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Defense contractors wary of sequester

Sikorsky CH-53K

Sikorsky Aircraft Corp. recently delivered the first CH-53K prototype heavy lift helicopter to its West Palm Beach facility for ground testing.

The U.S. Senate unanimously passed a $631 billion defense spending bill Dec. 5, which Sen. Richard Blumenthal said would deliver much-needed jobs and contracts for Connecticut residents and manufacturers.

Two days prior, however, a group of aerospace industry executives, including Pratt & Whitney President David Hess, warned Congress and the Obama administration that a failure to address the sequester — a package of billions of dollars in defense spending cuts scheduled to begin Jan. 1 — could result in “hundreds” of lost jobs.

“The existing cuts are something we understand as a necessary part of getting the country’s fiscal house in order. Sequestration is something else entirely,” said Hess, who also serves as chairman of the Aerospace Industries Association (AIA), in prepared remarks delivered at a Dec. 3 press conference in Washington, D.C. “The uncertainty in the marketplace over the past year has had a real impact on jobs, investment and innovation. Uncertainty is forcing companies to defer investments and hiring today, when we need it most.”

The appropriations bill approved by the Senate would apply to the remainder of the 2013 fiscal year, which runs through Sept. 30, and must still be reconciled with a separate House version before being sent to President Obama for his signature.

Blumenthal said the Senate bill would authorize the procurement of a new Virginia-class submarine, 29 Joint Strike Fighter (JSF) aircraft engines, and 96 helicopters, all of which he said would be manufactured by Connecticut-based companies.

“I am proud that this comprehensive measure means more support for men and women in uniform who serve and sacrifice for our nation, and more jobs and economic growth for our state as it supports weapons and defense products made in Connecticut,” Blumenthal said in a Dec. 5 statement.

While Congress and the Obama administration debate tax rates and discretionary spending, Hess said defense contractors such as East Hartford-based Pratt & Whitney and parent company United Technologies Corp. (UTC), based in Hartford, are still awaiting guidance on how the federal government will act on the scheduled sequestration cuts.

“It’s not clear as to how they would implement or execute sequestration if it were to occur,” Hess told Reuters following the AIA press conference. “We’re looking at various scenarios, but it’s hard to make any concrete plans.”

Stratford-based Sikorsky Aircraft Corp., Fairfield County’s largest employer and itself a UTC subsidiary, would likely be impacted by any defense spending cuts, company officials have said.

The Pentagon on Dec. 5 said it was advised by the White House budget office to begin planning for the implementation of the sequestration cuts if Congress and the Obama administration fail to reach a solution before the New Year.

The decision represents a sharp contrast to Obama’s declaration during an October debate that the sequestration cuts “will not happen.”

The $1.2 trillion package of automatic sequestration cuts that would begin to take effect in January includes nearly $500 billion in new cuts to defense spending.

Asked what the magnitude of potential job losses would be if the sequester were to take effect, Hess told Reuters, “You certainly would be talking hundreds of jobs.”

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Patrick Gallagher

Bio: Fairfield County Bureau Chief Staff Reporter Westchester County Business Journal Covers: Economy, energy, government, infrastructure and public works projects, law, media, technology Phone: (914) 694-3600, ext. 3017

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