South Florida military contractors prepare for budget cuts

South Florida companies say they have diversified operations to prepare for military spending cuts mandated by law next year.

Recent studies by the American Aerospace Association and the Center for Security Policy say Florida’s military contractors would have to cut nearly 40,000 jobs, based on expected defense budget cuts.

South Florida companies say that it’s too early to know the impact on their operations from the cuts but that they are prepared.

“This has been no hidden gem, that at some point the military would try to wind down the two-theater operations, Iraq and Afghanistan,” said Mark Llano, founder of Wellington-based Source One, a $180 million business that sells equipment and supplies to the military and federal government.

Source One diversified two years ago so that 60 percent of revenue stems from military business, Llano said.

In Broward County, there are more than 4,000 military contracts worth $285 million, according to the Center for Security Policy, a nonprofit, nonpartisan think tank. Palm Beach County businesses have nearly 1,900 contracts with a value of $431 million, according to the group. .

Mandated across-the-board cuts are part of the 2011 law to avert default on the national debt.

But how the cuts will be carried out “is very much up in the air. Once we get guidance from the Office of Management and Budget, we can provide guidance to contractors,” said Lt. Col. Elizabeth Robbins, spokeswoman for the Department of Defense.

In Hollywood, jet-engine part maker Heico Corp. said it does only a small portion of military business. But other Florida operations could be affected. “We’ve picked up other new defense programs that would hopefully upset the decline in the exiting ones,” said spokesman Victor Mendelson.

With multiyear contracts and law-enforcement business, Point Blank Body Armor said it is “well-positioned” for the cuts, said spokesman Glenn Wiener. The company employs 659 workers in South Florida.

This article can be read here: http://articles.sun-sentinel.com/2012-06-07/news/fl-military-spending-south-florida-20120607_1_budget-cuts-military-spending-cuts-military-contractors