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Defense Industry Starts To Feel The Sequester

Cleveland County defense contractor, Ultra Machines and Fabrication, will lay off as many as 100 employees in May due to cuts in federal contracts. It could be the first in a rising wave of job losses related to the sequester.

In the last three years, Ultra’s received $46 million in federal contracts—what that business, and most defense contractors rely on. But as the sequester and other federal budget cuts kick in, those contracts are drying up.

“Construction projects are being delayed until the money begins to flow,” says Scott Dorney, executive director of the North Carolina Military Business Center. “Service contracts that can be delayed may be delayed, and any contracts that may be cut short without violating national security may be reduced.”

Defense is a $23 billion business in the state, the second biggest industry, according to Dorney.

Last year, a George Mason University report predicted the sequester could cost almost 12,000 jobs, just in defense, just this year. Dorney says it is more complicated than that. He expects the government to postpone projects, rather than kill them—and then eventually the money to flow back in.

“Those critical projects and critical systems and critical contracts that have to be done, they have to be done  in a lot quicker time frame,” says Dorney.

But no one knows when that will be. And, that’s one of the main complaints of defense contractors—uncertainty about what will be cut, and when.