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TheStreet Open House

Lockheed, Union Jointly Fight Defense Cuts After Strike Ends

WASHINGTON ( TheStreet) -- Although it recently led 3,600 workers out on a 10-week strike against Lockheed Martin (LMT) in Fort Worth, Texas, the International Association of Machinists is now working with the company to block defense industry sequestration.

"We're standing up for our members to protect their jobs," said IAM President Tom Buffenbarger, in an interview. "Our issue is jobs, not ideology. People in America need jobs. The role of a union is not only to make better jobs, but also to protect the jobs we have."

Like Lockheed, the Aerospace Industry Association trade group and other defense companies, Buffenbarger has been sounding the alarm about "sequestration," the improbable name given to the unlikely scenario, created by a dysfunctional Congress, that would trigger $1.2 trillion in budget cuts over 10 years, about half of that from defense cuts starting in fiscal 2013.

A Pentagon spokesman calls the situation "an absurdity." Unable to find a way to compromise on a plan to raise revenue and cut spending, an arrangement that would likely appeal to almost everyone, Congress established an alternative that seems to appeal to no one, in hopes that it could perhaps compromise if a serious threat looms. "A game of chicken (in which) people get pink slips," Buffenbarger said.

Estimates are that as many as 2.14 million jobs could be lost and the unemployment rate would rise by 1% or more if sequestration takes effect.

Buffenbarger said he has been speaking out "about how wrong this is, how silly this is. We are still in a fragile economy. There are glimmers of hope in some industries -- aerospace is one -- but the failure of Congress to offer real solutions to the budget problem could kill this industry." He will appear Tuesday on "Jansing and Co." on MSNBC sometime between 10 a.m. and 10:30 a.m. EDT.

The largest defense and aerospace industry labor union, the IAM represents about 60,000 defense workers, including 30,000 at Lockheed, 11,000 at Boeing (BA) (where it also represents about 30,000 commercial aviation workers), and several thousand each at General Dynamics (GD), the Pratt & Whitney division of United Technologies (UTX) and GE (GE).

The IAM has historically been able to work with companies on political causes while striking the same companies over contract matters. Its support can help to galvanize Democratic support for an industry with a strong Republican constituency. The Lockheed strike in Fort Worth ended June 28: Buffenbarger said the company has led the industry in opposition.

Because the Worker Adjustment and Retraining Notification Act requires layoff warnings to be issued 60 days in advance in most states (the requirement is 90 days in advance in New York), sequestration looms as an issue in the November presidential and congressional elections. Layoffs would likely be scheduled for Jan. 2, meaning notices would have to go out Nov. 2, four days before the election, in most states, and Oct. 2 in New York.

Said Buffenbarger: "How do people vote when they have a pink sheet in one hand and a ballot in the other? Whoever the incumbent is gets a no vote."

Recently, nearly every defense industry constituency has been raising objections in a massive campaign to stop sequestration.

On Monday, the AIA, which has already condemned the $2.1 trillion impact on the defense industry, released a study showing that commercial aviation would also be impacted. The study said cuts to the Federal Aviation Administration budget could result in the loss of 132,000 aviation jobs and reduce GDP by $80 billion.

Last month, Lockheed CEO Robert Stevens testified before the House Armed Services Committee. He said Lockheed, the largest government contractor with $40 billion in 2011 contracts, has 120,000 employees after cutting its work force by 18% in the past three years, and would likely have to lay off another 10,000 workers if sequestration takes effect.

Stevens filled Congress in on the impact of the WARN act, which would basically be that weeks before an election, layoff notices would go out.

"Since we don't know exactly who will be affected by layoffs, or whether any plant closings will be necessary absent legal or contractual relief, our best judgment is that we may have to notify a substantially higher number of our employees beginning late in the third quarter of this year that they may not have a job if sequestration takes place," he said in prepared remarks.

In whose district might this occur? Don't know.

Also in July, Pentagon spokesman George Little told reporters that planning for sequestration was not underway.

"Much of what we plan for in this building is for things that might actually happen," he said. "We typically don't plan against absurdities."

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

>To follow the writer on Twitter, go to http://twitter.com/tedreednc.

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