Esper Honors the DIB
Defense industrial base workers received recognition for their perseverance during the COVID-19 crisis from Secretary of Defense Mark Esper in a letter dated May 4, 2020. Esper thanked the workforce for its “focus and dedication,” which has enabled the Defense Department to continue to make progress toward readiness and modernization goals.
Esper’s tribute to the defense industrial base workforce comes amid surging U.S. unemployment. COVID-19 crisis has created dire economic conditions for all sectors of the U.S. economy. Economic losses have mounted since March, materializing in devasting job losses. The unemployment report for April 2020 released by the Bureau of Labor Statistics shows total non-farm payroll employment fell by 20.5 million during April 2020. This is on top of a decline of 870,000 employment in March 2020. The April employment decline represents the largest decrease since the Bureau’s history.
The industrial sectors at the heart of the defense industrial base have been hit hard. BLS reports that the manufacturing sector lost 1.3 million workers, or 10.4%, in April. This is the largest monthly loss in manufacturing capacity since September 1945, which witnessed a decrease in employment of 12.1%. Key manufacturing subsectors also shed workers heavily such as primary metals (-11.5%), fabricated metal products (-9.8%), and transportation equipment (which includes aerospace-related manufacturing) (-33.4%).
Employment change by industry, April 2020, seasonally adjusted, 1-month net change (source: Bureau of Labor Statistics)
The defense industry, too, has felt the economic pain of the COVID-19 crisis. Many companies with substantial defense contracting business have announced layoffs. However, some defense companies are also hiring. Leading prime contractors Lockheed Martin, Northrop Grumman, and Raytheon have hired or expect to hire several thousand workers this calendar year. Defense companies have been helped in this regard by Defense Department assistance, such as the decision by the Acting Principal Director of Defense Pricing and Contracting Kim Herrington to increase progress payments for costs incurred completing contract work.
NDIA conducted a survey of 768 small business executives on the impact of the COVID-19 crisis on their companies. Fifty-one percent of respondents reported operational disruption from COVID-19 safety policies, and sixty percent expect long-term negative financial impact from the crisis. The full survey results are available here.