Facing possible cuts, Lockheed Martin uncertain about future


Published: Saturday, August 25, 2012 at 9:12 p.m.
Last Modified: Saturday, August 25, 2012 at 9:12 p.m.

Marion County's largest manufacturer says it is uncertain what will happen to nearly 1,000 local workers if proposed cuts to the Pentagon budget come to fruition.

Kelli Raulerson, spokeswoman for Lockheed Martin in Orlando, said the company is still trying to determine the impact of $600 billion in reduced defense spending over the next decade, as outlined under a deal Congress reached a year ago to raise the nation's debt ceiling.

That would include the future of its plant in Silver Springs Shores.

According to the Ocala-Marion County Economic Development Corp., Lockheed Martin employs 929 people locally, making the company the county's largest manufacturer and its sixth-largest firm overall.

Through a process called sequestration, a total of $1.2 trillion is slated to be carved from the federal budget by 2021. That is, unless Congress can reach a new budget agreement by the end of the year. The reductions were supposed to be split between defense and non-defense programs.

“We don't know how sequestration will affect any individual program or facility, but as we've consistently said, we will follow the law with respect to sequestration and the WARN Act,” Raulerson said in an email.

The Worker Adjustment and Retraining Notification Act of 1988, or so called WARN Act, requires companies with more than 100 employees to announce mass layoffs or plant closings 60 days in advance.

At the end of July, the Labor Department issued a notice urging employers to not send out WARN announcements before the November elections because it was unclear where the cuts would occur.

That happened largely because Bob Stevens, Lockheed Martin's chief executive officer, said he would issue a blanket WARN notice for all 123,000 employees right before Election Day.

Raulerson added that prior to making any decision about layoffs and issuing WARN notices Lockheed Martin would “carefully consider” any guidance coming from Washington related to labor regulations and the Sequestration Transparency Act, a recently enacted law that requires the Obama administration to spell out how much each program would be cut via sequestration.

While the proposed cuts are to be carried out over the next 10 years, much of the impact would be felt immediately.

The Congressional Research Service noted that the Defense Department would be forced to cut spending by about $60 billion in the current fiscal year.

Recently reports have cropped up to show how those cuts would affect defense contractors.

One of the most widely cited ones came from Stephen Fuller, director of the Center for Regional Analysis at George Mason University in Virginia, who released a report in July projecting that the cuts would cost the federal government and its contractors 1.1 million jobs over the next decade.

Fuller estimated 41,905 of those jobs would be in Florida, putting the Sunshine State in the top 10 states most affected by the reductions.

Moreover, according to Fuller, the defense cuts would shrink gross domestic product, or GDP, by $94.5 billion nationally, and relieve workers of about $46.5 billion in personal income.

For Florida, Fuller projects the Pentagon's reductions would reduce income among workers statewide by $1.8 billion, lop about $3.6 billion off the state's total economic output.

The “economic losses would reverse the positive GDP trend occurring since the recovery began in June 2009 and push the economy towards recession,” Fuller concludes.

The pending reality of the cuts has revealed a curiosity among Republicans.

In opposing almost all of the Obama administration's initiatives, GOP lawmakers and candidates have repeated the mantra that the government cannot “create” jobs.

Yet many in the GOP are now blasting President Barack Obama for the cuts — even though House Republicans voted 2-1 for the legislation that led to them — and predicting dire consequences for the economy.

Last month, for example, the Republican National Committee sent out a press release highlighting Fuller's research and pinning the cuts on Obama as “the big fail.”

The GOP-led House Armed Services Committee posted on its website a link to a Wall Street Journal article that referred to the “Obama jobs sequester.”

But Sen. Lindsay Graham, R-S.C., recently told Fox News that his party “has their fingerprints all over it,” referring to the sequestered cuts.

And Rep. Steny Hoyer of Maryland, the House Democratic whip, told Roll Call, a publication that covers Congress, the current the plan for the cuts “was created with overwhelming Republican support and is a Republican initiative.” “It is a Republican product that they are now wringing their hands and saying, ‘we really didn't mean it,'” Hoyer added.

A. Barton Hinkle, a columnist with the Richmond Times Dispatch in Virginia, which could lose an estimated 200,000 jobs because of the Pentagon cuts, noted in a column recently, “It's a little rich to hear conservative Republicans treat national security as if it were a federal jobs program.”

Contact Bill Thompson at 867-4117 or at bill.thompson@starbanner.com.

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