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Defense cuts could hurt civilian contractors

(CBS News) CLIFTON, N.J. - With sequestration on, defense department cuts could trigger one-day-a-week furlough notices to as many as 800,000 of its civilian employees later this month. And the cuts could also target civilian contractors as well.

As a small government contractor for 37 years, Arthur Barchenko has weathered political budget storms before. But this is different.

"We have never experienced anything like these past 18 months," he said.

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His New Jersey company Electronic Control Security Inc, or ECSI, provides hi-tech security systems for military bases and nuclear power plants. In the past 18 months, with the defense and energy departments shrinking budgets, orders have slowed to a trickle.

Asked if this was endangering his business, Barchenko said: "Absolutely."

Revenues have fallen from around $9 million a year to $1.5 million, and Barchenko has laid off a third of the staff. He says even the contracts he does get are held up because of layoffs at the government agencies.

"The contracts are delayed and everyone suffers," he said.

In New Jersey alone, there are 71,000 workers in the defense industry; nationally, it's 3.5 million -- all subject to cuts

In New Jersey, the effect could ripple through local businesses -- even as economic recovery was starting to take hold.

As for how long he can last, Barchenko said: "We're pretty flexible so we'll last as long as we have to."

But with no budget compromise on the table, that could be a while.

  • Elaine Quijano

    Elaine Quijano was named a CBS News correspondent in January 2010. Quijano reports for "CBS This Morning" and the "CBS Evening News," and contributes across all CBS News platforms. She is based in New York.