?>

Despite Record Defense Spending Layoffs Starting to Mount

The Obama Administration submitted its 2012 budget to Congress yesterday and it contains a record request for defense funding. This includes over a $100 billion to conduct operations in Afghanistan and Iraq while continuing the investment in new equipment to improve capabilities against other threats. Despite this and due to the cyclical nature of defense programs and spending several companies, large and small, announced recently a restructuring of their workforces.  As the U.S. defense budget adjusts to fiscal reality and requirement changes more companies may be in this situation.

Defense acquisition programs tend to be built in large quantities over a span of several years as the military attempts to field its needs quickly. This can lead to a requirement for a contractor to ramp up facilities, staff and production very quickly and then just as quickly cut it back as the U.S. military meets its requirements. It behooves a contractor to identify other customers or programs that it may support to try and maintain a steady production line and workforce. This is not always possible and the history of the Mine Resistant Ambush Protected (MRAP) vehicle production in America illustrates this as several companies invested in large plants that are now running at a much lower capacity as the U.S. has met its needs for the MRAP.

Recent layoff announcements include:

Stories like this may accelerate in the near future as companies figure out what will be needed by the Defense Department in a time of reducing budgets.  At the same time there are other defense contractors who need to hire people to support their new work or programs.  Many times, though, the new company is not located near places where the layoffs are happening so that transferring people may not be so easy.

The history of the U.S. defense budget has been cycles of rapid, large expenditures followed by years of smaller budgets.  The U.S. may be entering a period of extended decline in defense spending with a negative effect on the defense contracting industry.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Comments

3 Responses to “Despite Record Defense Spending Layoffs Starting to Mount”

  1. Horatio's Perspective on April 10th, 2011 5:50 am

    […] Matthew Potter, “Despite Record Defense Spending Layoffs Starting to Mount,” Defense Procurement News: http://www.defenseprocurementnews.com/2011/02/15/despite-record-defense-spending-layoffs-starting-to… […]

  2. Lockheed Announces More Layoffs | Defense Procurement News on July 1st, 2011 2:40 am

    […] many of the earlier cuts already made this year this is not related to the end of a contract or a restructuring of work by the Defense Department. This decision along with the recently planned […]

  3. More Defense Related Layoffs Announced | Defense Procurement News on September 28th, 2011 2:29 am

    […] and well being. The announced cuts represent almost 10 percent of their workers in that country. Earlier this year BAE had already began to make smaller cuts related to specific programs. This large one seems to be […]

Feel free to leave a comment...
and oh, if you want a pic to show with your comment, go get a gravatar!

You must be logged in to post a comment.

>