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Boeing: You Cut Defense, We May Close Wichita

Stocks in this article: BA

CHICAGO TheStreet) -- Does a dysfunctional Congress really want to do battle with a determined defense industry?

Now that the super committee's failure to cut spending allegedly has triggered automatic budget cuts of $1.2 trillion over 10 years, about half of that from defense cuts starting in fiscal 2013, the battle has begun and Boeing (BA - Get Report) has fired an early shot.

Boeing announced on Tuesday, the day after the spending cut effort collapsed, that it is studying whether to close a Wichita, Kan., facility, given the outlook for reduced defense spending. The plant employs 2,100 workers. It maintains, modifies and upgrades military and government planes, including Air Force One, the B-52, and the C32A and C40 military passenger and cargo planes. Completion of the study is expected by early 2012.

The announcement was entirely predictable, said Richard Aboulafia, an aerospace and defense industry analyst at the Teal Group in Fairfax, Va.

"This is a well-played effort to expand the network of politicians willing to fight against the 'sequestration' cuts," he said.

Massive defense spending is, for better or worse, a cornerstone of the U.S. economy. In fiscal year 2012, which ends Sept. 30, 2012, Pentagon spending is expected to total $513 billion, enhanced by $118 billion to fund the wars in Afghanistan and Iraq.

Strategically spread across many states, defense spending has backing not only from hundreds of members of Congress from all across the political spectrum, but also from dozens of key interest groups, from right wingers to the International Association of Machinists. Despite a cyclical downtown as war efforts wind down, most experts consider additional drastic cuts to be extremely unlikely .

"One reason the cuts won't happen is that efforts like this one will create an awareness of what's at stake," Aboulafia said. Indeed, Kansas Gov. Sam Brownback told reporters Tuesday that the state's congressional delegation "will fight and fight hard" to keep Boeing in Wichita, according to The Wichita Eagle.

Brownback said he would remind Boeing officials of their promise that Wichita employees would be involved in construction of the Air Force refueling tanker if Boeing won the hotly contested contract.

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