Big layoffs avoided but hiring tight for defense contractors

Defense contractors have stopped hiring and are worried about future defense budgets.


Dayton-area defense contractors have avoided mass layoffs in recent months, but confront continued uncertainty because of automatic budget cuts known as sequestration, company leaders say.

Many local defense firms have halted hiring and not filled open positions until they know what’s ahead with the Pentagon’s budget, said Scott Coale, president of Modern Technology Solutions Inc. in Beavercreek.

“I think it’s an issue that is still sorting itself out,” said Coale, a former leader of the Dayton Area Defense Contractors Association and a retired Air Force colonel. “I think the real challenge is what’s going to happen over the next 10-year period which the sequester law was supposed to address.”

The automatic budget cuts, which began four months ago, are targeted to cut about $500 billion out of the defense budget over a decade. This year, the military was forced to cut $37 billion by Oct. 1, and 10,000 Wright-Patterson Air Force Base civil service workers began 11-day furloughs this week. The cuts were in addition to the $487 billion in spending reductions the Pentagon agreed to absorb.

Deborah Gross, Dayton Area Defense Contractors Association executive director, said she has witnessed a “huge impact” from the no-show of military aircraft flying at the Vectren Dayton Air Show to more people sending out resumes “because they’ve lost their job due to sequestration.”

Sequestration, combined with other defense budget cuts that could add up to $1 trillion, would cause 1 million layoffs nationwide and more than 18,000 jobs lost in Ohio, according to a George Mason University report commissioned by Aerospace Industries Association. AIA spokesman Dan Stohr said Monday the intervention of Congressional lawmakers has changed the outcome.

“In the short term, we have not seen many layoffs,” he acknowledged Monday. “That will be coming.”

He predicted a bigger impact in the next 12 to 18 months.

Sequestration “doesn’t happen all at once,” he said. “It happens contract by contract, activity by activity, program by program.”

The four-county Dayton Metropolitan Statistical Area reported a 7.3 percent unemployment rate in May, the most recent numbers available. The region recorded the same unemployment rate in May 2012. Ohio had a 7 percent unemployment rate in May, compared to 7.6 percent nationally.

Stan Soloway, president and chief executive officer of the Arlington, Va.-based Professional Services Council, said sequestration’s effects on defense firms will be gradual.

“This was always going to be a ramp, not a cliff,” said Soloway, whose organization represents professional service firms with Pentagon contracts. “You will continue to see slowly growing but not insignificant impacts in the industry … which translates directly to job loses.”

“It’s fairly clear that when you look at 3, 4, 5 percent reductions in spending on services, you see a proportional number of people lose their jobs,” he said.

He expects to see a “significant reduction” in the defense budget next year, although Congress has not settled the question of sequestration’s effect on military spending in 2014.

Ohio Metal Fabricating had strong sales the first half of the year, but has noticed a drop-off the second half, a company spokesman said. The Dayton company with 17 workers makes parts for helicopters, Humvees and Mine Resistant Ambush Protected vehicles.

“We had a stellar first half of the year,” said Gary Burdette, sales engineer. “The second half we’re seeing some impact.”

The biggest drop happened when a major aerospace contractor departed the state, he said.

“We are just holding staff,” he said. “We’re level right now, but we’ve been finding work outside of our niche business.” That niche business has meant producing commercial heat lamps and capturing more aerospace work, he said.

Custom Manufacturing Solutions in Xenia makes turret rings for armored combat vehicles.

Mike Collinsworth, company president, said the federal government has delayed awarding some defense contracts. The company has kept 30 employees on the job, and had about a dozen temporary workers last year because of strong orders.

“We bumped up last year with temps and now the temps are no longer here, but I’ve not laid off my core workers yet,” he said.

TAC Enterprises in Springfield laid off 17 employees by early March and is trying to find new work for about 100 employees who produced Air Force cargo nets, officials said. Employees have had four furlough days since sequestration started, said Mary Brandstetter, chief executive officer.

The company, which employs developmentally disabled adults, recorded an 83 percent drop in new cargo net orders, bottoming out at $1.2 million, but had a 16 percent increase in a $2.2 million agreement to repair cargo nets, she said.

“Right now, it’s kind of month to month,” she said.



Reader Comments ...


Next Up in Military

Trump to reinstate military ban on transgender people
Trump to reinstate military ban on transgender people

President Donald Trump said Wednesday he wants transgender people barred from serving in the U.S. military “in any capacity,” citing “tremendous medical costs and disruption.” Trump’s announcement on Twitter would reverse the effort under President Barack Obama to open the armed services to transgender people. He did not...
69 years ago today, Truman ordered 'right and just' desegregation of US armed forces
69 years ago today, Truman ordered 'right and just' desegregation of US armed forces

Sixty-nine years ago on July 26, 1948, President Harry Truman issued an executive order abolishing racial discrimination in the United States armed forces. “It is hereby declared to be the policy of the President that there shall be equality of treatment and opportunity for all persons in the armed services without regard to race, color...
Report: Transgender health care would cost fraction of what military spends on Viagra, similar drugs
Report: Transgender health care would cost fraction of what military spends on Viagra, similar drugs

President Donald Trump said Wednesday that “tremendous medical costs” were partially behind his decision to bar transgender Americans from serving in the military. However, a report from The Washington Post showed that estimates for the cost of caring for transgender service members amount to just a fraction of what the military currently...
Memphis Belle gets its guns seven decades after WWII
Memphis Belle gets its guns seven decades after WWII

Piece by piece, Air Force restorers are assembling the B-17F Memphis Belle decades since the plane dodged flak and Nazi fighter planes over the skies of Germany and France in World War II. The bomber got a double-barrelled addition Wednesday when a tail gunner’s turret with two machine guns was bolted back onto the end of the iconic plane in...
Navy sailor found hiding on ship after week-long disappearance could face discharge
Navy sailor found hiding on ship after week-long disappearance could face discharge

A sailor whose disappearance from a U.S. Navy vessel last month launched a days-long search amid fears he had fallen overboard could face discharge after he was found hiding in the ship’s engine room, according to multiple reports. Gas Turbine Systems Technician (Mechanical) 3rd Class Peter Mims, 23, appeared to have vanished June 8 from the...
More Stories