Jessica Hill, Associated Press
WASHINGTON — Since the government shutdown started, one-fourth of MicroTechnologies's work force of 400 in suburban Vienna, Va., has stayed home. The headquarters is like a "ghost town," Chief Executive Officer Tony Jimenez said.
"I've seen more people cry in the last couple of days than the last few years," Jimenez said in a phone interview Wednesday, after six federal agencies he wouldn't identify told the company to stop work on contracts. "You don't take people's jobs and play Russian Roulette with them."
The partial shutdown that began Oct. 1 is beginning to have a ripple effect on federal contractors, which employ millions of people and attract more than $500 billion in annual awards. Costs will rise each day that government offices remain closed. The defense industry, the single biggest recipient of contracts, will likely be the hardest hit.
United Technologies Corp.'s Sikorsky Aircraft business slowed production of Black Hawk helicopters after Pentagon inspectors were furloughed due to the shutdown, Gregory Hayes, the company's chief financial officer, said Oct. 1 at a meeting with analysts and investors in Monterrey, Mexico. The inspectors are required to do reviews of the choppers as they're being manufactured, Hayes said.
About 800,000 federal employees have been furloughed.
"The immediate impact of the U.S. government shutdown on Sikorsky is only manageable for a short time," Paul Jackson, a spokesman for the Stratford, Conn.-based division, said in an e-mail. "Any extended government shutdown will considerably impact our business."
United Technologies is poised to furlough almost 2,000 Sikorsky Aircraft employees in Connecticut, Florida and Alabama on Oct. 7, according to a company statement Wednesday. The total "could exceed 5,000 employees if the government shutdown continues into next month," the contractor said.
Shares of United Technologies fell 2.2 percent to $104.98 in New York trading. A Bloomberg Government index of 68 government contractors declined 0.4 percent Wednesday. It has dropped 6.4 percent since Sept. 27, compared with a 0.13 percent gain in the Standard & Poor's 500 Index.
Contractors should be able to handle a short-term shutdown, said Larry Allen, president of Allen Federal Business Partners, a consulting firm in suburban McLean, Va. If the government stays closed for several weeks, vendors may consider layoffs, he said.
"If we get to that point, the whole country will be hurting, not just government contractors," Allen said in a phone interview.
There are an estimated 7 million full-time equivalent jobs tied to U.S. government contracts, Paul Light, a public policy professor at New York University, said in a phone interview.
NSC Technologies Inc., a closely held staffing company based in Portsmouth, Va., is having a hard time getting some of its employees access to Navy shipyards because most of the federal offices that supply passes are closed, said Tanya Rieger, vice president of workforce development.
About 250 NSC employees working in southeastern Virginia, where much of the Navy's ship repair and construction work takes place, have badges that are valid for a year or 28-day temporary passes, Rieger said in a phone interview.
"If the government doesn't open back up, those passes will expire, and there is no way for these workers to get back to the shipyards," she said.
The company provides skilled workers to prime, or direct, contractors such as London-based BAE Systems Plc, suburban Falls Church, Va.-based General Dynamics Corp., and Newport News, Va.-based Huntington Ingalls Industries, she said.
If NSC can't get its employees onto work sites, the larger companies won't have the staffing they need to fulfill their contracts, she said.
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