Aerospace contractor: Automatic cuts could cost 30,000 Ariz. jobs
The automatic cuts in the federal budget could cost 30,000 aerospace jobs in Arizona and millions throughout the country, a Prescott Valley-based defense contractor said.
Prescott Aerospace owner Michael Dailey said he has spoken to defense contractors in the state who believe the automatic cuts could trigger an economic downturn worse than what the construction industry has experienced. He fears the cuts could cost jobs at his company, which has about 29 employees who build parts for Boeing for the Apache helicopter, the C-17 cargo plane, the F-15 Navy fighter and the F-18 Air Force fighter.
However, Dailey said, "We really won't know for six months or more" how the automatic cuts would affect his industry.
He explained it will take that long because the U.S. Department of Defense will cut top projects first before anything trickles down to his company, which has been in business since 1983.
"I buy materials from other companies," Dailey said, indicating the automatic cuts would affect them as well. "It's a domino effect, and it keeps spreading out."
Dailey, who has worked in aerospace since 1974, was referring to $109 billion in across-the-board spending cuts that would kick in during the start of 2013.
A White House report issued two weeks ago warned the spending cuts would be "deeply destructive" to the military and core government responsibilities such as patrolling the U.S. borders and air traffic control. The report states the automatic cuts would mandate across-the-board cuts of 9 percent to most Pentagon programs and 8 percent in many domestic programs. The cuts stem from the failure of the congressional deficit "supercommittee" a year ago to strike a budget deal.
The process of automatic cuts takes the name "sequestration," and the Obama Administration has no flexibility in how to distribute the cuts, apart from exempting military employees and war-fighting accounts.
"Sequestration would be deeply destructive to national security, domestic investments and core government functions," the report says.
What kind of effect the cuts would have on Fortner Aerospace in Prescott remains to be seen, according to General Manager Tony Manocchio. Fortner, which has been in Prescott for at least 45 years, specializes in aerospace components that go into valve and start systems of aircraft.
"We have taken a look at it," Manocchio said. "We definitely are aware of it. We understand the impacts it would have on our business."
He continued, "A good percentage of our business is military. It is a significant piece of our business."
Fortner, a subsidiary of Synchronous, produces $10 million a year in sales and has 74 employees, Manocchio said. He added Fortner's largest customer is Honeywell in Tempe.
Officials from Cobham Aerospace in Prescott and Yampa Precision in Prescott Valley were unavailable for comment.
Cliff O'Brien, owner of Prescott Precision Die, declined to comment.