The Labor Department reported that a staggering 6.648 million people filed for unemployment benefits last week – double from the record 3.307 million a week earlier. Compare that to a year earlier when the weekly total was just 211,000.
In just two weeks all the jobs gained in the last five years were lost – and nearly all of it is due to the COVID-19 pandemic. This comes as much of the country has been ordered to stay at home at least for several weeks to help combat the spread of the highly infectious coronavirus.
According to a WalletHub report, the states with the largest unemployment increases were Louisiana, North Carolina, Indiana, New Hampshire and Florida – while the states with the smallest unemployment increases were Oregon, Connecticut, Wisconsin, Wyoming and West Virginia. Some sectors have been hit far harder than others – in states such as Michigan, many of its automotive and supplier factories shuttered, while states that rely on tourism have seen a spike in unemployment. Across the country restaurants, hotels and other hospitality-based businesses have also closed.
The aerospace industry has been especially hard hit, as airlines have grounded planes everywhere. That has sent ripples throughout the global supply chain.
“With the airlines not flying, they’re not ordering new planes; they’re not taking delivery of planes that are coming off the line. They’re not servicing the planes, so even the aftermarket has dried up,” Eric Fanning, chief executive of the U.S. Aerospace Industries Association, told Reuters on Thursday.
The New York Times also reported that many suppliers – notably those that make structural parts and lack a recurring market for repairs and replacements – are considering furloughing staff to conserve cash.
What This Means for Contractors
Several top defense contractors have shuttered production lines and even started layoffs – and this could put the more than 500,000 aerospace production jobs at risk, the International Association of Machinists and Aerospace Workers warned last month.
Just Thursday Boeing announced it will offer employees voluntary layoffs and early retirement, and CEO Dave Calhoun told employees via a memo the move is to reduce the need for other workforce actions.
However, help is on the way. As part of the massive $2 trillion coronavirus relief package signed into law last month, $17 billion will be set aside for federal loans for “businesses critical to maintaining the national security.”
More importantly, the Pentagon has declared defense contractors as “critical” to national security, and employees must continue to report to work. The Intelligence and National Security Alliance (INSA), an association that represents 160 federal contractors supporting the defense and intelligence agencies, applauded the passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act. It authorized agencies to modify federal contracts with contractors whose employees cannot perform work at a federally approved site or telework.
“The legislation enables government agencies to continue to pay contractors if they cannot perform their work because of coronavirus-related restrictions, such as the closure of federal facilities or the inability to telework,” said NSA President Suzanne Wilson Heckenberg via a statement.
“Such restrictions disproportionately affect contractors who perform classified work, which cannot be undertaken outside of a secure facility,” added Heckenberg. “The CARES Act will ensure contractors supporting defense and intelligence agencies can continue executing critical national security missions both during and after the pandemic.”
Still Hiring
Despite all the doom and gloom, there are still contractors hiring – including Lockheed Martin, the nation’s largest defense contractor. It announced steps it was taking to assist its workforce, customers and communities that are dealing with the pandemic.
To help ensure that the production of defense-critical items isn’t impacted, Lockheed Martin is working to sustain output by advancing $50 million to small and medium companies in its supply chain. It is also donating millions to non-profits that are engaged in coronavirus relief.
Most notably, Lockheed Martin is still hiring, and it announced it is doing so by the use of virtual technology that allows it to make the shift without increasing the risk of spreading COVID-19.
It may take a while for business to return to normal once the coronavirus pandemic is addressed, but the defense and aerospace sector could bounce back quickly – provided small firms can hang on and weather the storm.
