Eagle Industries

Pentagon Cutbacks – The Downside

“We all know the federal budget has to be cut,” Maier said. “But if you are cutting programs, you are cutting jobs.”

Masslive.com published an article earlier today that illustrates the downside to cutting the military budget too much, too quickly. The quote above, from that article, boils it all down into one sentence. The man quoted is Larry A. Maier, president of Peerless Precision Inc. in Westfield and co-president of the Western Massachusetts Chapter of the National Tooling and Machining Association.

When the Federal Government is one of the only entities spending money, slowing that spending hurts. Essentially, the tactical industry exists in order to service Government requirements. Commercial sales are mostly a secondary market associated with Government needs. Micro purchases by agencies and individual military units or individuals in those organizations. The recreational tactical market is important, but just aren’t as big. While the article discusses increased industrial demand for aircraft parts, unfortunately, many in the tactical industry don’t build products that have direct commercial applications. This is all food for thought as we move into the next phase of the debt ceiling deal.

10 Responses to “Pentagon Cutbacks – The Downside”

  1. Mike says:

    So, instead of cutting spending we just wait until the whole system collapses? Yes, when spending is reduced sometimes jobs are lost. That’s the nature of the beast.

  2. Administrator says:

    There is no economy if no one is working. People work, they spend money. The economy is based on the production and consumption of goods and services. You don’t fix an economy by putting people out of work. Out of work people don’t consume or produce.

    This is the world’s largest economy. If you don’t want it based on defense then you need to come up with an alternative and you’ve got figure out how to get companies to employ people. Me? I like defense just fine.

    The system WILL collapse if no one is spending.

  3. Jesse says:

    This… and it keeps manufacturing jobs in America for a good part of the industry. There is waste in any massive organization. Even massive corporations have bureaucracy and people that float by without productivity. The important factor in reducing spending is to cut fat rather than meat and bone.

  4. Lazy civy says:

    This is just a precursor to the coming battle of the special interests. Jesse is right, cut the fat, not the meat and bone. 10-15% cut, across the board, would be a good start. Just random numbers I’m throwing out, but it has to start somewhere.

    The cuts are going to hurt no matter how you look at it.

  5. Motivated civy says:

    Spending needs to be cut and Im sure we could streamline the defense budget. I am not in favor in deep defense cuts, too many other BS government programs to cut first.

  6. Administrator says:

    Yes, defense is a special interest. It happens to be MY special interest. The defense budget looks like a safe bet for elements in BOTH political parties. I hope it doesn’t hurt…much.

  7. Aygar says:

    I think that the collapse of current military industrial ecosystem is pretty much guaranteed without significant and extremely unpopular legislative changes. Most of the problem comes from a single source, congress has restricted the customer base for military systems to a single entity, the US government. This worked fine in the 50’s, 60’s and 70’s when the government was spending enough to support the entire system, with multiple simultaneous development and procurement contracts. With the governments current reduced spending levels, there is no one to pickup the slack in the system. A defense industry is prohibited from selling its military products elsewhere, and there are significant barriers preventing a defense industry from designing and producing non-military products while still maintaining the capability to do military work in the future.

  8. Strike-Hold! says:

    Making arbitrary, knee-jerk-reactionary cuts to programs that don’t have powerful special interests behind them will be the “easy”, simplistic (and short-sighted and dangerous) route that Congress will probably take.

    And how much do you want to bet that it will be low-tech and benefits programs that fall first to the axe? History shows us again and again that “meat and bone” doesn’t have as much political clout as “fat” does.

    There is surely no arguing the fact that the big boys in the defense industry have been living high on the hog for the past decade thanks to the massive increases in the defense budgets (aka, deficit spending) becuase of the wars in Iraq and Afghanistan. But the parties over now – welcome to the hang-over of the morning after…

    The only way forward is to make some tough choices – but tough choices that are based on smart, objective, fact-based decisions that change the way that business is done. Now, how likely is that?

  9. Strike-Hold! says:

    Case in point from the article:

    “…any slackening he has noticed has been taken up by a growing market for corporate jets.”

    Corporate jets eh? So, still think that “fat” will get cut but “meat and bone” won’t?

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