[ Pobierz całość w formacie PDF ]
.Whole sec­tors of the economy can prosper or wither as a result ofwartime changes.In this war, for example, not every companysuffers from the general problems discussed in Chapter 6.De­fense contractors make big profits while airlines take biglosses.Let s look at the profiteers first.Individuals, companies,and whole industries can prosper in wartime, depending onconditions.War shakes up societies, sending some up and somedown.The government can also direct military spending toparticular locations or companies, advancing them economi­cally.108Profit and Loss in WartimeDefense ContractorsOn the whole, peacetime is far better for making money in thisglobalized era than is wartime.One sector, however, is the ex­ception: those who sell goods and services for the war.Military contractors and suppliers, including arms makersand others whose goods are needed in wartime, benefit fromwar.During active fighting or heightened defense prepara­tion including the current period since 9/11 these compa­nies have higher revenue and higher profits.For example, theRaytheon company of Lexington, Massachusetts, produces theTomahawk cruise missile, hundreds of which were fired in theearly days of the war in Iraq.In 2002, Raytheon completed abatch of more than six hundred Tomahawks, and in 2001 3 thecompany was retrofitting four hundred more with global posi­tioning system (GPS) navigation, at more than half a milliondollars apiece.The company announced early in 2003 that itwould accelerate production of the missiles.In the next sixyears, the U.S.Navy plans to buy thousands more probably abillion-dollar order with an even better navigation systemthat will allow mid-flight retargeting.Defense analyst RobertC.Martinage called the Tomahawk s performance in the Iraqwar  good news for Raytheon. 1The War on Terror was also good news for General AtomicsAeronautical, which makes the Predator unmanned plane, usedfor surveillance and fitted with Hellfire missiles for use againstterrorists in Afghanistan and elsewhere.The Pentagon in 2003doubled its spending on such unmanned aircraft.The war hasalso boosted the fortunes of smaller companies lucky enoughto produce goods suddenly in demand.For example, L-3 Com­munications, a New York company that makes equipment toscan baggage and shipping containers for explosives, had a 50percent rise in its stock price in the two years after 9/11.109Profit and Loss in WartimeSimilarly, Boeing tripled production of satellite guidance kitsfor smart bombs, projecting $5 billion in Pentagon orders forthe highly profitable systems by 2010.However, since the warin Iraq was fought with the existing inventory of weapons,with spares ordered as needed, it was not a boon for defensefactories.It may have even diverted funds that would otherwisehave paid for new weapons but were instead needed to sendtroops and equipment to the Middle East.Boeing CEO PhilCondit warned that  money getting spent to fight a war then isnot getting spent on future programs, such as Boeing s next-generation unmanned bomber programs that matter to Boe­ing much more than making guidance systems for bombs.2More broadly, from early 2002 to early 2003, orders for mil­itary capital goods rose by one-quarter, even though factoryorders in the civilian economy dropped as business investmentwas held back by prewar fears.In the last quarter of 2002,higher military spending accounted for nearly two-thirds ofthe sluggish GDP growth of below 1 percent.So this periodwas good to the defense sector.The war in Iraq itself was notexpected to be a huge boost to the sector, because by historicalstandards it was small-scale.But the rising trend of defensespending in recent years gives all these companies a boost.Beyond the arms manufacturers, a whole range of compa­nies making products useful in wartime stand to profit in thenew wartime period.For instance, the 2003 war in Iraq gener­ated a big demand for training and equipment for internationaljournalists covering the conflict.Training courses in Britainand the United States on how to handle a hostile environmenthad a surge of enrollments, at several thousand dollars per par­ticipant.At the British company Centurion Risk AssessmentServices, which offers such training, business doubled fromearly 2002 to early 2003.Sales of satellite phones increased.And at the British company Expedition Kit Limited purveyor110Profit and Loss in Wartimeof bulletproof vests and other combat accessories (as well asmundane camping gear) sales have quadrupled. It s been ab­solutely fantastic for business, said cofounder Tim Simpson.3Is it wrong for companies like Raytheon or Expedition Kit toprofit from war? The country is at war, it needs cruise missiles,and Raytheon makes them.Being able to make cruise missilesis a strength of the American economy, which will contributeto winning the war [ Pobierz caÅ‚ość w formacie PDF ]