September 04, 2012
Credit: Credit: BAE
Uncertainty about $500 billion in additional U.S. defense budget cuts slated to start taking effect in January is “wreaking havoc” on weapons makers, threatening 1 million jobs, jeopardizing the health of suppliers and slowing acquisitions, Linda Hudson, the top U.S. executive at Britain’s BAE Systems Plc (BAES.L), told Reuters.
BAE Systems may have to warn all of its 30,000-plus U.S. employees just before the November 6 presidential election that the budget cuts could lead to about 4,000 layoffs, said Hudson, chief executive officer of the U.S. arm of Britain’s largest defense contractor.
“The environment is wreaking havoc on all of us and our ability to do rational things,” Hudson said in an interview last week, noting that uncertainty about the budget outlook was compounded by the presidential election and U.S. tax rates.
“If everything is cut across the board, we may end up having to send notices to all of our employees that work on government contracts because we can’t pinpoint a location that would be affected, or a program that would be affected,” she said.
Hudson’s comments came about a month after the U.S. Labor Department said the circumstances surrounding the planned cuts were too uncertain to require defense and other federal contractors to comply with a law calling for employees to be notified 60 days before major layoffs or plant closures.
Republican lawmakers have accused the Obama administration of trying to suppress potentially damaging notices of layoffs just before the election.
BAE Systems is one of many big weapon makers that are urging U.S. lawmakers to avert additional defense cuts mandated by the Budget Control Act, warning that more than 1 million jobs are at risk around the country.
The looming $500 billion in cuts stem from an August 2011 congressional deal in which lawmakers pledged to find $1.2 trillion in additional deficit reductions.