Uncertainty clouds outlook for weapon makers: BAE executive

WASHINGTON, Tue Sep 4, 2012 – Uncertainty about $500 billion in additional U.S. defense budget cuts slated to start taking effect in January is “wreaking havoc” on weapons makers, threatening 1 million jobs, jeopardizing the health of suppliers and slowing acquisitions, Linda Hudson, the top U.S. executive at Britain’s BAE Systems Plc, told Reuters.

BAE Systems may have to warn all of its 30,000-plus U.S. employees just before the Nov. 6 presidential election that the budget cuts could lead to about 4,000 layoffs, said Hudson, chief executive officer of the U.S. arm of Britain’s largest defense contractor.

“The environment is wreaking havoc on all of us and our ability to do rational things,” Hudson said in an interview last week, noting that uncertainty about the budget outlook was compounded by the presidential election and U.S. tax rates.

“If everything is cut across the board, we may end up having to send notices to all of our employees that work on government contracts because we can’t pinpoint a location that would be affected, or a program that would be affected,” she said.

Hudson’s comments came about a month after the U.S. Labor Department said the circumstances surrounding the planned cuts were too uncertain to require defense and other federal contractors to comply with a law calling for employees to be notified 60 days before major layoffs or plant closures.