Sequestration Already Proving Disastrous for Small Manufacturers in the Defense Supply Chain

Much has been made of the “fiscal cliff” that looms at the end of the year and its effect on small business across the nation.  The tax increases set to take effect will certainly have a negative impact on small manufacturers, many of which file as sub Chapter “S” corporations.

As this Bloomberg article points out, however, the pending defense cuts that are also part of the so called “sequestration”  are already having a disastrous effect on small and mid-sized manufacturers that are part of the defense supply chain.  Companies that supply everything from aircraft parts to uniforms to k-rations will be negatively impacted by the cuts.  This comes at a time when the manufacturing sector, the sector that has led the meager recovery, is showing signs of sputtering.

The administration put defense in the center of the discussion during the debt ceiling negotiations and the resulting sequestration plan, while simultaneously touting the sector’s resurgence. One wonders if they understand who makes the materials our defense department buys?