Defense Industry Cuts Exceed 500,000 Workers Over Cliff [View all]

[Zorro]

John Lutz is following the debate in Washington over the so-called fiscal cliff with more than academic interest.

Lutz’s wife has been out of work for more than a year, and he worries that he may be next if Congress and President Barack Obama fail to reach an agreement forestalling more than $600 billion in automatic spending cuts and tax increases scheduled to start taking effect in January.

Lutz, 50, supervises high-speed milling operations at Alken Industries Inc. in Ronkonkoma, New York, which makes components for military jets and helicopters. The company depends on defense contracts for most of its business, anticipates that next year’s sales will decline by 10 percent and is trying to diversify into commercial aerospace, said Kimberly Senior, chief executive officer, in a phone interview. Its workforce has been reduced to 57 employees from 72 in 2011.

“It’s kind of scary,” Lutz said. “I believe my work could be in danger. If you get all these defense cuts in the budget we’ll probably wind up eliminating some more jobs because the company will try to downsize more than what they already have.”

More at: http://www.bloomberg.com/news/2012-12-06/defense-industry-cuts-exceed-500-000-workers-over-cliff.html

This article makes the point that the sequester will have a serious effect not only on direct defense company jobs, but also will have serious collateral effects on those businesses who are indirectly reliant on defense contracts. It provides some insight into why Panetta has made such dire warnings about the sequester.