Shutdown a 'wait-and-see' game for submarine parts suppliers
The Day, New London, Conn.
NEW LONDON, Conn. — The day before the federal government closed, the Defense Department awarded 94 contracts totaling more than $5 billion.
Few contracts have been awarded since, U.S. Sen. Chris Murphy said, because the government workers who process the paperwork were furloughed last week, and with the lapse in appropriations, there is no money to distribute.
"These businesses that rely in whole, or in part, on government contracts are in a standstill mode until the government reopens," Murphy, D-Conn., said. "There are millions of private sector jobs at stake."
A contract Ansonia Specialty Metals bid on is one of the contracts delayed by the budget impasse and budget cuts, said John Barto, vice president and general manager of the Waterbury-based company.
The contract for $20 million in copper-nickel tubing for Navy ships, Barto said, "means everything to us."
While small companies are generally more vulnerable, the effect of the shutdown on many other small businesses in Connecticut that manufacture parts for submarines was mitigated by the fact that they are working on contracts that were funded before the government shut down, and the federal inspectors who approve their work were recalled from their furloughs Monday.
But several executives at these companies said they are frustrated with the unwillingness of members of Congress to compromise, and they are reluctant to hire new employees or expand their businesses in this current climate.
"I might be more inclined to hire or take risks or take on more debt, but I think I'm in agreement with most people I know in the business right now who just have a wait-and-see attitude," said Nancy Hillery, president of Hillery Co. custom metal fabricators in Groton.
William D. Berger, the business development manager at Ward Leonard Electric Co. Inc., in Thomaston, said, "If you tell us the budget is going to shrink and you're only going to do one submarine a year … we don't like those decisions, but we can plan our business."
"Right now, we can't plan our business," Berger said. "How do we know how to staff, whether to expand, or make investments in new products? The uncertainty is terrible for any size company, but small companies don't have the ability to absorb that uncertainty."
Barto said his business is almost completely reliant on naval shipbuilding contracts. The Defense Department stopped publicly announcing its contracts on the first day of the shutdown, Oct. 1.
Barto said he has a workforce of about 50 and at this point, he has not had to lay anyone off because of the delay in the contract award.
"We're eagerly watching to see how this is going to unfold," he said.
The government closed after Congress could not agree on a budget or a continuing resolution to extend the current government spending. The Republican-controlled House of Representatives passed a continuing resolution that would have defunded the Affordable Care Act, which Senate leaders have said they will not do.
"The long-term impact of the shutdown depends on whether Republicans get rewarded for taking the entire country hostage," Murphy said. "If we give in to the Republicans and allow them to extract concessions simply to allow the government to operate, that sends a message and there will be a forced or threatened shutdown every two or three months. … That is why we have to put this kind of brinkmanship to an end right now."
Momentum is building for a funding bill to reopen the government with no policy conditions attached, Murphy said. He said he thinks the state's defense contractors will "hold their own" for the duration of the shutdown because Electric Boat, Sikorsky Aircraft Corp. and Pratt & Whitney are still open for business.
David Weller, the manager of programs at Electro Mechanical Specialists in Norwich, said the furlough of government inspectors and auditors did make life more difficult last week, but when they returned to work, "it really negated whatever issues we were having."
Weller said the Navy's decision to scrap rather than repair the USS Miami hurt more than the shutdown because he expected between $600,000 and $1 million in business, which would have allowed him to hire more people.
Christopher Jewell, principal and chief financial officer at Collins & Jewell Co. in Norwich, also said the shutdown has not hampered his custom steel-fabrication business.
But Hillery, Weller and others expressed a growing frustration with Congress.
In business, the ability to compromise during negotiations is crucial, Berger said.
"There is no way you can survive in the business community acting the way either party is acting right now," he said. "They have a job to do, and that is to help govern the country and make decisions."