Defense firms defensively seek commercial jobs.

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.

Slayman said Lockheed is also expanding its environmental services unit in Las Vegas. "We see significant growth opportunities in environmental services and industries," he said.

At Beverly Hills-based Litton Industries Inc., Pentagon revenues have dropped to about 45 percent of the company's total annual sales from 58 percent over the past five years and will continue to decline to about 40 percent, said spokesman Dirk Koerber. Last year Litton had $5.1 billion in revenues.

Koerber said Litton also is looking to the commercial aviation market as a source of new revenues to offset declining defense work.

Litton products developed for the military that could also be sold for civilian uses include navigation systems and digital equipment for commercial or general aviation aircraft, said Koerber.

Among the more active companies in making the conversion is Hughes Aircraft in Los Angeles, which last week announced a company restructuring designed to reduce its dependence on military contracts.

Robert Dankanyin, who has been Hughes' senior vice president of diversification since the position was created 2 1/2 years ago, said there are several products the company is now marketing for commercial uses.

Those include a system used to illuminate display fields in war rooms that could be marketed to television manufacturers. Another Hughes product is a complex device that allows aircraft to identify targets on the ground that could be transferred to civilian uses, like identifying the author of a handwritten message. He said Hughes is also working with GM on developing a radar system for automobiles.

The cuts in defense spending not only affect large companies like Hughes, which last year had revenues of $7.8 billion, but also smaller contractors like Datametrics in Chatsworth, which had about $22 million in revenues.

President Sidney Wing said Datametrics is developing a high-speed color printer that will be sold on contract to a private company and a security device for facsimile machines manufactured by Xerox. Both products are being developed with technology Datametrics has used on military contracts, Wing said.

PHOTO : A communications control center owned by Hughes: The company's satellites can be used for military or commercial purposes