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Jun 21, 2012

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John

I worked for a defense contractor in the 90s. The day before the 1994 midterm election they threatened us with our jobs saying if the Republicans didn't do well we could expect layoffs. The GOP swept the election, but they still had a massive layoff around mid-December.

Seth Gable

Andy, are you serious ? Did you understand anything in the article ? First of all the author was trying to make the point that CEO's are making tens of millions of dollars while threatening to lay of employees when they have no reason to. He wasn't really saying it would save all those jobs by dipping in to CEO compensation.
Also, a 10% cut in the PENTAGONS budget does not mean the defense contractors would see a 10% cut, because they wouldn't. And, even if they all faced 10% cuts, they would still be bringing in near record profits. So threatening to lay off thousands of employees is a completely political threat, a way to scare Congress into giving them more and more TAX PAYER money. Yes, the vast majority (and sometimes all) of their contracts are government contracts, which means they are receiving tax payer money. Also, the "suppliers" you talk about are mostly companies from other countries, not American companies.
But the bottom line is that the defense industry is growing out of control. It is a private industry that makes billions of dollars in profits off of wars, in which thousands of Americans lives have been lost fighting. Instead of tax payer dollars going to give our soldiers better pay (they get paid dirt)and benefits for fighting our wars, these defense contractors spend tens of millions of dollars to lobby Congress for more and more tax payer funded contracts. On top of all of this, these contractors have taken tens of billions of our dollars to do certain jobs which they never did (mainly overseas).
Anyway, I really hope you just misunderstood what the author was trying to say and the point he was trying to make (instead of having no clue about anything regarding the defense industry). Clearly, though, the points you were trying to make were wrong to put it mildly.

Michael Selvey

I think the author was being rhetorical when referring to executives taking money out of their compensation for workers. These ARE, after all, the people who are planning to use (arbitrarily) the day before election day to send out layoff notices!

On your other points, I cannot imagine how the supplier chain is going to be devastated when Lockheed Martin has an $81 billion dollar backlog, Boeing at $46 billion, and GD and Northrup $40 billion in backlogs. Just in Time (JIT) policies would ensure that they would not be sitting on a huge amount of spares, so their suppliers should be in good shape for some time to come.

Maybe the article simply postulates how morally bankrupt the CEOS of these Defense Vultures really are?

Andy

You said: "Both Lockheed Martin and Northrop Grumman could afford to keep paying quite a few of their employees by dipping into their CEO's compensation."

Is that really what you think will happen? CEOs will pay a few employees out of their own paycheck? Do you really think that the number of employees that they could pay out of their own paycheck will eliminate the loss of jobs?

What about the suppliers? What about the people that work at those companies that supply goods to Lockheed and Northrop? Will the CEO's be able to protect those jobs too?

Or maybe your article simply proves your lack of understanding of how the business world really works. Be honest... if you are running a business and you know that 10% of your buyers are about to disappear (you just don't know which ones), are you going to continue to buy products from suppliers? Are you going to ignore the law that says you have to give your employees 60 days warning if layoffs are imminent?

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