WASHINGTON, DC – The Virginia Manufacturers Association (VMA) was proud to participate with the National Association of Manufacturers (NAM) in a national press conference to release a new report, Defense Spending Cuts: The Impact on Economic Activity and Jobs.
The Washington, DC press was eager to understand the effects on the Commonwealth and its businesses as outlined in the study. Aerospace, ships and navigation equipment were cited as the largest industries impacted. “We have composites and sensors in SW Virginia, navigation in Central Virginia, IT in Northern Virginia, aerospace in Southern Virginia and massive ships in Hampton Roads – these cuts will be felt deeply across the Commonwealth,” said VMA President and CEO Brett Vassey. “It’s not just the impact on the Tier 1 defense contractors; it’s the ‘rolling boulder’ down through the Tier 2 and Tier 3 suppliers as well as the chilling economic effects on these companies and the communities in which they operate that is potentially devastating – we are sacrificing industrial capacity due to an inability to prioritize Federal spending.”
This report was conducted using the Inforum Long-Term Interindustry Forecasting Tool (LIFT) model of the U.S. economy to determine the economic and employment impacts of specific alternative scenarios for federal defense spending from 2012 to 2022. Proposed cuts will include reductions in military and civilian personnel, the cancellation of planned procurement of weapons programs and other equipment, and declines in expenditures for operations and maintenance due to the withdrawal from the wars in Iraq and Afghanistan. Over the short term, these reductions will result in losses to domestic production and jobs, heightened because the U.S. economy is currently operating substantially below production potential and full employment.
With the sheer density of defense industries in the Northern Virginia and the Hampton Roads areas of the Commonwealth, Virginia will experience the second largest economic impact in the country – an estimated loss of 115,000 jobs. The concern of NAM and VMA member companies is that the Budget Control Act and across-the-board defense cuts under sequestration will further erode a manufacturing sector recovery and inject ever greater instability into the market. “In a fledgling economic recovery, policy makers need to take whatever steps necessary to prevent defense cuts that will cost more than a million U.S. jobs,” said NAM President and CEO Jay Timmons. For the complete report, please click here. For a PDF of the press release, please click here. (Both links will open in new browser windows.)