Good Luck With That

Industry captains don’t think Pentagon spending cuts will stop with the planned $487 billion reduction over 10 years and, therefore, they are structuring for deeper cuts and diversification. That’s according to Fred Downey, Aerospace Industries Association vice president for national security, who spoke Wednesday at an event sponsored by AFA’s Mitchell Institute for Airpower Studies in Arlington, Va. Downey said industry leaders met with Defense Secretary Leon Panetta during the Fiscal 2013 budget build in November and told him that the $487 billion in cuts is “manageable . . . though not desirable.” However, they also said “we don’t believe the cuts will stop” and that more, “unplanned” cuts are sure to come, recounted Downey. For example, the budget assumes $60 billion of additional efficiencies, but “nobody on the planet believes” that they will materialize, said Downey. Industry leaders think investment accounts will be hit harder, he said. Companies that are sitting on piles of cash are not investing in more defense capabilities, he said, but rather in information technologies and healthcare. However, the good news, Downey said, is that Panetta and his top acquisition lieutenants “get it” and are trying to preserve the industrial base as much as they can.