As the summer of 2020 stretches on, the Labor Department reports that July’s 2.9 million permanent job losses is less than expected. Economists were afraid that the permanent job loss spike would be higher than what it was. The longer people sustained short term COVID-19 related layoffs from the spring, the greater the risk of those layoffs turning into actual job losses. Now what we’re seeing is more and more industries impacted – like a domino effect. But because the defense industry’s customer is the federal government, right now, the work continues. In fact, the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act could potentially deliver $29.4 million to the DoD in order to cover payments made to contractors to cover sick and paid leave, defense industrial bases, Defense Production Act purchases, and operational impacts due to COVID-19. An interconnected economy needs to be supported in each industry.
Layoffs Impacting the Defense Industry
|Boeing||According to Boeing executives and documentation, COVID-19 is beginning to impact other company projects. Boeing stated that they will lose $151 million on the KC-46 tanker, adding up to a total loss of $4 billion on the project. With COVID-19 and airline reductions, factory closures and project pauses continue to take a toll.|
|Dell Technologies||While the number of employee layoffs is unspecified, Dell Technologies has noted that it is not due to COVID-19. They explain that their move is a proactive measure to be ready for more COVID-19 uncertainties. With reorganizations and budget realignments, Dell considers layoffs and freezing pay raises and benefit contributions to help course correct going forward.|
|ScanSource||With revenue down about 20% year over year, the organization will look to a $30 million cut in expenses to stave off future complications. However, ScanSource touts its purchase of Intelysis four years ago as a worthy investment with their numbers up 15%.
“Based on COVID-19 impacting our business since March, we spent a lot of time figuring out where [the decline in business] was going to impact us the most,” Mike Baur, chairman and CEO of ScanSource. “We’ve been talking about the decline in premises-based communications for a while. So it was easy to say we had to reduce our investment there. But at the same time, we continue to invest heavily in our Intelisys business.”
Of course, while businesses fight to stay solvent and keep people employed with funding from the HEALS Act, cyber attackers remain watchful and ready to take advantage. Since April 2020, U.S. defense and aerospace contractors were targeted with a series of phishing attacks by North Korea’s Hidden Cobra. It’s clear that there’s never a good time to relax on cybersecurity. It’s a never-ending improvement process. As we get better in our responses, hackers also continue to improve and change tactics.
Hiring impacting the Defense Industry
|Northrop||With $5.9 billion in classified space deals, Northrop Grumman continues to set itself up in the remaining quarters with their defense contracts. “It is quite significant,” CEO Kathy Warden said. “I can’t provide any color on what it is, but suffice it to say, this is a long-term program as a result of the size of the effort.”
Northrop’s Utah location aims to fill more than 600 positions at its missile defense development facility. “We’re on track to actually add a lot more over the next few months, and that trend is expected to continue over the next few years,” Katie Qian, director of Air Force programs at Northrop Grumman said. “Being a technical company, we are looking for lots of engineers, but on top of that, just all sorts of positions. Everything from entry level technicians and engineers to experienced managers to contracts and finance, administration — all kinds of positions as part of the immense growth that we’re experiencing right now.”
Qian also noted operations with NASA’s Space Launch system ramping up in other areas. With their work considered essential, Northrop continues to operate with an eye towards balancing employee safety and mission achievement.
Opportunity to Watch
As the Pentagon looks to grow its cyber operations force, some are concerned that the DoD won’t be able to attract and retain the talent it needs. Cyber teams without any players on them are somewhat useless.
“If you don’t have the access to military targets, adding more cyber units [isn’t] going to accomplish much,” Sen. Joe Manchin, D-W.Va., said during an Aug. 4 hearing with members of the Cyberspace Solarium Commission at the Senate Armed Services Subcommittee on Cybersecurity.
“Our sense of United States Cyber Command is they’ve done a great job within the authorities that they have of recruiting, training and developing for careers the people necessary to do the work that they do,” responded Chris Inglis, a commission member and a former deputy director of the National Security Agency.
Gen. Paul Nakasone, the head of Cyber Command says that while we can get personnel in and trained, the issue is retaining the best in the industry. Lawmakers have sought to support Cyber Command’s retention efforts. They are planning to give Cyber Command the same hiring authority ad Defense Advanced Research Projects Agency (DARPA) and some others, allowing them to give technical talent more competitive pay.
“First of all, it begins with the mission. If you like to work hard problems, if you like to be in the middle of ensuring the defense of our nation, if you like to work with incredible people and superb technology, being in a place like Cyber Command and NSA is critical,” Nakasone said. “But we’ve also been the beneficiaries of a number of different initiatives both by Congress and by our services to make sure that we have a significant amount of enumeration for those forces.”