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Defense suppliers seek to cut costs

A satellite image of the Pentagon building.

TEXT OF STORY

BILL RADKE: Boeing and Lockheed Martin both announced major cost-cutting moves this week. And why would that be? Well apparently, these defense industry giants believe the Pentagon when it says it will cut spending significantly.

Marketplace's Nancy Marshall Genzer reports.


NANCY MARSHALL GENZER: There's lots of pressure on the Obama administration to cut the budget deficit. And non-defense spending has already been pared down.

GORDON ADAMS: So that puts defense squarely in the bull's eye.

Gordon Adams is a defense industry analyst with the Stimson Center. He says procurement spending will be targeted first. The Pentagon won't buy as many new bombers or ships. So suppliers are tightening their belts.

ADAMS: Industry is beginning to lay off people, is beginning to look to areas where they can sell off pieces of their business.

About 25 percent of Lockheed Martin's senior managers have taken early retirements. Boeing is consolidating its military aircraft business.

Todd Harrison is with the Center for Strategic and Budetary Assessments. He says the defense industry as a whole is trying to get into non-military ventures.

TODD HARRISON: A lot of the technologies the defense companies have could be applied to other civil government agencies -- things like NASA, FAA.

Harrison expects defense spending to slide for the next ten to 15 years.

In Washington, I'm Nancy Marshall Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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