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Job cuts, furloughs ‘on everybody’s mind’

Local defense contractors and base workers bracing for pay cuts or job losses.

The debate about sequestration and defense spending cuts is about more than numbers to Stephen Barno.

The 64-year-old Tipp City man, a proposal manager at a Beavercreek area defense contractor, has concerns major budget reductions set to kick off next month might mean he won’t have a job.

“It’s always a situation where contracts aren’t available and having a job and being part of the workforce is a major concern,” he said. “The potential is always there for layoffs. I know other industry companies are being put into the situation of reducing manpower and trying to do more with less.”

Barno did not want to mention the name of his company.

As budgets decline and contracts dwindle, some area defense employees are facing lower paychecks, he said.

“Many, many people are being asked to take pay cuts of 25 to 50 percent,” Barno said. “What that means is the government is not getting the people that they need.”

David L. Hart, 48, who is married and has three sons, has similar concerns about the future.

“I am concerned for my employment depending on how deep the cuts are and how dramatically my employer is affected,” said Hart, director of sales and marketing at Segue Technologies Inc., a Beavercreek information technology support firm. “I think that’s on everybody’s mind.”

The threat of sequestration, or automatic, across-the-board reductions could strike Wright-Patterson Air Force Base and the rest of the military if Congress and President Barack Obama fail to reach a deal to avert the reductions by March 1. The Air Force faces cutting $12.4 billion from its budget from sequestration between March and September, part of about $500 billion in less spending the defense budget would face over a decade.

“That’s a huge chunk of money to accomplish reductions in a relatively short amount of time,” said Alan Chvotkin, executive vice president and counsel of the Arlington, Va.-based Professional Services Council, a trade group representing defense-related service companies.

Preparing to cut back on spending

Thousands of employees outside the fence at Wright-Patterson could also be impacted. The Dayton Area Defense Contractors Association, for example, represents about 250 companies with around 15,000 employees in the region. Nearly 35,800 jobs, from retail to restaurants, are indirectly tied to Wright-Patterson, a base 2011 economic analysis found.

The fallout could hit defense contractor employees such as Barno and Hart and mean the furloughs of 13,000 civilian employees at Wright-Patterson like Thomas Robinson. Much of the base’s civilian workforce could face 22 unpaid furlough days, or a 20 percent pay cut through September.

“That’s an income loss and along with it comes all kinds of other complications,” said Robinson, executive assistant for the American Federation of Government Employees Council 214 at Wright-Patterson.

“Health insurance and all those other costs stay the same even though our pay drops,” said Robinson, who has refinanced the mortgage on his Dayton home to cut expenses. “It will mean no more going out to restaurants.”

Robinson, 59, who has worked at Wright-Patterson since 1976, said the last time a furlough happened was in the mid-1990s.

“We ended up getting paid for those days, but that’s not what we’re seeing here,” he said. “The upcoming sequestration is going to cut payroll. There’s no way around it.”

Barno has pared back spending in anticipation of potential hardship ahead.

“It’s a trickle down issue. If I don’t make a salary, my money is not going to the community,” Barno said. “It impacts us as a family making financial decisions, planning for the future. At my age, it’s looking at retirement. When can I really retire?”

He’s searching for jobs in both Dayton and the Washington, D.C., region.

For now, he has cut back on travel, kept an old car running longer, shops at grocery warehouses to save on bulk purchases and stopped eating out at restaurants on a checklist of several items to save money.

“Basically, instead of going to a movie, and out to eat, we make a pizza and watch a DVD,” he said.

Barno said he’s experienced layoffs twice before, in 2010 and 2011, because of defense budget cuts.

That brought other consequences. “The last time I was laid off, I could not get (health) insurance” because of a pre-existing condition, he said. “So you’re at risk that you don’t have a major catastrophe when you’re without that insurance.”

Even before the latest budget crisis, he has faced bumps in the service contractor industry. In 2007, Barno watched his pay plummet by about $20,000 to an annual salary of $45,000 at a former employer.

Already, defense contractors say they are grappling with Air Force requirements to offer the lowest cost, technically acceptable bid to win base service contracts.

“The acquisition machine gears down to the lowest price which isn’t always necessarily the best solution,” Hart said. “You get your lowest price but it may not be the most cost efficient.”

The process drives contractors to “undercut” each other, and some employees face the prospect of working in the same job for significantly less money, he said.

Hart hasn’t lost hope about his future nor does he dwell on what might happen. He pointed to his firm being in a pool of businesses chosen to compete for orders from a $1 billion military services contract.

“We’re bidding on work and we expect to grow significantly in the next five years,” he said.

He’s also confident about the necessity of what his company does and the future of the base.

“The Air Force is not just going to shut down and go out of business and they need their IT systems,” he said. “They’re not going to shut down Wright-Patt. It’s a mega-base for the Air Force with a lot of important missions.”

Still, with furloughs on the horizon and less money in employees’ wallets, a leader of an area charity anticipated the phone ringing more often for help with utility bills, rent and food.

“It’s making us pretty nervous because we have limited resources, also,” said John C. Peters, president of the Mary Help of Christians St. Vincent DePaul Conference in Fairborn. “So far we have never had to close our door to clients, but we’ve come awful close sometimes and it’s getting more and more difficult.”

The charity has had a sharp increase of people asking for help, rising from 300 a decade ago to more than 1,400 more recently. “We’d have trouble with another significant increase,” he said.

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