Looming national defense cuts will eliminate about $31 million in federal contracts for Quad-Cities businesses, according to a new report from The Center for Security Policy, a Washington, D.C.-based organization.
The center, which bills itself as a nonpartisan think tank concentrating on security issues, did a detailed look at local economic impacts of a 10-year, $500 billion cut to the nation’s defense budget scheduled to go into effect Jan. 1 unless Congress reaches an agreement on broader budget issues. The reports are free and available at forthecommondefense.org/districts.
“The impact would be devastating to Rock Island Arsenal,” said Tim Frye, of the Rock Island Arsenal Development Group, which leases space on the Arsenal to private companies. “If no contracts are let out, a lot of my tenants won’t want to be here.”
In Rock Island County, the government has a total of $80.7 million in 2011 contracts, and an 18 percent cut — which is the estimated impact — would be $14.5 million, with an even greater projected loss in Scott County — $17 million, out of its contracts worth $94.7 million, according to the new report.
“If the Army is forced to reduce their spending through this legislation, it could really hurt us as we have some multiyear contracts that we are currently executing,” Sam Kupresin, vice president of Rock Island-based Mandus Group, said Wednesday. His company had 11 defense contracts last year worth $12.6 million, including work refurbishing howitzers.
“How those would be impacted, we do not know at this time,” Mr. Kupresin said. “Certainly, sequestration will hurt future business because the military will have much less to spend, which will mean less business opportunities for companies like ours.”
“So many businesses are necessary to the national defense,” Christine Brim, chief operating officer of the Center for Security Policy, said Wednesday. “From an economic development point of view, it shows the number of businesses vulnerable to cuts, which are coming down in a very draconian, quick and unmanaged way.”
The process that mandated the $500 billion in cuts was agreed to last August when a congressional committee failed to find $1 trillion in budget savings through spending cuts and new taxes. That required across-the-board spending cuts divided equally between nondefense and defense spending.
Defense Secretary Leon Panetta has said the cuts would be like “shooting ourselves in the head.”
“The problem is that the cuts are across the board, so every contractor gets affected, and being done at a level that endangers national security and American business’ ability to continue functioning,” Ms. Brim said.
“The deficit and the debt are a major national security issue we have to come to grips with. But I don’t think the way to do that is defense. The link between the strength of the American economy and our ability to have strong national defense is crucial.”
A June study by the National Association of Manufacturers indicated that the cuts would cost about 1 million jobs. Illinois is among the top 10 states to be impacted by job losses, with more than 35,400 jobs on the line in the next two years alone, the study found.
U.S. Rep. Bobby Schilling, R-Colona, has opposed the cuts strongly. The House has “offered a plan to avoid the devastating cuts to our national defense set to officially take effect next year, but the Senate and the Administration have yet to act,” he said in a news release.
The cuts will “mean fewer personnel and, therefore, longer and more frequent deployments; antiquated technology on the battlefield; and permanent loss of critical civilian expertise on our assembly lines, in our labs and on our testing ranges at facilities like the Rock Island Arsenal, all of which pose a serious threat to our nation’s defense,” Rep. Schilling said.
Congress should address the national debt “in ways that don’t put our defense manufacturing capabilities and our warfighters at risk,” he said. U.S. Rep. Bruce Braley, D-Iowa, agrees.
The added defense cuts are “the product of politicians refusing to do the hard work of reducing our nation’s spending in a responsible way,” he said Wednesday by email.
The Center for Security Policy study found Illinois defense contractors earned $6.71 billion in 2011 and face the loss of 27,254 jobs from budget cuts, and Iowa contractors earned $1.28 billion in 2011 and could lose 4,730 jobs.
Q-C’s largest defense contractors
The top Quad-Cities defense contractors in 2011, with total contract value, according to a new study, are:
— Cobham Life Support, Davenport, $22.6 million (aircraft parts and auxiliary equipment manufacturing)
— Charles F. Day & Associates, Davenport, $16.4 million (engineering services)
— Mandus Group, Rock Island, $12.6 million (truck trailer manufacturing)
— McCarthy Improvement Company, Davenport, $11.6 million (heavy construction, paving)
— Cummins Central Power, Rock Island, $9.4 million (machinery and equipment repair and maintenance)
— Vista International Operations, Davenport, $8.4 million (computer programming)
— John Deere Shared Services, Moline, $5.2 million (construction machinery manufacturing)
— Valley Construction, Rock Island, $4.5 million (heavy construction and engineering)
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