Defense Cuts Could Hurt DC Economy
The Washington Post reports:
After surging in size and profits during the post-9/11 era, the defense industry in metropolitan Washington is bracing for a major contraction and significant layoffs that economists said could produce a drag on the regional economy for years.
Already, there have been signs that announced cuts in national defense programs are having an impact: Six hundred executives at Bethesda-based Lockheed Martin are accepting the company's offer of a buyout. ITT Defense and Information Systems, based in McLean, this year combined seven business units into three and cut 1,000 workers. Hundreds were let go this year from Northrop Grumman operations in Maryland.
Those losses are just the beginning of what many expect to be a much broader set of reductions at local companies.
After making cuts in military hardware budgets last year, Defense Secretary Robert M. Gates last month took aim more directly at the Washington region's defense industry, calling for reducing spending on "support contractors" by 10 percent each of the next three years. This region is a hub of contractors providing professional, administrative and computer services.
"As the defense budget shrinks, it will be impossible for the companies here to escape unscathed," said Loren Thompson, chief operating officer of the Lexington Institute and a consultant to several major defense contractors. "There will be many thousands of layoffs in the greater Washington area."
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