Job cuts in the United States defense manufacturing sector are inevitable as the shift in procurement priorities puts the spotlight on “engineering talent,” but the overall market remains resilient, particularly when compared to the wider manufacturing sectors, according to an industry figure.
In addition, Congress has illustrated its understanding of the link between funding of large, labor-intensive defense programs and US employment levels, says David Baxt, group head of Aerospace and Defense at Jefferies investment bank.
On July 20th, he told Jane’s that “there are major changes in how money is being spent” in the Department of Defense,” and that the US’ new focus on “upgrading existing platforms to perform better in today’s new world order,” as opposed to buying numerous platforms “tends to reduce the need for manufacturing jobs, but increases the engineering talent need”.
He added: “As engineering talent is more productive, in terms of revenue per employee, a net job loss is inevitable.”
However, despite threatened cancellations, the number of defense programs that have been canceled outright “is pretty small,” said Baxt, arguing that “even some of the highest-profile cancellations of the past: Crusader [self-propelled howitzer program], ACS [Aerial Common Sensor] or Comanche [reconnaissance/attack helicopter], have tended to morph into other programs.
[ Via Military Industry Daily ]