Sequestration Specter Already is Making its Mark on Contractors

March 14, 2012

Neither the government nor the aerospace industry can afford to sit and wait for the sequestration required under budget law to kick in on Jan. 2, 2013, an industry chief said Wednesday. The mere threat of across-the-board spending cuts already has had a "chilling effect" on companies that are vital both to the economy and to U.S. national security, said Robert Stevens, chairman and chief executive officer of Lockheed Martin Corp.

Stevens told a Capitol Hill luncheon gathering sponsored by the Aerospace Industries Association that his industry has responded to the budget situation's "huge disruption" by reducing overhead and cutting investments in training and research and development, as well as imposing "painful" reductions in force.

"We understand the need to address our nation's fiscal challenges," he said. "But the prospect of sequestration is another matter entirely," given the $500 billion in reductions the Pentagon would absorb over 10 years, including $53 billion in fiscal 2013 alone. Such changes would be "divorced from any national strategy and from operational needs," he said, resulting in "the smallest ground forces since 1940, the fewest ships since 1950, and the smallest Air Force in history." The country needs a "strategy to preserve the industrial base, not dismantle it," he added. 

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