U.S. shutdown forces more govt contractors to furlough workers

Thu Oct 10, 2013 12:15pm EDT

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(Reuters) - Engineering firm URS Corp URS.N and British defense contractor BAE Systems (BAES.L) added a further 4,200 to the number of workers who have been temporarily laid off due to the U.S. government shutdown.

URS, which builds energy and other industrial projects, has furloughed about 3,000 workers, while BAE Systems said about 1,200 employees from its intelligence & security and support business had been told not to report to work for now.

Companies have announced at least 6,600 workers have been put on furlough due to the 10-day shutdown.

The shutdown was triggered after Congress failed to reach an agreement on funding for the new fiscal year due to a standoff over healthcare reforms.

A prolonged budget impasse could have seriously damaging consequences for the U.S. and global economies, with retailers, healthcare companies and weapons makers warning of project delays, employee furloughs and other impacts.

U.S. jobless claims touched a six-month high last week, partly due to the shutdown.

The negotiations over the budget are complicated by simultaneous talks to raise the debt ceiling to stave off a possible default after October 17.

The furloughs at URS and other companies such as weapons maker Lockheed Martin Corp (LMT.N) include employees working at government facilities that have been closed or those laid off after their employer received a stop-work order or directions to reduce staff.

"The government shutdown, the continuing effects of sequestration, and uncertainty about the federal budget are all having negative impacts on URS and many other government contractors," said URS CFO H. Thomas Hicks.

URS counts the U.S. departments of defense, homeland security, state and treasury as its customers.

URS and Lockheed also warned of an increase in number of employee furloughs if the shutdown continued.

A few defense contractors, including United Technologies Corp (UTX.N) and Lockheed, withdrew or scaled back plans to furlough workers after Defense Secretary Chuck Hagel recalled most civilian defense employees.

(Reporting by Garima Goel in Bangalore; Editing by Don Sebastian and Saumyadeb Chakrabarty)

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