January 11, 2013
U.S. defense industry executives on Thursday said they were cutting costs and continuing to invest in new weapons technologies as budget pressures mounted, but said the Pentagon also needed to spell out its requirements more clearly.
Leanne Caret, vice president and general manager of Boeing Co’s vertical lift division, underscored the importance of an open dialogue between the U.S. Defense Department and its top suppliers in the current budget environment, especially since there were fewer new programs for companies to bid for.
“It’s absolutely critical that we choose our investments ... wisely, both in terms of the programs that we support, as well as those investments that will allow us to have corporate survival as we go forward,” Caret told industry and military officials at an annual aviation conference hosted by the Association of the U.S. Army (AUSA).
She urged military leaders to be candid with the industry about their requirements and fiscal realities, even if those conversations were sometimes difficult.
Boeing, Sikorsky Aircraft, a unit of United Technologies Corp, and weapons makers are bracing for additional across-the-board cuts to the Pentagon budget after lawmakers last month failed to remove the threat of $500 billion in cuts to defense spending over the next decade.
Company executives say uncertainty about defense budgets and delays in getting new procurement programs started have dampened their ability to hire workers and make needed investments.
Defense Secretary Leon Panetta on Thursday ordered the U.S. military services to freeze civilian hiring, delay maintenance work and reduce other spending, acknowledging for the first time that the additional cuts - on top of $487 billion already being implemented - were increasingly likely.
The situation is particularly grim in the helicopter market, where the cancellation of several programs over the past decade, and delays in getting others started, has sparked concerns about the loss of skilled workers and critical design skills.
Many helicopter makers were discouraged this week when an Army official said he did not expect a final Pentagon decision on whether to go ahead with a new armed helicopter until spring, which could delay the bidding until 2014.