Real Manufacturers Warn of Defense Cuts Economic Damage

By October 9, 2012Economy

The drum beat of the massive damage that the U.S. will see should the defense cuts go into effect is picking up. This weekend the Las Vegas Review-Journal ran an editorial by Click Bond Inc. executive Karl Hutter.

The NAM released a report that paints a stark picture of job loss and economic loss – to the tune of over a million jobs lost nationwide by 2014. But you don’t have to take the word of an economic report – real manufacturers are telling the exact same story.

Mr. Hutter writes about who will bear the brunt of these proposed cuts. “In the aerospace sector, most of the pain from these cuts will not be felt by large corporations, but by the small and midsize businesses that form the extended supply chain. About two-thirds of an aircraft’s value is contributed by smaller suppliers, and three-quarters of all aerospace and defense-related manufacturing jobs are at these firms. So cuts to large programs and their big prime contractors will immediately flow down to where most of the work is done. My company, Click Bond Inc. in Carson City, is one of these firms.”

In a recent survey of manufacturers and small businesses, over two-thirds have cited uncertainty in the economic and political arena as their major road block to job creation and investment. Mr. Hutter’s comments put a face to those significant concerns.

“Sequestration stands to negatively impact our planned growth through investments in equipment and construction, in research and technology and, most importantly, in hiring and training people. While we wait for Congress to act, the mere uncertainty surrounding sequestration makes running a business difficult. It’s hard to invest in new products or hire new workers with the sequestration buzz saw hanging over aerospace and defense programs. It’s risky investing in expensive tooling or materials for work on contracts that may be sequestered, but it’s equally dangerous putting off work in the face of tight customer deadlines and long material lead times.

We must sign contracts now with our own suppliers on work for 2013, but it’s impossible to know which projects will survive sequestration’s scythe. Such judgments must be made by every firm up and down the entire supply chain, exponentially magnifying the damage that is already under way.”

This is why the President and the Congress need to act now, on behalf of companies like Click Bond, to halt these cuts, restore certainty and save the million-plus jobs that are at risk.

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