Rust in system could turn arms buildup into a big backlog

President Reagan wants to increase the Defense Department's allowance from $ 162 billion in fiscal 1981 to $256 billion in 1984. But America's defense industry may have a hard time producing all the weapons scribbled on the Pentagon's new shopping list.

Since Vietnam, most of the verbal wrestling over defense has centered on whether war tools like the B-1 bomber and MX missle were truly needed for national security. While the talk went on, the defense industry's production lines got older and slower, or shut down entirely. The House Armed Services Committee, alarmed by the trend, created a special panel, which held 13 days of hearings last year on the defense capabilities of America's industrial base.

"The panel finds that there has been a serious decline in the nation's defense industrial capability that places our national security in jeopardy," panel chairman Richard Ichord reported to the full committee. "An alarming erosion of crucial industrial elements, coupled with a mushrooming dependence on foreign sources for critical materials, is endangering our defense posture at its very foundation."

Though some of the critical problems reported by the panel have since eased, its general conclusion still holds true, according to many defense analysts and congressional staffers. They say the Reagan defense buildup could well become the Reagan defense backlog.

Already there are long, fidgety lines in many defense-related industries.

New airplanes are some of the highest-priority items on the Pentagon's list. But, according to the Pentagon's Defense Science Board, a buyer now has to wait 41 months to get a completed F-15 fighter.

The problem isn't assembly, but getting parts. "At the prime [conractors] level, there's no problem," says Allen Skaggs, vice-president at the Aerospace Industry Association of America."There is a problem at the next level, with subcontractors."

From 1976 to 1980, the waiting time on delivery of aluminum forgings lengthened from 20 to 120 weeks. The line for landing gears went from 52 to 120 weeks.

The backlogs were caused by customers clamoring for new, more efficient airliners such as the Boeing 757 and 767. Industry officials say a softening economy has recently showed demand, easing the situation a little.

"Last year was an unusual year for us," says Joseph Eid, a spokesman for Wyman-Gordon, adding that waiting time for the precision forgings has company produces has shortened since 1980.

But analysts say increased orders stemming from the Reagan buildup could send the waiting time right back up again, as Wyman-Gordon is one of only three companies able to produce some of the large forgings needed on jet fighters.

Though its problems are the most acute, the aerospace industry isn't the only one with a narrow capacity to produce weapons. A Washington Post article reports that only two shipyards in the United States have the ability to build many of the Navy's new ships, and that both facilities are already running at full tilt.

Even America's most basic production force, the machine tool industry, has grown creaky and aged.

"Machine tools provide the basis for production of all military hardware," says Charles Downer, preparedness representative of the National Machine Tool Builders' Association; "however, only a fraction of the nation's machine tools are capable of efficient and timely production of today's sophisticated weapon systems."

Mr. Downer says American private industry has the lowest percentage of new machine tools in the free world. The Department of Defense itself owns 97,000 machine tools, but only about 2 percent are state-of-the-art numerically controlled equipment. The Defense Science Board recommends that at least a quarter of the tools, a portion worth about $750 million in 1955, should be immediately replaced.

And no matter how modern the machine, it won't work without a pair of hands to run it. The average age of America's 300,000 machinists is 58, and their numbers are dwindling. Yet a University of Illinois economist has calculated that a defense buildup comparable to Mr. Reagan's would increase demand for machinists by 8 percent in 1982 alone.

"The most difficult shortage to correct quickly is the shortage of skilled workers in our industrial military base," W. Paul Cooper, chairman of the board of Acme-Cleveland Corporation, said recently before a congressional committee. "It takes longer to train a machinist, a tool and die maker, a patternmaker, a design engineer, or a manufacturing engineer than it does to build and equip a plant."

A report released last month by Rep. Les Aspin (D) of Wisconsin claims that a defense buildup would suck up vast numbers of scientists and technical talent, picking clean many consumer industries and leaving them even more vulnerable to foreign competition.

The production of weapons requires many high-tech skills in electronics and engineering. "All those professions are now very competitive," says Robert DeGrasse Jr., author of a defense study for the Council on Economic Priorities, adding that any increase in defense spending would tend to muscle in on the private sector instead of just absorbing slack production.

The manpower shortage could conceivably be matched by a lack of strategic raw materials. Most of the cobalt and chromium used in making US jet engines comes from overseas. Cobalt imports, for instance, are largely from Zaire -- a country that has already cut off exports once, in 1978, because of internal political problems. Experts fear that the supply of other minerals, such as titanium and platinum, could be similarly choked off.

Why has the defense base grown rusty, like a lawn mower left out in the rain? Many analysts say it may be the nature of the business. Weapons spending in America runs on a boom-and-bust cycle, and many subcontractors have grown tired of gearing up to produce guns and then getting stuck with unused capacity.

"If you have a big military buildup, unless you continue at that rate you will have a terrible letdown," says Dr. Wassily Leontief, a Nobel Prize-winning economist at New York University.

After World War II, Mr. Leontief says, many defense subcontractors couldn't make the switch to civilian production. Instead, they quietly expired.

For those that survived, defense work sometimes become more trouble than profit. The Bodine Corporation, a small machine tool facility, produced munitions-related equipment through Vietnam. "In the 1970s, our industry -- like all others -- was buried in burdening government regulation," said President Richard Bodine before a congressional committee several weeks ago. ". . . It is no longer economically practical for us to bid for or accept a government order."

Will the Pentagon, flush with new cash, saunter down to the corner weapons store and find nothing to spend its money on?

One congressional staff member believes capacity follows demand. "Typically, when we've increased appropriations, industry has responded," he says. "There is a lag. But I don't know any other way to do it when you depend on private industry."

The House panel suggested multiyear contracts as one way to help strengthen America's defense industries. Such a move would enable contractors to plan ahead, modernizing production lines and stabilizing their work force, according to Gen. Alton Slay, former commander of the Air Force Systems Command. The bottom line would be a lower price for weapons.

"We could save as much as 20 to 30 percent over the current type of single-year contracts," General Slay told the House panel.