Defense contractors speak out against budget cuts


Williams-Pyro President Della Williams, Whitney President David Hess, EADS North America Chairman and CEO Sean O'Keefe, Pratt and and Lockheed Martin Chairman and CEO Robert Stevens testify July 18 before the House Armed Services Committee. (Chip Somodevilla/GETTY IMAGES)
July 18, 2012

Defense contractors warned Wednesday that across-the-board federal spending cuts posed a calamitous threat to their businesses and that thousands of jobs were on the line unless lawmakers find another way to shrink the deficit.

The defense industry has been exerting increasing pressure on Congress to overturn the planned cuts, noting that companies could be forced to send layoff notices just before the November election.

At a House hearing Wednesday, the chief executive of Bethesda-based Lockheed Martin said about 10,000 jobs could be lost at the contracting powerhouse if the government carries out the automatic cuts — about $1 trillion, split roughly between defense and other federal programs over the next decade.

“The impact on our industry would be devastating,” said Robert J. Stevens, the firm’s chairman and chief executive.

David P. Hess, president of Pratt & Whitney, said the company is tempering its hiring and investment, and Sean O’Keefe, chairman and chief executive at EADS North America, said his company is warning members of Congress and local officials in places where employees might be laid off.

Buoyed by military spending to fight wars in Afghanistan and Iraq, the defense industry has grown tremendously over the past decade, but it now faces a significant contraction as the wars come to an end and government spending shrinks.

Under a deal made by lawmakers last summer, the automatic cuts, known as a budget “sequester,” will start taking effect in January unless Congress can agree on $1.2 trillion in budget cuts over the next decade. The Obama administration has said it does not want to slash defense spending, and few members of Congress have indicated any enthusiasm for doing so.

“Everybody agrees it’s a bad idea and almost everybody I’ve talked to thinks we should do something to avoid it,” Frank Kendall, the Defense Department’s acquisition chief, said this week. But “I haven’t talked to anybody yet who knows how to do that.”

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