Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 26, 1991 TAG: 9102260393
SECTION: EDITORIAL PAGE: A-7 EDITION: METRO
SOURCE: RICHARD E. SORENSEN
DATELINE: LENGTH: Long
We're ranked second, too, in defense presence by state, again topped only by California. There are 207,874 civilian and military personnel in Virginia affilated with the Department of Defense. So Operation Desert Storm has a more favorable impact on Virginia's economy than it might in many other states.
The fact is, the business of war is big business in Virginia. Virginia is one of the nation's largest military suppliers. With numerous military bases located throughout the state, America will be turning to Virginia to train its personnel, replenish its supplies and refurbish its ships. Munitions and equipment used in the Middle East must be replaced, and Virginia will provide them.
This includes everything from propellants for artillery and rockets made at the Radford Army Ammunition Plant to combat boots made in Southside Virginia. Night-vision goggles are made by ITT in Roanoke and missiles are manufactured by Atlantic Research Corp. in Falls Church. Tires for military aircraft and trucks are made by Goodyear Tire and Rubber in Danville.
Parts for military tanks, planes, and helicopters are made by Electro-Tech, Poly Scientific and Kollmorgen, all in the New River Valley. Material for bullet- and shrapnel-proof vests are made of Kelvar, a body-protection fabric by DuPont in Chesterfield County. Radar-proof coverings are made by Bond Cote in Pulaski. Material for dress uniforms are made by Burlington Industries in Clarksville.
In addition, naval and Marine planes and ships are refurbished in the Tidewater area, and the current defense budget calls for Navy cargo and transports ships to be increased from 96 to 142.
Northern Virginia's economy is based on defense-related research, in battlefield command, control, and communications. In fact, Virginia is the locus of such activity in the United States, and outside contractors have suffered from federal budget cuts. The current war should help reverse this trend, as high-tech weapons such as laser-guided smart bombs have come out big winners.
The impact a defense contract can have on a small business is powerful. Take Virginia Apparel, with plants in Blackstone and Rocky Mount: The small family-owned operation, faced with an erosion of business due to the rise of imports, had to tell the 100 employees of its Blackstone operation that if business didn't significantly improve by spring, the plant would have to shut down. It just didn't make sense to run two plants at 50 percent capacity instead of one at 100 percent.
Earlier this month, Virginia Apparel was awarded a government contract for 429,000 desert camouflage pants, to be shipped in equal monthly shipments for 12 months beginning in June. The contract contains a clause that permits the government to extend the contract for up to 100 percent of the original amount.
Chairman Sid Mason says he's been "scratching and clawing" to save the Blackstone plant. While he can't really say the defense contract saved the business, Mason admits it certainly gave Virginia Apparel a boost.
Instead of being in the unfortunate position of possibly laying off 100 employees, he's looking to hire an additional 150.
The Bush administration estimates that the cost of the Persian Gulf War for the first three months will run about $56 billion. The U.S. allies are to pay $41 billion. It is estimated the American taxpayer will pay $15 billion.
It's just a simple fact that states with strong defense industries will pay less of that $15 billion. During war, money leaves the state in the form of taxes and borowing necessitated to fund the effort. But for states with powerful defense industries, the money comes back in the form of contracts and employment.
To date, the war has been looked upon favorably by the financial markets. It has been a well-managed and well-run operation, with minimal cost. Operation Desert Storm has been efficient. It's that military efficiency that has kept America's economy stable during the conflict.
The stock market has more than recovered to where it was before Iraq invaded Kuwait; it has thrived. The market is negatively affected by chaos and uncertainty, but this operation has been so well-managed that it produced certainty.
Oil prices haven't skyrocketed, and our oil reserves haven't suffered. The administration seems to be handling the effort coolly and consumers aren't panicking. If that continues, the stock market will continue to increase and interest rates will continue to fall.
During her recent visit to Virginia Tech, columnist Jane Bryant Quinn noted that war is usually an economic as well as a personal disaster, but that this conflict is "a special and different war."
On a personal level, war is always disastrous. It also most always makes for a tumultuous economy. But the war in the Persian Gulf, assuming the president's predictions are correct and the current trends continue, will at least be economically manageable in the commonwealth even in the midst of recession.
And that's largely due to Virginia's long history as a defense-industry powerhouse.
by CNB