* Industry sees cuts as "doomsday machine"
* Some say big contractors wouldn't feel immediate impact
By Susan Cornwell
WASHINGTON, Feb 1 An anxious U.S. defense
industry has launched a new push to galvanize lawmakers who are
doing little to stop the massive federal spending cuts due to
kick in on March 1.
Defense contractors started a fresh surge of letter-writing
campaigns and meetings with U.S. officials to plead their case
about why the billions of dollars in cuts known as sequestration
would harm not only the defense sector but the larger economy.
The cuts are already law, but when Congress put them there
last year, lawmakers never intended for them to happen. The
thinking was that they would be so abhorrent that Democrats and
Republicans would come up with an alternative budget-cutting
But no plan has emerged, and lately some Republicans have
been saying they are willing to let sequestration take effect.
If Congress doesn't act by March 1, some $85 billion in spending
will be cut, about half of it from domestic spending and half
from defense, this year.
"It's time that our elected officials focus and disarm the
so-called doomsday device they set in motion," Linda Hudson,
chief executive of British BAE Systems' U.S unit, wrote in a
blog posted on Thursday to employees of the company.
"Sequestration must be stopped, and you can help," she
declared, urging employees to go online to a website where they
could post a letter to their lawmakers. BAE Systems PLC
is a subcontractors on the F-35 Joint Strike Fighter jet.
Lockheed Martin is the prime contractor, while Northrop
Grumman and BAE Systems are principal partners.
Last week, the Aerospace Industries Association, the
industry's chief trade group, hosted a conference call with 200
executives from about 150 defense companies to map out plans for
a final stand against the cuts, spokesman Chip Sheller said.
The group has been warning against sequestration for months
but now is using direct marketing on Facebook and LinkedIn. It
is urging individuals who may be hurt by job losses to write
protest letters, and BAE's push is part of this plan.
"These latest gloom and doom messages from the Hill about
sequestration are fueling our efforts to turn up the volume,"
Sheller said. He said the industry had generated 17,000 new
letters to Congress and the White House since Monday.
AIA President Marion Blakey and a handful of top industry
executives have also been meeting members of Congress, including
the leaders of defense committees, to underscore the potential
impact cuts would have on jobs.
Blakey pointed out this week that the 0.1 percent
contraction of the U.S. economy in the fourth quarter was partly
caused by government spending that has already been reduced,
primarily in the defense sector. A fresh wave of cuts would
"overwhelm our floundering economic boat," she said in a
'BEST WE CAN HOPE FOR'
Defense lobbyists who have been sounding the alarm about
sequestration say they fear they may not succeed. Some saw as
particularly unsettling comments by Republican Representative
Paul Ryan this week that he thought the automatic spending cuts
"will probably happen".
"How can you maintain a firm line when the Republicans have
said they'll accept defense cuts?" said one lobbyist who
"About the best we can hope for now is that they'll allow
generous reprogramming requests," he said. Reprogramming
requests are the means by which the Defense Department seeks
congressional approval to shift sums from one account to another
to cover unexpected needs.
During recent earnings calls, defense executives said they
are not yet including the cuts in their outlooks for 2013,
leading some to believe that the sector is confident they will
But the omission is more about uncertainty, not confidence.
"We don't have specific information about how DOD (the
Department of Defense) might implement sequestration," said Rob
Doolitte, spokesman for General Dynamics Corp, which
manufactures the Abrams main battle tank, the Striker combat
vehicle and nuclear-powered submarines.
"They talk about across-the-board cuts. We have thousands of
contracts ... and until we have information about changes to
those programs, we can't make an accurate assessment of how
sequestration will impact us," Doolittle said.
Weapons-makers cite economists who say at least 1 million
defense industry jobs would be threatened. BAE has estimated
that sequestration could result in the elimination of 10 percent
of its workforce in the United States, or about 4,000 jobs,
spokesman Brian Roehrkasse said.
NO IMMEDIATE THREAT?
But some analysts say companies making major weapons systems
like the cutting-edge Joint Strike Fighter (JSF) program will
not feel an impact immediately if sequestration happens.
"The big ticket items are not really a problem. They are
already operating on contracts that have been funded ... They
will be working off their backlogs for not just months, but
years," said Chris Hellman, a senior analyst at the National
Priorities Project, a research organization that focuses on the
Big programs could be affected in the future if for example,
civilian contractors are used for training new pilots for the
JSF, and there is no money to pay the contractors, Hellman said.
Hellman does not think sequestration is the best way to cut
the defense budget, but he does not think the cuts would affect
national security. "I think we could easily take $55 billion out
of the annual defense budget, I think we should. And the sky is
falling rhetoric ... I think is unreasonable."