Defense Companies Say ‘No More’ To Budget Cuts

 - September 19, 2011, 4:55 AM
Pratt & Whitney president David Hess warns that the U.S. aerospace and defense supplier base will atrophy with deep budget cuts. (Photo: Bill Carey)

U.S. aerospace and defense companies have drawn a line in the sand, telling Congress that budget cuts beyond more than $350 billion the Pentagon expects over the next decade will erode the country’s industrial base and diminish its ability to respond to future threats. Top executives of Boeing, Pratt & Whitney and other aerospace companies came to Washington last week to lobby members of the 12-member congressional “super committee” that is looking for ways to cut overall government spending by $1.5 trillion more. Companies also launched the “Second to None” initiative under the umbrella of the Aerospace Industries Association (AIA) to broaden their appeal to the public.

The $350 billion in defense spending cuts contained in debt-limit legislation passed by Congress in August, with other committed budget drawdowns by the Pentagon, brings the planned reduction in spending to $460 billion or more over 10 years, claimed Marion Blakey, AIA president and CEO. “Our position is no more,” Blakey told reporters at the National Press Club. “We do believe at this point, with the kind of cut that has already been tabled with the [debt-limit] act, that defense has been cut into the bone and we cannot have that continue.”

A recurring theme of the September 14 press conference was the increasing inability of aerospace and defense companies to invest in research and development and critical infrastructure, making the country weaker over time.

“In the area of defense, I have great fears about the industrial base. Right now, for the first time in more than 100 years, we do not have an active design team working on a manned aircraft,” said Jim Albaugh, Boeing executive vice president. “The F-35 is in test, and the design teams are going away. I think the big question is, at what period of time do you lose the capability to actually design airplanes?”

Pratt & Whitney president David Hess, whose company builds the F-35’s F135 engine, argued that U.S. defense spending–excluding the wars in Iraq and Afghanistan–has seen a continued decline to just 4 percent of the GDP. The effect has been to cull the field of suppliers with certain capabilities. “We’ve shrunk to the point where there is little margin in some key capabilities.…As that capability atrophies, it’s very hard to reconstitute and get it back,” Hess said.