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CUTS MAY PROVE A BLOW FOR DEFENSE WORKERS

SHARE CUTS MAY PROVE A BLOW FOR DEFENSE WORKERS

Cuts in defense spending won't hurt the economy, analysts say, but could be traumatic for a work force accustomed to satisfying a single complacent customer - the Pentagon - instead of the competitive marketplace.

A third of the nation's engineers and scientists work in defense, and by some estimates 26 million people depend on the military economy, so there's considerable concern in Washington about the recoil that will be felt if the defense budget is sharply reduced, as seems likely.Analyst William W. Kaufmann of Harvard University and the Brookings Institution thinks defense spending could be half its current size in 10 years.

Both the new era opened by President Bush and Soviet President Mikhail S. Gorbachev at Malta and the pressures of the deficit point to dismantling the Reagan era defense buildup. John Ruby, chief operating officer of Ford Aerospace, says a number of firms are already planning "downsizing."

Some economists say the government also should be designing retraining, counseling, job search and relocation programs to ease the transition for defense workers.

"We put over a billion and a half dollars into building planes we didn't need" to preserve jobs, says Lawrence J. Korb, who was an assistant defense secretary in the Reagan administration.

"I'd like to see the government come up with a plan to help people in a graceful and humane way, but you talk about an industrial policy in this country and they call you a communist," he says.

Congress' Joint Economic Committee is looking at the issue. It has scheduled hearings for Tuesday on "the economic consequences of reduced defense spending and the winding down of the Cold War."