States Study Economic Conversion

BOSTON—An informal network of local and state activists is using economic rather than political arguments in a campaign to divert spending on military R&D to civilian projects. The effort to reduce a local economy's dependence on defense con tracts and replace it with a variety of civilian R&D projects is known most often as economic conversion, although it goes by a variety of other names. Based on a desire to avoid the historical fluctuations in funding that have plagued communities who

Jun 29, 1987
Joseph Hixson
BOSTON—An informal network of local and state activists is using economic rather than political arguments in a campaign to divert spending on military R&D to civilian projects.

The effort to reduce a local economy's dependence on defense con tracts and replace it with a variety of civilian R&D projects is known most often as economic conversion, although it goes by a variety of other names. Based on a desire to avoid the historical fluctuations in funding that have plagued communities whose scientists and engineers work chiefly for defense con tractors, the movement has gained support from those who seethe latest buildup in military spending coming to an end. But disagreement remains on the economic impact of such conversion efforts.

A bill passed June 2 by Connecticut legislators provides $12,000 in seed money for a permanent task force on manufacturing that hopes to offer incentives and capital to companies that switch from military to civilian projects. The bill's sponsor, State Rep. Sean McNally, expects leaders from education, labor and business to use the task force to plot the state's long-term economic health. Later this summer Massachusetts legislators are expected to approve $100,000 to finance a similar task force.

Some scientists, such as electrical engineer Anne Schuerger, have become dissatisfied with military contract work. The cancellation of a defense project Schuerger was working on for Sunstrand Corporation's aerospace department in Rockford, Ill., caused her to leave the company and become involved in civilian projects.

Now a member of the Minnesota Economic Conversion Task Force, Schuerger wants to reduce the nation's dependence upon military contracts for both economic and philosophical reasons. "Money channeled into the civilian economy rather than the military creates more jobs," Schuerger said.

"The shift also opens new avenues for research in the private sector and creates more secure, community-oriented jobs for skilled scientists and technologists."

Beyond the Pentagon

Perhaps the most intensive efforts toward economic conversion are occurring in Cambridge, home to several firms involved in supplying weapons systems to the Defense Department. A report last February by the Cambridge Peace Com mission advocated greater diversity among the city's businesses. "Diversification planning does not require that a firm cease doing business with the Pentagon, but that it expand its non-military government or commercial activities," declared the 18-page report, which interviewed city defense contractors and Defense Department data to assess Cambridge's dependence upon defense contracts.

The report cited Bolt, Beranek & Newman, one of Cambridge's leading military contractors, as a model. The firm has ventured into noise pollution and transportation studies, partly owing to severe losses in aerospace contracts during a recession at the end of the 1960s. Although the firm is now in-creasing its military operations, its civilian operations have given it a more flexible financial foundation.

For firms who find it hard to diversify without incentives, the re port recommends legislation establishing "specified tax abatements, long-term tax agreements, and corporate income tax deductions."

In Portland, Ore., activists are circulating petitions for a 1 percent income tax on incomes over $100,000 to create a "peace-oriented venture capital fund." The campaign to place the issue on the November 1988 ballot is being led by members of World Peacemakers, a small nationwide network of independent peace/justice groups whose members have moved be yond their initial anti-nuclear campaign.

A similar effort last summer in San Jose to tax military contracts coming into the city and to create a new Economic Stability Commission was defeated after opposition from local military contractors. George Muihern, director of public relations at Lockheed Corp., said that the company fully supports diversification, but that other is sues are at stake as well.

"We're all in business to do certain things," Muihern said. "Supporting the government is one thing we do, but we want to broaden our base to the extent we can."

The question of whether federal defense contracts are inherently more unstable than other types of economic activity is a major issue in most economic conversion campaigns, including the current effort in Minnesota. State Rep. Karen Clark, who leads the state's Economic Task Force that is seeking to diversify local businesses that depend upon military contracts, said the drive has faced stiff opposition from Honeywell Inc. and other contractors that do business with the Pentagon.

In public testimony last summer, a Honeywell spokesman cited a 1985 study for the Defense Department that found no evidence to support what Honeywell said are important assumptions made by supporters of economic conversion—that the defense industry in Minnesota is more susceptible to the "boom and bust" of military spending than other industries in the state, and that defense-related jobs can easily be converted to non-defense jobs. On the other hand, advocates cite a 1983 defense study from the Congressional Budget Office that found $10 billion spent by military contractors generates 40,000 fewer jobs than a comparable amount spent on public or private commercial activity.

Hixson is a freelance writer in Boston.