Defense Industry Cuts Exceed 500,000 Workers Over Cliff

[Zorro]

John Lutz is following the debate in Washington over the so-called fiscal cliff with more than academic interest.

Lutz’s wife has been out of work for more than a year, and he worries that he may be next if Congress and President Barack Obama fail to reach an agreement forestalling more than $600 billion in automatic spending cuts and tax increases scheduled to start taking effect in January.

Lutz, 50, supervises high-speed milling operations at Alken Industries Inc. in Ronkonkoma, New York, which makes components for military jets and helicopters. The company depends on defense contracts for most of its business, anticipates that next year’s sales will decline by 10 percent and is trying to diversify into commercial aerospace, said Kimberly Senior, chief executive officer, in a phone interview. Its workforce has been reduced to 57 employees from 72 in 2011.

“It’s kind of scary,” Lutz said. “I believe my work could be in danger. If you get all these defense cuts in the budget we’ll probably wind up eliminating some more jobs because the company will try to downsize more than what they already have.”

More at: http://www.bloomberg.com/news/2012-12-06/defense-industry-cuts-exceed-500-000-workers-over-cliff.html

This article makes the point that the sequester will have a serious effect not only on direct defense company jobs, but also will have serious collateral effects on those businesses who are indirectly reliant on defense contracts. It provides some insight into why Panetta has made such dire warnings about the sequester.

[robinlynne]

1. Are you trying to say that Panetta cares about jobs? really?

[Zorro]

2. Of course he does.

Panetta is a patriot and has a long and distinguished career serving the country.

[Scuba]

3. If the government spends less, someone's job will be lost. Whether defense, healthcare, ...

... police, teachers, etc., someone will lose a job.

I'd frankly rather see us spend money on health and education than war, but that's just me.

[robinlynne]

9. It's not just you.

[kooljerk666]

4. Over the Road Trucking can not find workers..........

get ready to suffer..................

The freedom of the open road.

It’s hard to beat the view from the driver’s seat.
Over-the-Road truck drivers enjoy great miles, money and adventures.

http://www.schneiderjobs.com/company-drivers/driving-opportunities/over-the-road

I have had to change careers a dozen time, get ready to work.

[Zorro]

11. The trucking community will also be impacted by the sequester

Another collateral casualty.

[CincyDem]

5. Can't have it both ways

Throughout the past 18 months we've been hearing all this BS that government spending doesn't create jobs.

If that were true, another way to say it would be that there is no correlation between government spending and job creation.

If that were true, another way to say it would be that there is no correlation between government spending and job destruction.

If that were true, reducing government spending on defense won't lose any jobs.

But reducing defense spending will likely cost some jobs, so there is a correlation between government spending and job destruction, so there is a correlation between government spending and job creation, so government spending does create jobs.

Let's get out there and start investing in infrastructure so those 15 guys that aren't making helicopter parts are making parts for bridge building cranes or highway pavers or wiring up new schools.

[reflection]

6. I plan to use your first two paragraphs. Thank you. n/t

[dixiegrrrrl]

7. I love your logical drilldown...but......

If reducing spending is the plan
and part of the reduced spending will put defense workers out of a job
where will the money come from to give the jobless defense workers a job in infrastructure
since the goal was to reduce spending, not re-allocate it.

[CincyDem]

8. yeah, you're right about that...but...

I guess I'm in the "re-allocate" camp.

To my core, I do not believe that that deficit is the boogey-man that republican's have made it out to be so reducing spending isn't part of my logic flow.

To me, the national debt is like a home mortgage or the debt that a company takes on to manage it's normal business. As long as you can service the debt (pay the interest obligations) all is well.

There are several concerns with a mortgage or corporate debt.

1) interest rates might rise, dramatically increase your interest obligation to the point where you can't service it. That's bad.
2) you lose your job (or source of cash flow) and even without any change in interest rates, you can't service it. That's bad too.
3) you're mortgage holder "calls the note" and says they want full payment by 3:00pm this afternoon. That's really bad.

In today's world, the percentage of what the US Government pays to service the debt is about 18% of annual revenue. That's not out of line with firms like GE or Macy's and I don't read headlines about them going out of business because of their debt load. Other reasons, maybe...but not debt load.

Let's look at the risks with the debt...

1) Interest rates - as long as the US Government has their own printing presses, that's not going to happen.
2) lose our job - we are not going to lose the tax base of the population.
3) call the note - we, the US population, are the primary debt holders. All this noise about China...they're less than 8% and their vested interest in being a US bond holder is off the charts more important than them wanting their money back.

So I don't see the risk of the debt being very high. It's just something else repubs want you to be afraid of and I guarantee you if they ever get the WH back, the debt will be the last thing on their mind.

Imagine a situation where you're sitting around the dinner table with the family and your son, the gifted athlete, is telling you that the soles have worn completely off his track shoes and continuing to run in them could cause permanent damage to his feet. Do you say to him "sorry son, you'll just have to take the risk because our mortgage is too high". Of course not.

Failing to invest in our infrastructure for the future because of the debt is like sending the kid out to run on bad shoes because of the mortgage. Both will likely create more harm and more costs down the line than just dealing with it now.

Sorry for the ramble but that's why I'm into reallocation versus reduction.

[sadbear]

10. It won't be painless, but this shift is necessary.

Maybe those defense workers can start building parts to rebuild and improve the infrastructure. Re-purposing, if you will.