Connecticut, early into the defense industry, aims to stay in front line

Yankee ingenuity put Connecticut in the forefront of America's Industrial Revolution and made it one of the nation's earliest defense suppliers. The state isn't about to surrender its role as a leading manufacturer of military hardware. Connecticut's role as a supplier for American military forces is deep-rooted.

Hats, bullets, and brass buttons for George Washington's Revolutionary War army were made by industries that arose along the mill streams cross-hatching the state. The first American warship, the 16-gun Oliver Cromwell, was built in Connecticut. So was the first torpedo boat -- invented by Daniel Bushnell of Westbrook and used against the British flagship Eagle in New York Harbor in 1776.

Eli Whitney, inventor of the cotton gin, pioneered the use of standardized parts and churned out rifles for the US Army in the late 18th and much of the 19th century. His factory later was absorbed by the Winchester Arms Company. Samuel Colt was the state's leading weapons maker of the late 19th Century, supplying the cavalry and law-enforcement officers with sidearms. Colt's boring and rifling machinery became standards for US government armories and those in foreign lands.

Colt Industries, in turn, was training school for Francis Pratt and Amos Whitney, founders of Pratt & Whitney. With the rise of air power in the 20th century and the increasing reliance on electronics, P & W and other divisions of United Technologies Corporation are once again in the forefront of military goods and services. Currently, UTC's Pratt & Whitney (jet engines) leads the state in employment, followed by General Dynamics' Electric Boat division (nuclear subs), followed by UTC's Sikorsky (helicopters).

The state's defense industries aim to keep their lead. With the Blackhawk helicopter still in heavy production, for example, Sikorsky officials are heavily involved in bidding to win the contract for the US military's next generation of helicopter, code-named the LHX.

This is to be a highly automated craft flown by one pilot. Major US helicopter makers have already ``bought into'' the 'copter by working on its development; Sikorsky dedicated a new engineering building to flight simulations, labs, and other research and development to prove the single-pilot concept.

``You're going to be hearing a lot about LHX in the next few years,'' a Sikorsky official predicts.

Sikorsky president William F. Paul applauds the ``solid backing for conventional weaponry'' of the Reagan administration. But he still sees a need to stabilize the firm's employment: ``The idea is to keep lean enough so that when the next cycle takes place you can handle it.''

Over the years, those cycles have taken their toll on the Connecticut defense industry -- especially on subcontractors, a group that is supposed to benefit the most from the ``multiplier'' effect of defense spending and which, conversely, appears to suffer from a ``divider'' effect as well. It is easier to cut off a subcontractor than to lay off workers in your own plant.

L. L. Allison, UTC vice-president for strategic planning, says, ``Since 1970, there's been a substantial decrease in the subcontractor base for all of the aerospace industry. Small machine shops were the first to feel the effects after the Vietnam war ended. The yo-yo effect on subcontractors has driven many of them out of business, and they're reluctant to come back under the current defense buildup.''

Mr. Allison adds, however, that United Technologies has maintained a ``cadre of efficient and loyal subcontractors over the years.'' Sikorsky's Mr. Paul notes that his company's relationship with subcontractors is so close that ``if we had to pull the chain it would be as damaging as cutting employment at Sikorsky itself.''

One element that lures defense business to Connecticut, says David Driver of the state Department of Economic Development, is the ``sophisticated network of subcontractors. They can make any kind of product -- and that attracts business.''

Several times a year, the Department of Economic Development calls together hundreds of subcontractors to meet with big defense manufacturers or, as it did recently, with representatives of the military's own logistics bases. (In the wake of scandals over $500 hammers and other overpriced parts, the military is showing an increasing inclination to go right to the manufacturer to contain costs.)

Because of widespread diversification of the state's economy in recent years, says Dale van Winkle, head of UTC's government affairs office, ``if there were a modest adjustment in defense spending, there'd be no real problem in the state,'' Mr. Driver says.

Although he sees the state as generally receptive to defense industries -- and manufacturing in general, Mr. van Winkle cites the 111/2 percent corporate income tax rate and the high cost of unemployment compensation as major disincentives.

By far the major disincentive, however, is the personal property tax on machinery and equipment used in manufacturing, in effect, a tax on capital investment. This tax, morever, would be ``difficult to get rid of since it is a large revenue source for municipalities.''