SCIENCE/TECHNOLOGY : Defense Industry May Be Big Winner in Persian Gulf Crisis

Bernard L. Schwartz, chairman of New York-based Loral Corp., said the defense industry could benefit in the near term from the heightened military tensions resulting from the Iraqi invasion of Kuwait.

Loral supplies a wide range of electronic warfare gear that is now being deployed in air and ground systems in Saudi Arabia, including tactical reconnaissance systems aboard aircraft and sensors in a variety of missiles, Schwartz said.

And Ford Aerospace Corp. in Newport Beach, which Loral is in the process of acquiring for $715 million and other obligations, could also come out ahead if the Saudis purchase more McDonnell Douglas F-15E fighter jets from the U.S. government, as reported over the weekend.

Ford Aerospace makes the guidance systems for AIM-9L Sidewinder air-to-air missiles that are used on the F-15E. So far, Don Flamm, spokesman for Ford Aerospace, said he is not aware of any impending sale of Sidewinder missiles to the Saudi government.

But he said any Sidewinder sale would be a boon to the company’s aeronutronic division, which employs 2,700 people in Newport Beach. The division has made 130,000 guidance systems since the program was started in 1950.

The guidance system has accounted for $1 billion in Ford Aerospace sales since 1969, Flamm said, and it continues to be one of the division’s major programs. Each system costs about $20,000, Flamm said.

Schwartz has acknowledged that the Newport Beach division, which accounted for $316 million of Ford Aerospace’s $1.85 billion in sales last year, is unprofitable. But he believes the aeronutronic arm is poised for a turnaround, and another sale of Sidewinders to the Saudis wouldn’t hurt.

For the long term, however, Schwartz said he believes the Iraqi crisis will have little impact on military spending levels.

“I would hope there will be a renewed focus on the idea that the United States has global interests that need protecting and that funding will be determined by the requirements for protection,” he said.