Looming defense cuts have Arizona industry worried

February 26, 2013

Arizona’s aerospace and defense industry stands to lose big if lawmakers in Washington allow sequestration cuts to start at the end of this week. 

The state is the sixth-largest recipient of Defense department contracts in the country, and the federal government funneled about $13 billion to Arizona aerospace and defense companies in the state last year alone. The result of that federal investment is some $2. 3 billion in state revenues and 49,000 high-tech jobs.

"You can make the argument that the dept of defense is one of the state’s largest and most important employers," says Dennis Hoffman, a professor at the W. P. Carey School of Business at Arizona State University.

So people in Arizona get a little woozy when defense spending is on the line -- like it is right now. Some $1.2 trillion in cuts spread out over the next ten years will start on Friday if Washington lawmakers don’t come to a compromise.

 "Sequestration is already here," says Dane Mullenix, director of Arizona Laboratories for Security and Defense Research. "Companies have been pulling back.  Companies have been delaying decisions and making investment decisions based on uncertainty that almost always fall to the conservative."

Mullenix met with business leaders from the Greater Phoenix Economic Council Tuesday. The group is planning a trip to Washington this spring to promote Arizona’s aerospace and defense industry.


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