General Dynamics reports $2bn loss as US military faces major cuts
The announcement, according to the report, prompted major worries within the Washington metropolitan area since government-based IT contracting has served as the “key ingredient” to the region’s economic growth in the past decade.Information technology, the daily notes, would likely be “the first segments of the private sector to sustain tangible damage from federal budget cuts - because it’s easier for the government to stop rewiring offices than it is to stop building a ship or a tank.” The area’s dependence on government contracting work, particularly in the field of IT, makes it especially vulnerable to planned budget cuts agreed to over the past couple of years by US President Barack Obama and the nation’s legislators in Congress. This is while the US Government “procurement spending” in the area steadily climbed by double digits from 2000 to 2010. In 2012, however, it declined by 5.5 percent, the report says.
Meanwhile, the amount of the loss reported by General Dynamics has “stunned” some analysts “accustomed to years of steady profits at the company.”Defense contractors, moreover, have been getting ready for the planned military budget cuts as the US-led wars in Iraq and Afghanistan are winding down. The Defense Department budget is facing budget cuts of nearly 500 billion dollars over 10 years as part of an agreement reached between the US Congress and the White House in 2011. The report further cites economist as estimating that the planned spending cuts would “destroy some 450,000 jobs” across the Washington metropolitan area, which includes most densely populated areas in states of Virginia and Maryland near the US capital. MFB/MFB