Sales at Lockheed’s information technology unit, for example, dropped about 7 percent in the second quarter.
Meanwhile, sales rose for its F-35 fighter jet, which accounts for 14 percent of Lockheed’s revenue and is the Pentagon’s largest weapons program. The program had been besieged by questions about cost overruns, but it has been largely shielded from budget cuts.
“I’d say that our customer really has not come out with a definitive position on how they’re going to take into account sequestration,” said Marillyn A. Hewson, Lockheed’s chief executive. “One thing I will say is that they’re very supportive of the F-35, and we’ll just have to see how it comes out.”
In the Washington region, a booming market in contractor jobs has ground to a standstill. The government’s usual labor statistics don’t track contracting jobs specifically, but most of those jobs tend to fall under the professional, scientific and technical services industry. That industry averaged 2.6 percent annual job growth from 2003 through 2011, adding nearly 100,000 net jobs in the process.
But over the past 18 months, employment growth slowed to a trickle; the industry added just 1,200 net jobs, a growth rate of 0.1 percent.
Still, the region and the industry are not experiencing anything close to the economic cataclysm that defense lobbyists warned about.
In the months before the sequester took effect, the Aerospace Industries Association warned that it would be devastating to the defense industry and the broader economy. Sequestration will “be the second wave that overwhelms our floundering economic boat, likely sinking us back into a recession,” the association said in a January statement. The association’s chief executive could not be reached for comment Tuesday.
Industry analysts said this week that the full effects of the cuts were always likely to take several years to materialize and that contractors were wrong to suggest otherwise. The cuts will eventually ripple through the industry, they said.
“The biggest reason why sequestration isn’t hurting earnings is because it takes a long time for legislation to turn into bottom-line results,” said Loren Thompson, a consultant for the defense industry. “There’s a lot of money that is coming out of the military procurement accounts, but the impact is only trickling down.”
The Defense Department’s short-term strategy is buffering contractors for now, other analysts said.
“The easier, less painful things are getting cut first from the DOD, and the more painful [steps] — including going to contractors, looking at long-term programs and potentially disrupting supply chains” will be “the last thing DOD is doing,” said Loomis, the Stifel Nicolaus analyst. But “if the cuts continue into ’14, there’s no choice.”