Contractors plan for worst
Published 6:40 pm Wednesday, April 11, 2012
Defense contractors with a presence in Suffolk are planning for possible deep cuts to the Pentagon’s budget next year, according to several contractors and the Aerospace Industries Association.
Mandatory cuts to the $531 billion Department of Defense budget of $50 billion per year for 10 years, a process called sequestration, will take effect if lawmakers in Washington don’t reach a deal to reduce the federal deficit by January, the Professional Services Council, a trade association, reportedly cautions.
The Aerospace Industries Association, which according to its website represents more than 300 major aerospace and defense companies and their suppliers, says many of its members have been hashing out contingency plans to deal with any cuts, and indicated layoffs would be involved.
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“We have been hearing from our members that have been making plans,” spokesman Dan Stohr said.
Defense contracting is a vital part of the Virginia economy, and its role in Suffolk’s economy grows stronger each year.
A Deloitte study released in March says 113,434 Virginians are directly and indirectly employed by the aerospace and defense industries, the seventh most among states.
Website www.governmentcontractswon.com, which tracks contracts using public-record information, says 98 defense contractors in Suffolk received 852 contracts worth more than $1 billion between 2000 and 2011.
Defense-related employment would be at special risk if sequestration were to go into effect.
Even after the disestablishment of U.S. Joint Forces Command, Northrop Grumman spokeswoman Margaret Mitchell-Jones said, her company employs 225 people at its facility in North Suffolk’s Pentagon South – the colloquial name of the area that hosts a growing number of Department of Defense installations and defense contractors.
The company employs 525 people across Hampton Roads, Jones said. Many Suffolk workers commute to those other sites as well as to other contractor workplaces outside city limits.
In an email, Mitchell-Jones stated Northrup Grumman had aligned its core business with DoD investment priorities.
“As the U.S. defense budget is highly dynamic, we defer further comment and will not try to predict its outcome,” she added.
Lockheed Martin, another defense contractor with an important North Suffolk presence, “understand(s) the fiscal challenges our nation faces and we continue to assess the budget in detail to understand potential impacts to our business, including in the North Suffolk, Virginia, area,” spokeswoman Nettie R. Johnson said in an email.
Kendell Pease, a spokesman for General Dynamics, another DoD contractor in Suffolk, said, “The company has taken a hard look at who we are and done the appropriate steps, and some of them haven’t even been enacted yet.”
Stohr urged the DoD to help contractors adjust to possible sequestration by telling them exactly where it plans cuts.
In the event of layoffs, this would help contractors issue pink slips within employees’ contract requirements, he said.
“DoD needs to be moving now to get plans for sequestration done,” he said.
The area’s biggest defense contractor, of course, is across the river from Suffolk, but many of the city’s residents work there and could find themselves at risk if sequestration resulted in a loss of contracts.
Huntington Ingalls employs about 21,400 at its Newport News shipyard and 1,430 at other Hampton Roads locations, spokeswoman Christie Miller said in an email.
“We are constantly planning for the future, but this is a long and complex process and it’s too early to speculate (on what may occur),” Miller stated.
Congressman Randy Forbes, the House Armed Services Subcommittee on Readiness chair and whose House of Representatives district includes Suffolk, stated in an email that sequestration would cripple the defense industry.
“While it is unclear where specifically … jobs would be lost, any community reliant on defense jobs would lose a great deal,” he said.
“I am doing everything possible to undo these catastrophic cuts to our national defense.”
Former Virginia governor and U.S. Senate candidate Tim Kaine said during a visit to Suffolk on Wednesday that in the face of sequestration, “Congress needs to get its act together.”