Defense firms plan own furloughs amid shutdown

2013-10-05T00:00:00Z Defense firms plan own furloughs amid shutdownBloomberg News Arizona Daily Star
October 05, 2013 12:00 am  • 

Lockheed Martin Corp., the biggest U.S. government contractor, said Friday it has identified about 3,000 employees for furloughs on Monday because of the partial government shutdown.

Other defense firms have already furloughed workers or plan to do so if the shutdown continues. Raytheon Co., parent of Tucson-based Raytheon Missile Systems, says its contingency plans include potential operational adjustments but detailed no firm plans.

“I’m disappointed that we must take these actions and we continue to encourage our lawmakers to come together to pass a funding bill that will end this shutdown,” Marillyn A. Hewson, Lockheed’s president and chief executive officer, said in a statement. She said the number of workers on unpaid leave is expected to increase weekly if the shutdown continues.

Warnings of planned or potential furloughs, coupled with pleas for an end to the funding impasse in Washington, extended beyond Lockheed. Boeing Co., the No. 2 contractor, said Friday that it may have “limited furloughs” beginning next week. The Aerospace Industries Association, a trade group, said tens of thousands of defense workers face furloughs.

“I view it as a domino,” said Mark Amtower, who runs a government-contracting consulting firm in Clarksville, Md. “If Lockheed can do it, then you’ll see several of the other top 20 start to drop off, too.”

Some Lockheed employees aren’t able to work because their jobs are in closed government facilities, their tasks require government inspections or the company has received an order to stop work, the company said in a statement.

The Lockheed workers affected by furloughs were to be notified Friday, Hewson said in a memo to them.

“If you want to make your voice heard on this issue, I urge you to contact your members of Congress on your personal time,” she told them.

Boeing “is seeing increasing effects on certain daily operations that involve U.S. government facilities and people,” spokesman Dan Beck said in an email.

“While the company is working to limit the negative impact of the shutdown on customers and employees, we expect more consequences could emerge in the coming days, including limited furloughs of employees in some areas,” he said.

The Chicago-based defense and aerospace company received $30.3 billion in awards in fiscal 2012, according to the BGOV study.

Some employees of contractor Booz Allen Hamilton Holding Corp. are being assigned to other tasks or taking time off with pay, James Fisher, a spokesman, said in an email.

“We have not begun any furloughs, but are considering various options, depending on the length of the shutdown,” said the spokesman for the McLean, Va.-based company, which ranked 13th in the BGOV study with $4 billion in contracts.

The shutdown is affecting all aspects of military contracting, according to a letter to Defense Secretary Chuck Hagel from Marion Blakey, president of the Aerospace Industries Association, and retired Lt. Gen. Lawrence Farrell Jr., president of the National Defense Industrial Association. Both are based in Arlington, Va.

The two industry officials said their “most immediate concern” was the absence of contract-management inspectors, who audit work throughout the manufacturing process.

Two other top defense contractors have announced plans to cut back on work since the government shutdown began Oct. 1.

It may affect 10 to 15 percent of the 34,500 employees of the U.S. unit of London-based BAE Systems Plc, according to Neil Franz, a company spokesman.

The U.S. division, BAE Systems Inc., already has excused 1,000 employees from work, according to an e-mailed statement from Linda Hudson, the unit’s chief executive officer. The division will pay employees through this work week, Hudson said Sept. 30 in a Facebook message.

United Technologies Corp., a supplier of helicopters and jet engines to the military, said this week that an extended government shutdown would force furloughs of as many as 5,000 workers.

The first effect will be furloughs for about 2,000 Sikorsky Aircraft employees on Monday, and possibly 2,000 more at Pratt & Whitney and UTC Aerospace Systems if the shutdown runs into next week, the Hartford, Conn.-based company said in a statement Wednesday.

It said a shutdown into November could push the total past 5,000.

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.

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