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Lockheed CEO Draws Grim View Of Sequestration Effects; Can’t Tell Workers Jobs Will Survive

Posted by Colin Clark on



WASHINGTON: When Bob Stevens, CEO of Lockheed Martin, delivered his now annual speech before the Farnborough or Paris air show, he didn’t talk much about international sales or the Joint Strike Fighter or the military threats America faces.

Instead, Stevens talked mostly about the mandatory budget cuts known as sequestration and the “fog of uncertainty” that now enshrouds his company, his 103,000 employees and his 40,000 suppliers. At one point it even sounded as if he might be calling for revenue increases.

He wasn’t. Stevens made clear to me that he was talking all about broad questions of corporate tax policies and international competitiveness. But when pressed after his speech this morning about whether corporate leaders such as he should be advocating for increased revenues to be part of the solution he did say that the country’s leaders must act, must lead us through the challenges posed by sequestration. No call for higher taxes perhaps – he is a true corporate representative, not a political player — but a clear signal to Capitol Hill and the White House that the leader of the world’s biggest defense company is really worried about the “fog of uncertainty” that congressional inaction on sequestration is causing.

If Congress wants some reasons to act and fix sequestration before it begins to fundamentally undermine the nation’s economy and deal a sharp blow to the entire aerospace business it could do worse than pay attention to the man who leads Lockheed Martin.

Stevens told a roomful of reporters that his leadership team cannot tell its employees whether they will still have jobs should sequestration strike. His suppliers’ costs may rise and they would be within their rights to seek redress from Lockheed, he noted.

Of course Stevens is self-interested since his company will bear an impressive share of the pain should Congress fail to act in time and the nation face $53 billion in defense cuts two months into the 2013 fiscal year.

But members of Congress are self-interested as well and face the prospect of being blamed by the American people for the possibility of our country facing a downgrade by the rating agencies, for the possibility of outsized and unplanned defense and civilian budget cuts and for the possibility of fiscal and financial disaster, all of which can be avoided should they lead and act. Members of Congress face the judgment of the American people in November, days after hundreds of thousands of voters will have received notices required by the WARN Act that their jobs are in jeopardy unless Congress acts to fix sequestration or at least kick the can down the road a decent distance.

Not much motivates a member of Congress more than a threat to their reelection and each WARN Act letter to a constituent would be proof they have failed the country.

The country’s leaders must lead, but will they?

What do you think?