Prospect of defense cuts looms over Pa.
Steve Callahan, Director of Business Development for Lockheed Martin, addresses the crowd Monday at the National Association of Counties Annual Conference at the David L. Lawrence Convention Center.
Flight instructor Tony Stutts, left, gives U.S. Rep. Mark Critz, D-Johnstown, a lesson in an F-35 flight simulator Monday at the National Association of Counties annual conference at the David L. Lawrence Convention Center.
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At the David L. Lawrence Convention Center, Downtown, things were looking rosy from the cockpit of Lockheed Martin's simulated F-35 fighter jet.
"This isn't a jobs program, but it means a heck of a lot of jobs," said Steve Callaghan, director of Lockheed's F-35 program, at the National Association of Counties convention Monday. He stood in front of an elaborate flight simulation erected for the convention, which included authentic controls and an eight-screen display.
U.S. Rep. Mark Critz, D-Johnstown -- whose district hosts a Lockheed facility -- stepped into the simulator's pilot's seat after making remarks praising job creation stemming from the development and manufacture of the high-tech jet.
But even as the security and defense technology giant emphasized the more than 900 jobs that its program has brought to Pennsylvania, a much larger jobs number was looming over the state's defense industry.
A new study scheduled for release today by the Arlington, Va.-based Aerospace Industries Association predicts that more than 78,000 Pennsylvanian jobs will be lost if so-called federal "budget sequestration" goes into effect in 2013. Half of those potential losses are in the defense industry, which includes private firms like Lockheed Martin.
The job losses detailed in the study, said Aerospace Industries Association vice president Chip Sheller, would be "immediate." In addition to the 40,000 jobs at risk in the Pennsylvania defense industry, an additional 38,000 would come from federal, healthcare, education and other sectors.
"There is no question that sequestration is going to dramatically increase unemployment in the Pittsburgh area," Mr. Sheller said.
If they come, the cuts would be a result of Congress' failure to reach an agreement on parts of President Barack Obama's 2011 Budget Control Act, which in August appointed a Joint Select Committee of the House and Senate to find $1.2 trillion in cuts in addition to $900 billion already designated by the act.
Because the bipartisan "Supercommittee" failed to agree on where the $1.2 trillion would come from, the "budget sequestration" measure will automatically make those cuts from all non-excluded programs effective Jan. 1, 2013.
Cuts to the Department of Defense will make up about half of the sequestration total, slashing $492 billion on top of spending caps already outlined in act.
In October, the Aerospace Industries Association predicted 1 million job losses from those cuts. The new study is the first to look at the potential job loss from sequestration alone, both defense and non-defense related.
Sequestration, said Mr. Sheller, "is going to wipe out jobs in nearly every sector of the economy. ... It is not [only] a defense industry problem."
Though the total number of losses predicted nationwide by the Aerospace Industries Association study will not be released until a news conference later this morning, Mr. Sheller said the figure will include the jobs of 600,000 federal workers, 400,000 manufacturing workers, and 50,000 workers in the health and education sectors.
Still, the defense industry will be the hardest hit by the cuts. Defense Secretary Leon Panetta was among those to speak out against sequestration in June, calling it a potential "disaster" for the industry.
There is still hope in the industry that Congress will act to stop sequestration. It would require legislators to act on a different deficit-reduction package. The president has repeatedly encouraged compromise on Congress' part, saying that the matter is out of the White House's hands.
The Aerospace Industries Association and its 360 member companies have hosted rallies at defense-industry companies nationwide, including a November rally at BAE Systems in York, Pa.
Lockheed Martin CEO Robert Stevens spoke out against sequestration in June, saying that it would mean a 10 percent reduction in government spending with the defense contractor.
The potential effects of sequestration on the company's F-35 program, for which some components are assembled at the Lockheed Martin AeroParts location in Johnstown, would likely be significant, since the program's high costs have been the subject of controversy.
In April, the program's escalating costs, totalling more than $400 billion, were the subject of congressional debate, and the Obama administration has proposed delaying the purchase of 179 jets to save $15 billion.
At the convention center Monday, Mr. Callaghan stressed the importance of a "predictable, stable" ramp-up to the F-35 program, which he said could dramatically increase the 133,000 jobs the F-35 already provides nationwide. He acknowledged, however, that only the Department of Defense can provide that stability.
"Sequestration is not the right way to go," said Mr. Callaghan. "We need to make sure that the folks making these decisions fully understand the ramifications of what they're doing."
First Published July 17, 2012 12:00 am