Aramanda: Sequestration cuts would cripple small businesses
Soccer moms. NASCAR dads. During election season, it seems like we're not even people anymore -- just voting blocs the candidates are carving up or making promises to.
This year, it's small businesses. Almost every issue gets debated through this lens. Will the health care law hurt small businesses or make it easier for them to offer benefits their workers need? Will tax hikes fall on wealthy millionaires or decimate small business bottom lines? Above all else, how can we generate more small business jobs?
On Thursday, the House Committee on Small Business held a hearing to talk about the upcoming sequestration budget cuts, the result of the failed supercommittee deficit negotiations last year that are set to begin on Jan. 2, and how they will affect small businesses. The $1.2 trillion in cuts would be divided roughly in half between defense and nondefense programs over nine years.
Before last week, the sequestration debate mostly focused on the defense portion of the cuts. And when people think defense cuts, they usually envision corporate giants like Lockheed or Boeing. But 70 cents out of every military purchasing dollar goes to the small and midsized suppliers that make components those big prime contractors assemble. A complex piece of hardware like a fighter jet or a submarine will have thousands of suppliers and subcontractors all around the country. Two-thirds of defense manufacturing jobs are in these supply chain firms.
And it's these small businesses that are on the chopping block if sequestration isn't stopped.
Economists predict that sequestration will destroy more than 2.14 million American jobs, but few appreciate how many of these lost jobs will be at the very small businesses that President Barack Obama describes as "the engines of our economy." According to the latest studies, sequestration will destroy more than 30,000 small-business jobs in New York State.
It's also the worst possible strategy for cutting budgets -- across-the-board reductions instead of targeted cuts focused on things we don't need or budget busters we simply can't afford. This makes it a threat to every company up and down the entire supply chain, even healthy firms working on critical technologies like mine, CPI Aerostructures in Edgewood.
Business is good at CPI -- we recently expanded our facilities and employ 200 people, manufacturing aircraft components like wing assemblies, engine housings and surface skins. We serve some of the highest value programs in our military -- including retrofits that add cutting-edge capabilities and years of service life to older aircraft like the A-10 Warthog, as well as providing production parts to the Blackhawk helicopter and the E-2D Hawkeye.
But because sequestration cuts aren't guided by any strategy or reason, they mindlessly put everything at risk. CPI will find a way to weather cuts, but in such tough times, that won't be true for other firms still struggling to get back on their feet after the Great Recession.
That's an economic and a human tragedy, but it's also a problem for America's security. The experienced workers at companies like CPI -- our single greatest asset -- possess the specialized skills and capabilities needed to manufacture complex failure-is-not-an-option equipment for our military. This expertise has been built up through decades of research and development and irreplaceable training on the job. The same is true throughout the entire supply chain; for many technologies, there may be only a few firms that can do the job.
Right now, American troops go into battle with a high-tech lead over our rivals. But if we don't keep innovating, that gap will close. Upstate, Rep. Richard Hanna (R-Barneveld) has warned that sequestration could hit the Rome Air Force research lab. That hurts New York, but more fundamentally, shutting down such cutting-edge facilities hurts our future military capabilities. That's why Defense Secretary Leon Panetta predicts that sequestration would "generate significant operational risks" and lead to "unacceptable risk in future combat operations."
There are a lot of reasons to replace sequestration with a more responsible approach to budgeting and long-term deficit concerns. As both parties clamor for the mantle of "friend to small business," the problem of sequestration is the biggest danger out there for smaller firms like mine.
Gregg Aramanda is vice president of CPI Aerostructures in Edgewood.