Defense industry braces for unknown fallout from virus

The vaunted U.S. military-industrial machine is venturing into the unknown as the coronavirus continues its spread across the country, sector leaders said Wednesday, with the global pandemic threatening to slow down innovation and disrupt key supply chains.

Amid grumbling from some in the private sector, Pentagon officials and military contractors insist they have been in daily communication as they seek ways to keep the industry fully up and running and to ensure the Defense Department has access to the equipment it needs to protect U.S. national security. Top Pentagon officials this week instituted daily meetings with industry leaders, and military officials told reporters Wednesday that so far the coronavirus has not caused major slowdowns or otherwise harmed operations.

But the industry is bracing for a worst-case scenario, one in which the economic slowdown caused by the pandemic — coupled with the military’s diversion of resources toward helping the federal and state governments cope with rising numbers of patients and demands on the country’s medical infrastructure — stretches into the summer and beyond.

Boeing, which has both commercial and defense operations, this week came out in favor of an emergency government loan and subsidy program of “a minimum of $60 billion” for the aerospace manufacturing industry. Lockheed Martin, told the Pentagon this week it has had to shut down a Mitsubishi Heavy Industries Japan factory where the F-35 fighter jet is assembled for at least a week because of virus fears.

“The unknown — if you look at the stock market, if you look at earnings, innovation, all of those things, there’s just a feeling of unknown. We don’t know,” said retired Air Force Gen. Herbert “Hawk” J. Carlisle, now the president and CEO National Defense Industrial Association (NDIA).

“My belief is in the next two to three weeks [if] we’re able to flatten the curve, and we’re making progress on a vaccine going forward, and medication, and we’ve handled it appropriately … I think it’ll take a while for the economy to recover, but that to me is less concerning,” he told The Washington Times in an interview. “If it’s 10 to 12 months, I think we as a nation are going to have to work hard. And that concerns me more.”

While top defense industry contractors such as Boeing, General Dynamics, Lockheed Martin and others say they’re open for business while also taking steps to protect employees and stop the spread of the virus, Gen. Carlisle concedes the industry has already felt blowback.

He said key industry symposiums, conferences and events — often the most fertile ground for companies to pitch ideas to military officials and brainstorm new projects — have been canceled or postponed. The Pentagon’s laser-like focus on the coronavirus also means that there’s likely to be fewer opportunities over the next few months for military leaders to spend time meeting with industry representatives on new proposals and initiatives.

For Pentagon leaders, the potential consequences are already crystal clear.
Ellen Lord, undersecretary of defense for acquisition and sustainment, on Tuesday asked NDIA, the Aerospace Industries Association, the U.S. Chamber of Commerce and a host of other organizations to be part of a core team that will meet daily with the goal of keeping the supply chain up and running.
Military officials say that so far there’s been limited impact.

“Right now, to date, we’ve not seen a limitation that’s caused us to pause or affect operations in any way. But this is a concern going forward,” Air Force Chief of Staff Gen. David L. Goldfein told reporters at the Pentagon Wednesday. “Companies have got to figure out how to keep their [production] lines open with their own social distancing and their own procedures to protect their work force.”

Indeed, defense firms say they’re instituting the same kinds of safeguards and social distancing protocols that have become commonplace across the U.S. over the past several weeks.

“Employees with potential exposure are instructed to work remotely and self-quarantine. We have provided guidance to employees and their managers to accommodate flexible work schedules and alternative arrangements where possible,” Lockheed Martin spokesman Trent Perrotto told Defense News this week. “We continue to follow travel guidance from the U.S. government and other countries where we do business, and are limiting all other international and domestic travel unless necessary for business.”

Gen. Carlisle said those policies are in place across the sector. But he also cautioned that teleworking is difficult if not impossible for employees working on sensitive or classified projects.

Social distancing inside production facilities, he said, also could lead to slowdowns, especially if the rules remain in place for months.

“They’re probably going to separate people with social distancing, which will slow down production lines,” Gen. Carlisle said. “Industry is working hard to do the right thing.”