Clinton offers steps to help defense industry

VALPARAISO, Indiana (Reuters) - Democratic presidential contender Hillary Clinton offered a package of measures on Saturday designed to keep U.S. defense manufacturing jobs in the United States.

Clinton, a New York senator, said the drain of U.S. manufacturing jobs to foreign countries under President George W. Bush was hurting companies that serve the U.S. military.

"We're not just outsourcing jobs, we're outsourcing our security. This has got to stop," she said in Valparaiso, which lost 225 jobs when the Magnaquench company moved them to China five years ago.

The company made "neo" magnets, critical components in the guidance systems of military smart bombs. Two former Magnaquench workers appeared with Clinton at a rally where she proposed steps to try to save similar companies.

"We've got to elect a president next year that will remember Magnaquench, remember the story and remember the technology," the New York senator said.

Clinton is battling Illinois Sen. Barack Obama for the Democratic nomination to face Republican John McCain in November's presidential election.

She proposed new requirements to toughen reviews of foreign investment in national security industries and technologies. She also promised to strengthen the "specialty metals clause" that requires certain vital metals used in defense manufacturing be produced in the United States.

Clinton said she would spend $75 million to create a new task force on industrial espionage to investigate and prosecute cases of espionage and information theft.

She also called for a broad review of the industrial base serving the U.S. defense industry and for an analysis of new defense contracts to determine their impact on U.S. jobs and industry.

Clinton earlier on Saturday visited two defense-oriented manufacturing factories in Indiana, which votes on May 6. One produced transmissions used in tanks, and the other produced military-use Humvees.

(Writing by John Whitesides; Editing by Peter Cooney)

(To read more about the U.S. political campaign, visit Reuters "Tales from the Trail: 2008" online at http:blogs.reuters.com/trail08/)