The Obama Administration made the ending of several large acquisition programs the key to their 2010 budget proposal. Not only did they not ask for funding for these programs in next year's budget but in many cases they went ahead and terminated the contract already. While this will require some expenditure of funds to clean up there will be no more work carried out. This has led to some of the companies involved to begin laying off workers.
Lockheed Martin was one of the first to do so as the VH-71 New Presidential Helicopter program ended. About eight hundred jobs were eliminated at their Owego, NY facility. Some of the workers were able to be placed on other contracts but the economic cost to the region has been substantial.
Another program that was stopped was the Army's new vehicle program, Future Combat Systems (FCS). This program was made up of a series of ground and air vehicles as well as data links and data processing systems to integrate them. The decision was made to end the ground combat vehicle portion as its requirements and design predated the current operations in Iraq and Afghanistan and it was felt the lessons learned from those campaigns should be applied. Yesterday BAE Systems a key contractor on this program announced they were laying off over three hundred people at their Minnesota facility. This is about a quarter of their work force.
Lockheed Martin has further announced due to the projected restructuring of the defense and NASA budgets that they will cut over eight hundred jobs from their Space Systems division. The company believes that there will not be enough new work over the next few years to justify the size of the work force. Many contractor hire employees based solely on their being a vehicle for them to work on. If the contract vehicle ends then the employees must move on.
It is true that some contractors will hire in response to new contracts and it is certainly possible that in the next few years the Obama Administration will start new, big acquisition programs that will hire people. The current trend though is to expect further cuts to these types of programs with further job losses. The F-22 program will take several months to wind down but with no new aircraft being started this will lead to the elimination of several thousand jobs across the U.S. as it moves from production to sustainment. The F-35 is supposed to ramp up its production but any delays there will leave a gap of possible quite high unemployment in certain areas.
An argument being made to keep these programs going was that it would help the country ride out the recession. Unemployment has grown much higher then the new Administration predicted and the passage of the "Stimulus" bill in March has not seemed to help. To put things in perspective the entire defense budget for 2009 was about $650 billion dollars to be spent over the next several years. The "Stimulus" was for almost $800 billion. Some of that money could have been used to buy a few more aircraft or fix the VH-71 program possibly. That might have cushioned the job losses.
To make matters worse defense contracting jobs tend to be either fairly high payed manufacturing or professional jobs. Some communities such as Huntsville, AL are dependent on these kind of jobs. In the D.C. area the defense losses are cushioned by the gain in other government jobs but that is not always possible in other parts of the country. If the NASA and Army acquisition budgets take big hits then Huntsville could easily see very high unemployment with little options to make it up in other industries.
Of course in the past there have been many who have argued that the defense budget is not a jobs program but should be based on the needs and requirements for the nation's defense. In a time of economic problems it might not be a bad idea to use it to provide jobs and stimulate some parts of the economy. The ultimate results of some of these decisions won't be known for several years and hopefully things will work out for the best with the country being defended and the economy recovering.