After weeks of a pandemic, unemployment rates are higher than the years of job loss during The Great Recession. In times like this, the defense industry seems like a good place to be. 

Thanks to the Pentagon and its response to the crisis, cuts in the defense industry are currently fewer and farther in between than the rest of the country. Companies with ties to the mainstream industry seem to be facing the highest impact.  Clearly, the business of making commercial airplanes isn’t in high demand right now. 

However, Northrop Grumman and General Dynamics cite the stability of the government for their defense focused work as a benefit for the company. 

Which companies are sending out layoff notices? 



The Boeing Co. Being bigger does not mean a company can withstand anything. The downturn for Boeing after its best-selling jet was grounded has been amplified with the current pandemic impact. Ten to fifteen percent cuts could reduce their workforce by almost 10,000 employees. Most cuts are occurring within the Commercial Airplanes division, with the defense and space units seeing the fewest jobs reduced. “I know this news is a blow during an already challenging time,” CEO David Calhoun said in a memo to employees. “I regret the impact this will have on many of you. I sincerely wish there were some other way.”
Spirit AeroSystems While Spirit claims that the Defense programs are not impacted, the company sent out 1450 WARN layoff notices on Friday. Lower production rates have a rippling effect. The company’s leadership is also looking at other ways to shore up the financial stability of the company, in order to be a competitor going forward. 
Raytheon Technologies Corp Raytheon is another casualty in the aviation business. Raytheon’s plans include an immediate $2 billion cost-cutting measure, suspension of share buybacks, and an unidentified number of furloughed workers. Chief Executive Gregory Hayes expects more reductions without specifying how many of its 195,000 might get a notice. 
FireEye Inc  It may not seem like the right time to see layoffs hit a cybersecurity company, but it seems like no one is immune to the coronavirus. FireEye cites falling stocks and lower revenue projections as the reason behind the 6% cut to its workforce. FireEye thinks the cuts will reposition the company with better operating performance (i.e. cheaper). 
General Electric Co As the coronavirus continues to keep people grounded at home, GE announced that it plans to cut 25% of its global aviation workforce. These cuts are part of the plan to reduce costs in the business by $1 billion. “In the process of reacting to what has hit us here, if we play our cards right we will accelerate the operational and cultural transformation of GE,” CEO Larry Culp said as he looks to COVID-19’s impact to speed up the 128-year old company’s restructuring efforts. 
Glassdoor Not even job search sites are immune from the impact of a loss of jobs across the country. CEO Christian Sutherland-Wong said the current pandemic is the cause for such a dramatic drop in recruiting. Despite reducing executive salaries, the company still had to make a 30% staff reduction. 

Pentagon Provides Stability For the Contracting Chain and a Message to Industry

While slowdowns in payments and approvals can impact the smaller contractors, contract allowances for delayed deliveries due to COVID-19 have helped keep doors open and work progressing, albeit at a slower pace. It also helps when larger companies with overhead to withstand the downturn ensure steady payments to smaller companies, with an eye on ensuring the supply-chain continues to run. 

Although COVID-19 seems to have caught many of us unaware, the initial panic of how to function from home seems to be wearing off. However, most companies are concerned about future cash flow issues, impacting long term financial prospects.

“The U.S. defense industry continues to operate, so in that respect, it’s kind of a good news story compared to other parts of the economy,” Andrew Hunter, a senior fellow at the Center for Strategic and International Studies, said, “Defense firms are still operating and they still have a pretty strong demand from their customer, the Department of Defense, which is doing quite a bit to, in many ways, even accelerate its demand signal to industry.”

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Jillian Hamilton has worked in a variety of Program Management roles for multiple Federal Government contractors. She has helped manage projects in training and IT. She received her Bachelors degree in Business with an emphasis in Marketing from Penn State University and her MBA from the University of Phoenix.