Demand for Body Armor Benefits a Small California Company
STEVE INSKEEP, host:
Of all the money the U.S. government spends on defense, the biggest single chunk goes to businesses in California.
That's been true for many years, but now it's a new kind of defense industry that's getting contracts: smaller companies that make specialty products to fight 21st century wars.
From member station KQED, Rob Schmitz reports.
ROB SCHMITZ reporting:
Joel Moskowitz insists he's not a defense contractor. Defense contractors, he reasons, are large aerospace companies that make fighter jets and weapons systems; they're not small ceramics companies like his. But when 80 percent of his company's projected sales next year will be to the military, saying he's not a defense contractor is becoming more difficult.
Mr. JOEL MOSKOWITZ (CEO, Ceradyne, California): We have this one material, it's terrific. And the government is buying tens of thousands of tons of this, and we're there. And if the company continues at the 80 percent level, then I guess I won't be able to say it forever.
SCHMITZ: Moskowitz is a CEO of Orange County-based Ceradyne. When he started the company 38 years ago, military contracts were not what he had in mind for the durable, lightweight ceramic parts his company made. But that changed a few years ago after the U.S. occupation of Iraq.
As a growing insurgency threatened U.S. troops, the Pentagon realized it needed more lightweight body armor that could stop bullets and shrapnel. Moskowitz answered the call with Ceradyne ceramic armor plates.
Mr. MOSKOWITZ: This is where we make the ceramics.
SCHMITZ: Topping his designer suit with a big blue safety helmet, Moskowitz walks through a row of 20-foot tall cylindrical furnaces. The tops of the furnaces glow orange. Inside them, a temperature of 3600 degrees Fahrenheit helps mold the body armor plates from boron carbide, the strongest material on earth for its weight.
Demand for these armor plates has helped Ceradyne grow from $45 million dollars in sales five years ago to a projected $560 million in sales this year. It is one of the fastest growing companies in the region, thanks to military contracts. And Ceradyne isn't alone.
Mr. JACK KYSER (Chief Economist, Los Angeles County Economic Development Corporation): It has become almost like a boutique type of industry.
SCHMITZ: Jack Kyser is the chief economist at the Los Angeles County Economic Development Corporation. Kyser says today's Pentagon wants items like video games, trained personnel, or global positioning software that helps generals keep track of their troops. He says the government has found these products among California's smaller engineering companies that used to do most of their work for the retail sector.
Mr. KYSER: You're a lot of cross-fertilization. Somebody may be doing something for a videogame business one day and the next day they may have a business order from somebody who's doing defense work. It's a very different type of defense.
SCHMITZ: A different type from what a half a century ago provided thousands of blue collar jobs for the region, a time when companies like Boeing, Northrop, and Lockheed bolstered Southern California's middle class with manufacturing plants that churned out fighter planes and missiles.
Now both Northrop and Lockheed have merged with other companies and left the region, taking jobs with them. Boeing's huge cargo jet plant in Long Beach is now facing the possibility of a shutdown in 2008, which will put another 6500 jobs on the line.
Ceradyne's Joel Moskowitz admits many of his company's new jobs are in factories in Kentucky and Georgia. California's real estate and electricity prices mean it's too expensive to expand here.
Mr. MOSKOWITZ: That's a driving factor. So you know, we've hired probably 200, 250 people in the last 14 months, in Lexington. That would've been here.
SCHMITZ: And as real estate prices in Southern California continue to soar, the region's status as a Mecca for blue collar defense jobs seems as outdated as the Cold War.
For NPR News, I'm Rob Schmitz in Los Angeles.