Accession Number : ADA307115

Title :   California's Shrinking Defense Contractors: Effects on Small Suppliers,

Corporate Author : RAND CORP SANTA MONICA CA

Personal Author(s) : Vernez, Georges ; Dardia, Michael ; McCarthy, Kevin F. ; Malkin, Jesse ; Nordyke, Robert

PDF Url : ADA307115

Report Date : 1996

Pagination or Media Count : 94

Abstract : This study investigated how small, California-based suppliers in the defense aerospace industry weathered the Pentagon's budget downturns of the early 1990s. Aerospace companies have reeled in the wake of a 20-percent drop in the amount that the Pentagon budgeted for research and development and for procurement between 1989 and 1994. Nationwide, the U.S. aerospace industry job base has shrunk by 25 percent. The impact has been even more dramatic in California. Home to one in four of the country's aerospace employees in 1989, California has seen its aerospace industry employment rolls fall by 40 percent. Much of the decline has been in Los Angeles county, where 10 percent of the nation's aerospace employees worked in 1989. In 1994, some 121,000 people worked in the aerospace industry in the county, half the number employed in that sector five years earlier. Small suppliers (those with 500 or fewer employees) may be particularly sensitive to Pentagon budget cuts. Unlike large defense contractors with broad mixes of products and manufacturing procedures, small suppliers typically concentrate on making one or a handful of products. They account for the bulk of firms in the aerospace business even though they receive only 10 percent of defense dollars going to contractors. Nevertheless, they make up a crucial segment of the aerospace industry, one that would be difficult to replace should defense cuts force many of them out of military contracting. This study investigated how small suppliers were impacted by defense procurement cuts, how they responded to the cuts, and how effective government programs were in blunting the cuts' impacts. The study traced the experience that small suppliers have had with producing for both defense and commercial customers.

Descriptors :   *ECONOMIC IMPACT, *CONTRACTORS, *AEROSPACE INDUSTRY, *MILITARY DOWNSIZING, DEPARTMENT OF DEFENSE, JOBS, COMMERCE, DEFENSE SYSTEMS, EMPLOYMENT, REDUCTION, AEROSPACE SYSTEMS, CASE STUDIES, PROCUREMENT, CALIFORNIA, PERSONNEL, VENDORS, TRACTORS.

Subject Categories : Administration and Management
      Economics and Cost Analysis
      Defense Systems

Distribution Statement : APPROVED FOR PUBLIC RELEASE