Defense spending cuts hitting contractor workforces

The drop in U.S. military spending in recent years is taking a predictable toll on the defense industry, according to a recent report.

An analysis by Politico of Security and Exchange Commission filings shows that the top five defense contractors have cut 70,000 jobs overall since 2008, a decrease of 14 percent.

Lockheed Martin, the largest defense contractor, was the hardest hit, losing 21 percent of its workforce, Politico reported. Northrop Grumman’s workforce fell by 16 percent and Raytheon’s by 14 percent. Among the other top-five contractors, however, workforces at Boeing and General Dynamics each grew by 4 percent during that period.

The workforce reductions, which have been going on for several years, reflect the decrease in military budgets as the wars in Iraq and Afghanistan wrapped up and Congress has tried to rein in federal spending. The cuts affect not only the top contractors but their suppliers throughout the defense industrial chain. In 2012, Bloomberg reported that the overall defense industry could lose more than 500,000 workers

According to the Council on Foreign Relations, military spending in inflation-adjusted dollars rose sharply and steadily after the Sept. 11, 2001 attacks, peaking in 2010 at about $700 billion, and has fallen just as sharply since. In 2013, the last year CFR had data for, spending dropped from $671 billion to $619 billion, as measured in 2011 dollars.

The 2015 defense budget approved by the Senate in July, the first in over a decade not based on the United States being involved in a war, is for $549.3 billion  (in 2014 dollars).

About the Author

Kevin McCaney is a former editor of Defense Systems and GCN.

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