Industry weighs U.S. defense cuts' impact

WASGHINGTON, D.C., Feb. 13 (UPI) -- Defense industries are weighing the potential effects of proposed cuts to the U.S. Defense Department budget that could run into tens of billions of dollars over the next 10 years.

Proposals in U.S. President Barack Obama's fiscal 2013 budget mean defense orders will be lower this year than over the past few years, leading to job losses in some defense and security industry sectors as well as the armed forces.

The U.S. disengagement in Iraq has led to reduced procurement and excess equipment ending up in military warehouses. With the Afghanistan conflict also likely to scale down in the coming year, the momentum for those cuts will accelerate, data from the government budget proposals indicated.

An upbeat Obama said, "The main idea in the budget is … at a time when our economy is growing and creating jobs at a faster clip, we've got to do everything in our power to keep this recovery on track."

Pentagon officials said they were on track to save $259 billion over the next five years and $487 billion over the next 10. The Pentagon wants $525 billion for fiscal 2013, with an additional $88.4 billion for international contingencies including the continuing operations in Afghanistan. Both figures are lower than the $531 billion overall figure for fiscal 2012 and $115 billion for contingencies this year.

A large part of the Pentagon's savings, about $15 billion, could come from reorganizing the Lockheed Martin F-35 Joint Strike Fighter program, Defense Daily said on its Web Site.

Other major savings include $13.1 billion less spent on the U.S. Navy shipbuilding, delays in developing the Ohio class replacement submarine and review and cancellation of orders for Northrop Grumman Block-30 Global Hawk unmanned aircraft systems.

The Pentagon is cutting back more than $3.5 billion by changes, including cancellations in the U.S. Army Ground Combat Vehicle and Defense Weather Satellite programs.

While the U.S. Army is likely to be about $700 million better off because of the cutbacks both the U.S. Air Force and the Navy may lose a total of $5.7 billion in the cutbacks. However, huge personnel cuts are planned in both the Army and the Marines.

The potential impact of the cuts on U.S. and international defense industries is yet to be determined and may not be known until 2013.

However, the cuts in the Pentagon bureaucracy would be substantial as a saving of $60 billion over five years is planned. Structural changes affecting the forces aim to save another $50 billion.

The U.S. fiscal year runs from Oct. 1.