US Arms Makers: Uncertainty Paralyzing Investment, Jobs

By Reuters

“We need clarification now,” he said, adding that lawmakers appeared to be becoming more engaged on the issue. Industry leaders have joined forces with unions in some areas to fight the budget cuts.

Hess said Pratt & Whitney was analyzing the expected impact of the additional budget cuts on its revenues and hiring, but the uncertainty had clearly put the brakes on his company’s investment and hiring plans.

“We’re already seeing it today,” Hess said. “No one wants to hire. No one feels there’s enough certainty to make significant capital investments. We’re all kind of waiting on the sidelines to see what happens,” he said.

Industry leaders have warned that the Pentagon could also face billions of dollars in contract termination fees and other costs when the new cuts go into force next year.

Dennis Muilenburg, president and chief executive of Boeing Co’s defense unit, said his company had shed 8,000 jobs and decided in January to close its Wichita, Kansas facility to cut costs and safeguard some research and development spending.

“We’ve been preparing ourselves for a worst-case scenario - a full $1 trillion cut in the U.S. defense budget,” Muilenburg told a group of reporters at the airshow. “We’re trying to size our cost structure to be prepared for that worse-case scenario.”

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