More Cuts In Defense Spending

[discocrisco01]

It looks like Boeing is not optimistic on future of defense spending. From the http://latimesblogs.latimes.com/money_co/2011/11/boeing-defense-cuts.html">Los Angeles Times

"The chief executive of Boeing Co.’s defense, space and security sector spoke to investors at a defense forum in New York about how the company was positioning itself in the coming years with constrained federal budgets.

At the Bank of America Merrill Lynch Defense Outlook Forum on Thursday, Dennis Muilenburg described bracing for what he expects to be a “tough defense environment.”

"We do a lot of scenario planning about how it might impact individual programs, which would get into individual facilities and infrastructure," he said. "But we are preparing ourselves and had been preparing ourselves for that worst-case budget scenario."

Boeing has extensive defense, space and security facilities across the Southland including in El Segundo, Anaheim, Long Beach and Huntington Beach. In all, the company employs 21,347 people in the state.

“We are anticipating already seeing at least $500-billion reduction in the U.S. defense budget over the next 10 years that could be as high as $1 trillion dollars,” he said.

The Chicago company, which also makes commercial jets, has already begun to slash defense jobs in preparation of a shrinking Pentagon budget.

Earlier this year it relocated two key defense programs and 800 jobs from Long Beach. The company also cut 900 jobs at its nearby sprawling complex where it makes C-17 cargo planes, citing declining orders.

“Certainly, it’s a challenging defense environment and we’ve been very realistic about it, we’ve anticipated it, we’ve expected it,” Muilenburg said. “Clearly we’re in a down dense cycle budget-wise in the U.S., while we see some opportunities on the international front.”"


That is not an optimistic future from defense spending. There is a lot of jobs to be loss. Outside of jobs and profits for the corporation stock, what will be lost.

The first thing that defense spending cuts means that more money is free for veterans care. The money could be directly moved from the contractors to more veterans programs.

The second place is that defense spending could go is to fund unemployment compensation. Simply, cut $60-$100 billion dollars from the Pentagon's bottom line and you can fund unemployment compensation for each year.

It is sacred cow that needs to be cut. Even though my job directly depends on weapons spending programs, it still does not help the country in the long run.

There are tons of programs that could use the Pentagon's resource that would better serve to invest in the country's future.

The reality is that I personally would rather see huge tax increases than have government spending to be cut. The defense lobby does not seem to know that tax increases are its best ally. They would rather the corporate income tax be decrease, than the government get a ton of new revenue and defense funding can receive modest cuts instead of sharp cuts that are projected by the Boeing CEO. For this industry and its lobby, taxes are the solution.

But no corporate CEO is willing to state that he is willing to pay significantly higher taxes in order for the corporation to continued funding for the Pentagon.

So the defense industry is an industry in decline. The war industry must be become a dying industry because the peace industry has not begin. It will not escape the deficit-cutters because Republicans cannot stomach huge tax increases that are required to fully fund the defense contractors. It is more important to see tax rates lower than to endure another Iraq or Afghanistan.

The days of chasing that lucrative cost-plus contracts are over. There is just not enough funds to get that elusive cost-plus program that provides easy profits to a contractor. Cost plus contracts are real easy to place for cost growth to occur and drive up the cost of weapon system. In an era of budget cuts, Boeing is going to see far less cost plus contract come along for new high technology systems.

Without the lucrative contracts, Boeing has going to turn to its profitable commercial division that makes aircraft such as Boeing 777 and 787. For Northrop Grumman and Lockheed Martin, the news even more grimmer because they rely on government contracting for a significantly higher percentage of their business.

Should we mourn the defense contractors getting less business? No, because the industry of peace bring a higher dividend to the country than does massive military does. Our main wars would be fought via trade now and not with guns.

However, climate change might change things and once the resource wars begin, then Lockheed Martin and Boeing will start to see gravy train once again. For right now, there are just going to have to used to lower revenues and less business until that date occurs.

[MADem]

1. What, the sub drone isn't coming along as planned? USN not biting?

http://articles.latimes.com/2011/aug/19/business/la-fi-drone-submarine-20110820

...Submarine drones have had limited use in ocean exploration, but Boeing Co. hopes to forge a much more sweeping role in national defense and environmental protection, said Mark Kosko, program director... "We're at the point that we can take this show on the road," he said. "This is a technology that can now move beyond the test role into a more meaningful role."

The mini-sub was made at Boeing's defense systems facility in Anaheim. The unmanned sub can withstand the crushing pressures of the deep ocean, diving to depths of 10,000 feet to glide above the seabed, dodging craggy mountains on its own. Engineers can envision a day when the vehicle is equipped with long-range torpedoes and sent on covert missions that last for months.

Boeing built the robotic submarine, dubbed Echo Ranger, in 2001 to capture high-resolution sonar images of underwater sea beds for the oil and gas industry. But now the company believes it has evolved the sub's onboard computers into a sophisticated system that will usher in a new era of unmanned submersibles.

The Echo Ranger program is not funded by the Navy, rather the endeavor is funded entirely by Boeing itself. The company would not disclose how much it has poured into research and design of the submarine.