocket System is produced by LTV at East Camden. Recent cut is in the defense budget have led to layoffs of LTV and other Arkansas plants, and Desert Storm might not be enough to reduce the trend.
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Title Annotation:effects of the 1991 Persian Gulf War on Arkansas defense contractors
Author:Nelson, Rex
Publication:Arkansas Business
Date:Feb 4, 1991
Words:1714
Previous Article:Medical insurance for the rich?
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