Rockwell Collins exec says looming defense cuts could be 'pretty devastating'

Iowa has about 4,973 defense-related jobs at stake in the debate over federal budget cuts, according to the head of Cedar Rapids-based Rockwell Collins's Washington, D.C., operations.

The cuts would be "pretty devastating," said Robert "Bobby" Sturgell . He acknowledges that many of the jobs lost would be at Rockwell Collins.

Rockwell Collins has already announced more than 200 job cuts companywide in recent months, responding to the slowdown in federal military spending. The company and has frozen non-essential hiring in its Government Systems division, which handles defense contracts.

Iowa isn't a state known for attracting big defense dollars. It didn't even crack the top 10 states in an analysis George Mason University prepared for the Aerospace Industries Association on the potential impact of federal defense cuts on the nation and various state economies.

Rockwell Collins, with about 9,000 employees in Iowa, isn't one of those companies widely regarded as a defense contractor. About half of its business comes from defense and government contracts, however, and the company is watching eagle-eyed as the federal Super Committee tries to hammer out an agreement to cut $1.2 trillion to $1.5 trillion in federal spending by Nov. 23 in response to the recent Budget Control Act. Without that agreement, the sequestration rules of Budget Control Act provides for 50 percent, or roughly $600 billion, of the budget reduction target to fall on defense programs.

Sturgell said the Obama administration has already announced it plans to cut about $460 billion over the next 10 years. The 50 percent automatic cut of about $600 billion would be in addition to that $460 billion, bringing total cuts to over $1 trillion.

The Aerospace Industries Association recently estimated that the $1 trillion in federal defense cuts over 8 years would place 1 million jobs at risk, based on the George Mason University analysis it sponsored.

The analysis was based on an annual reduction of $45.01 billion to the military modernization accounts. It would reduce gross domestic product (GDP) by $86.456 billion, equivalent to 25 percent of the projected annual increase in GDP for 2013. It would lower GDP growth projected for 2013 from 2.3 percent to 1.7 percent.

Sturgell says the cutbacks would not only leave many Americans out of work and slow the economic recovery, but would have long-term consequences for America's defense readiness.

"Even at a $460 billion level (in cuts) what's going to get hit first is the spend in research and development and procurement," Sturgell said. That in turn would have an impact on the global leadership of the United States aerospace industry, Sturgell said, because many of the advancements in commercial aviation begin with research and development funded by defense programs.

Sturgell said the $1 trillion cut would put America "back into the hollow forces environment we were in two decades ago," a situation from which it could not quickly recover.

""I don't think folks realize that for the first time in 100 years we don't have a design team designing a manned combat aircraft or helicopter," Sturgell said.

The AIA believes that roughly 4 percent of the nation's gross domestic product should be allocated to defense, and that 35 percent of that spending should be allocated to research and development spending and procurement, Sturgell added.

The Super Committee has until Nov. 23 to draft its recommendations and Congress has until Dec. 23 to act upon it, Sturgell said. He said there's "a fair amount" of pessimism that agreement will be reached on the cuts required in the Budget Control Act.

Rockwell Collins and the AIA are urging the Super Committee to cut less from defense and approach the cuts strategically, Sturgell said. He acknowledged, however "there's a fair amount of pessimism they can reach an agreement" in Washington circles.

Sturgell believes the aerospace industry has done a good job of making its case, but said it's competing against every other constituency affected by proposed federal budget cuts. Defense aerospace may not evoke as much sympathy as some, he said.

"It is one of those industries people tend to take for granted," Sturgell said.