War Is Good Business
By Conn Hallinan
War, the expression goes,
is a bad business. It's certainly not a good idea if you're a soldier
or civilian caught in the middle of one, and it tends to raise havoc
with things like domestic spending. But if you are Lockheed Martin,
Northrop Grumman or former Joint Chiefs of Staff chair, Admiral (ret.)
William Crowe Jr., these are salad days.
For those who make its instruments,
war is very good business indeed, and, while the rest of the economy
may be tanking, things that go "bang" and kill people are
on a roll.
Boeing, for instance, recently
doubled its production of JDAM kits ($25,000 a pop), which make dumb
bombs smart. Raytheon added a shift to produce its Paveway laser guided
bombs ($55,600 apiece), while Alliant Techsystems is churning out 265
million rounds of small arms ammunition ( $92 million).
This is the era of high tech
war, which is good news for General Atomics Aeronauticals Systems and
its unmanned surveillance and attack craft, the Predator. The going
rate is $25 million for four. So, too, for Northrop Grumman, with its
$20 million Global Hawk, the Cadillac of robot aircraft. Northrop, which
recently swallowed TRW for $7.8 billion, is projected to earn $26 billion
in revenues this year.
To keep all these machines
talking to their operators, Boeing is pitching its Wideband Gap satellite
($1.3 billion per unit) and Lockheed Martin, Hughes and TRW are pushing
their EHF Advanced Wideband satellites for $2.7 billion a shot.
And if you're Admiral Crowe
Jr., you are cashing in on a real smart investment. Back in 1998 the
state of Michigan sold the vaccine company, Bioport, to a group of private
investors. At the time, the company was under fire from the Federal
Drug Administration for poor quality control of its smallpox vaccine.
Crowe Jr. and company brought the place for a song and, shortly thereafter,
landed a $60 million contract from the Department of Defense.
You don't have to kill people
to make money. Take Kellogg Brown & Root, owned by Vice-President
Dick Cheney's old company, Halliburton. The construction company has
been building bases since World War II and had a virtual lock on military
construction during the Vietnam War. It made $2.5 billion from the DOD
during the '90s and is presently building bases in Afghanistan (the
costs are classified).
Other bases are being constructed
in Yemen, Pakistan, Turkey, Georgia, Uzbekistan, Kyregyszstan, India
and the Philippines. No need to go to uncomfortable places to make money
from all this, however. The Homeland Security budget is $37.7 billion,
and the military industrial types are already thundering toward the
trough.
Boeing wants to fit commercial
airplanes with its missile-tracking device, the same one that keeps
missing its targets in the Administration's billion- dollar missile
defense boondoggle.
Lockheed Martin wants to
sell its military simulators to train emergency fire and medical teams.
General Dynamics is pushing
armored vehicles to local police (a bargain at $200,000 plus) and also
wants the military to use its Gulfstream Executive jets as early warning
radar systems. Smart move. With the economy a disaster, and the Iraq
War likely to worsen things, Executive jets are a slow sell these days.
Northrop Grumman, builder of the $2 billion B-2 Stealth Bomber, and
co-contractor with Lockheed Martin on the $400 billion F-35 Joint Strike
Fighter, is pushing its telecommunication systems as a way to fight
bioterrorism.
All of this, of course, is
done in the spirit of patriotism. "The attacks on Sept. 11 are
a very personal things for us," says Boeing Vice-President John
Stammreich. He did not, on the other hand, offer any of his company's
whiz-bangs at cost.
If one adds up all the supplementary
costs of war beyond the $355.5 billion military budget--Homeland Security,
$30 billion in supplementary funds, $25.5 billion for foreign military
assistance, $16 billion for nuclear weapons, etc--the U.S. spends in
excess of $465 billion each year, or $1.2 billion a day.
A month of military spending
would wipe out California's catastrophic budget deficit. Instead, Californians
are going to cough up $10.1 billion in income taxes just to pay for
the upcoming $100 billion plus Gulf War. U.S. military spending not
only dwarfs the combined military budgets of the "Evil Axis"
($11.4 billion), all potential enemies ($116.4 billion), but every single
nation in the world, from Russia to Luxembourg ($423 billion). War is
a bad business? Not for everyone.
January 12, 2003