Defense industry likely to fall off fiscal cliff

Defense industry

Defense contractors are preparing for “fiscal cliff,” expect to issue massive layoffs

Shortly before the Nov. 6 presidential election, defense contractors, including Lockheed-Martin, were preparing to publish layoff notices to their employees in order to comply with provisions of the WARN Act, Worker Adjustment and Retraining Notification Act.

The law requires employers with 100 or more employees to give a minimum 60-day notice of expected plant closures or mass layoffs. Knowing that a $500 billion defense spending cut was due to be implemented the first week in January as part of sequestration, defense contractors were concerned.

They had every right to be.

Nonetheless, the Obama administration told the contractors to hold off. It would have looked bad and hurt the president’s case for re-election, you know. The White House even suggested somewhat of an immunity plan, offering to reimburse contractors for damages and legal expenses stemming from their failure to inform their employees that layoffs and plant closures were right around the corner according to an ABC News report. Top Republican lawmakers were livid.

Now that the president has the second term he wanted, falling off the so-called “fiscal cliff” isn’t such a big deal. It’s coming. President Obama knows it, Congress knows it, defense contractors know it, and soon, so will their employees.

“Administration officials have given Defense Department number crunchers the green light to begin planning for the $500 billion in budget cuts set to go into effect in January,” The Hill reported Tuesday.

Merry Christmas.

“I think there’s a creeping sense of pessimism in the defense sector,” defense analyst Loren Thompson told The Hill. “I don’t think most people in the industry really understand why their pleas have [been ignored].”

I’m sure the president knew by the end of October that his own inflexibility would result in a failure to reach any sort of an agreement in the fiscal cliff talks. But he got what he wanted — re-election. That, I suppose, is the important thing. To him anyway.

Read more at The Hill.

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About Michael Dorstewitz

Mike has been with BizPac Review almost from the beginning. Follow him on Twitter at @MikeBPR.

  • KB Cook

    wasn't that the plan all along – the fundamental change of America? Welcome to communist America

  • Viveka Weiley

    I think if you check, you'll find that the Communists maintained quite a massive State-supported defense sector.

    Until of course the crushing expense of all that imperial overreach (in particular a long and fruitless war in Afghanistan) destroyed their economy completely, leading to near-total societal breakdown and the replacement of their heaving, corrupt bureacracy and surveillance state with… well, exactly the same thing, only now with out-and-out kleptocrats in charge.

    It's almost as if – no, never mind. Carry on.