According to several executives from the defense industry, the possible automatic budget cuts are paralyzing the hiring and investment plans for defense contractors, Reuters reported.
In an interview with Reuters July 8, before the Farnborough International Airshow, Mick Maurer, president of Sikorsky Aircraft said, the “uncertainty is paralyzing everyone.”
Boeing Co.’s defense unit president and chief executive Dennis Muilenburg, also present at the airshow, said the company has already cut 8,000 jobs and is closing a facility in Kansas in order to prepare for the possible sequestration.
In a separate interview with Reuters, Aerospace Industries Association chairman Dave Hess said that Congress should act fast and not wait for December because all contractors can do is sit on the sidelines and watch.
The AIA estimates that sequestration, a 10 to 14 percent cut in Pentagon spending, could result in the loss of 1 million jobs and a 25 percent reduction in U.S. economic growth.
Hess, who is also the president of United Technology’s Pratt & Whitney engine-making unit, said the defense industry needs clarification right away because currently no companies can do much hiring or make finalized plans for next year.
Recently, six Republican senators asked several defense contractors about the potential impacts of the automatic budget cuts, scheduled for January 2013.