Reuters Summit-US aerospace/defense stresses jobs

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US military contractors are more than ever promoting the stimulative impact of their business on jobs and the economy as Congress mulls steeper cuts in defense spending to reduce the budget deficit.

With job creation a political priority amid 9.1 percent unemployment, defense industry executives are applying pressure with $330 billion in cuts already in the pipeline and billions more possible through the early part of the next decade.

Companies, their workers and their lobbying forces are placing stronger relevance in their outreach to lawmakers and the Obama administration on economic issues as big reductions are weighed in an uncertain fiscal climate in addition to always prominent national security arguments, Reuters reports.
“I think they need to temper their thinking and their decisions with the benefits that industry has to the economy,” Pratt & Whitney Chief Executive David Hess told the Reuters Aerospace and Defense Summit. Pratt & Whitney is a division of United Technologies (UTX.N).

More than 10 percent of U.S. manufacturing demand is supported by aerospace and defense spending, industry figures show. About 800,000 jobs are directly tied to the sector, which supports numerous other jobs.

Other leading companies in the sector include Lockheed Martin (LMT.N), Boeing (BA.N), Northrop Grumman (NOC.N), General Dynamics (GD.N).

Total industry sales of planes, missiles, ships, ground equipment and other technology topped $214 billion last year.

Additional business related to Energy Department, Homeland Security, and satellite programs add to the economic engine.
“Nobody in the government thinks about that impact systematically, and politicians often describe military outlays as if they are a drag on the economy rather than a stimulus,” Loren Thompson, an analyst with the Lexington Institute, wrote this week in a Forbes column.
“Political leaders can’t seem to grasp that money spent by the Pentagon is just as potent in creating jobs as money spent by the Department of Transportation,” Thompson said.

He told Reuters separately that President Barack Obama’s $300 billion proposal on Thursday night to create jobs throughout the economy with his reelection fortunes sagging comes as the government considers $300 billion or more in military spending reductions.

At the same time, Thompson told Reuters that companies and their allies historically have not made a coherent case about the economic impact of their business.

Industry is working overdrive to minimize spending cuts, which could lead to tens of thousands of lost civilian jobs, analysts said. These, in many cases, would include higher wage engineering and technology positions and specialized assembly jobs.

In an unusual alliance, the Aerospace Industries Association trade group joined last week with organized labor in a letter to Obama to tout the industry’s impact on jobs.

The Sept. 1 letter urged Obama to “keep in mind the many thousands of aerospace and defense workers that face the loss of their jobs in these difficult economic times.”

The group plans to next circulate a similar letter to key members of Congress.