Officials Seek Means to Deal With Defense Cuts

The gloomy defense industry report issued this week by Los Angeles County underscores the need for advance planning to shield San Diego County from the economic pain being caused by defense spending cuts, local officials said Tuesday.

Los Angeles County could lose as many as 420,000 jobs by 1995, while the county’s personal income total could shrink by $84.6 billion during the coming decade, according to the report.

The economic havoc facing Los Angeles “makes me feel that we’d better start working faster” to buffer the San Diego’s economy from defense spending cuts prompted by the Cold War’s end, said Kurt Chilcott, the city of San Diego’s deputy director of economic development.

Last week, city officials allocated $184,000 for an “action plan for a comprehensive local defense industry adjustment program,” Chilcott said Tuesday.

City officials will use the funds to canvass San Diego’s defense-contracting community to determine where layoffs will occur, what types of workers will be laid off and how the city can help businesses switch to non-defense production.

Economic pain in Los Angeles, by far the nation’s most defense-dependent region, will be shared by San Diego County as defense cuts continue, according to Max Schetter, a senior vice president with the Greater San Diego Chamber of Commerce. “Many of our local suppliers are suppliers to prime contractors in San Diego and Los Angeles, so we’re going to feel a ripple effect,” Schetter said.

“Los Angeles is obviously going to be hurt a lot worse than we are for variety of reasons,” said Dan Pegg, president of the San Diego Economic Development Corp. “But we’re going to start to feel, to a degree, what Los Angeles has felt.”

Although not as dominant as in Los Angeles, defense contracting remains a big business in San Diego County. Defense contracting payrolls accounted for about $5.1 billion of the county’s $59.4 billion gross regional product during 1991.

In February, San Diego County’s largest defense contractors indicated they will lay off an additional 2,500 to 3,500 employees during 1992, according to the San Diego Consortium and Private Industry Council, which provides job training for laid-off San Diegans. Defense contractors laid off an estimated 3,660 people during the past two years, according to the consortium.

But the defense industry layoffs in the county will rise even more than the consortium’s estimate because many larger defense contractors have declined to discuss staffing plans, and the consortium did not contact hundreds of San Diego’s smaller contractors and subcontractors.

“We believe that the 2,500 to 3,500 figure is just the tip of the iceberg,” consortium spokesman Earl Parker said Tuesday. The estimate was based on conversations with executives at just a handful of the county’s largest defense contractors, Parker said.

Los Angeles’ dire report “shows how vital the need (for advanced planning) is,” San Diego City Councilman Bob Filner said Tuesday. “This is not just an intellectual exercise . . . economic conversion is a matter of economic survival.”

Los Angeles’ report “underscores that this is a crisis facing our community,” said Marcia Baruta, executive director of the San Diego Economic Conversion Council, which was created in 1985 to redirect defense-related spending into the commercial sector.

“The Los Angeles report will hopefully make more people take economic conversion seriously, as something we need to do,” Baruta said. “We need to use savings from defense cuts to create new jobs.”