Cut Defense? A Fight Begins | Wall Street Journal


WASHINGTON—One of the Pentagon’s biggest contractors is launching a lobbying campaign this week to rescue a venerable Army vehicle line from shrinking spending and shifting military priorities.

Executives from BAE Systems BA.LN +2.52% PLC and dozens of its suppliers are heading to Washington, D.C., where they will exhort lawmakers to divert millions of dollars to a York, Penn., plant to continue work on the Army’s fleet of Bradley fighting vehicles.

The U.K.-based company’s campaign will be one of the first by defense contractors that are expected to turn to supporters in Congress this spring to undo military spending decisions.

Lawmakers from both major parties are motivated to protect local jobs, even if it means forcing the Pentagon to keep military programs it wants to eliminate because of spending cuts or troop reductions.

“Every single piece of equipment affected by the drawdown will see some sort of street fight to keep the production lines open,” said Gordon Adams, a former White House budget official who now is an international relations professor at American University here. “This is a classic service-contractor duel.”

Faced with a glut of gear, budget cuts and plans to trim the size of the Army, the military effectively wants to enact a three-year suspension in work on the Bradley vehicles. The armored vehicles cost about $3.1 million apiece and have fallen out of favor as tougher alternatives have arisen.

BAE worries that the decision could mean the death knell for the Bradley line and force the company to lay off more than 250 of its York plant’s 1,250 workers. The company projects it would cost up to $700 million to restart Bradley production lines if work is closed for three years and all the suppliers find other work

“If we don’t find a way to mitigate the shutdown between now and midsummer, we are reaching…the-line-of-no return,” said Mark Signorelli, BAE’s vice president of vehicle systems.

This week’s push won’t be the first such campaign by the defense contractor. In past efforts, BAE succeeded in convincing Congress to override Army requests to limit spending and nearly double the amount of money for the Bradley line, to more than $280 million now.

The company wants to keep the Bradley production line in York running long enough to give them time to find other buyers for its transports around the world.

Sen. Bob Casey, (D., Penn.) is among those supporting the drive to protect the defense industry jobs.

“I realize that we have to come up with savings and make difficult decisions about defense, but I think, in this case, there are other places to find savings,” said Mr. Casey.

The battle comes as the U.S. military shifts its focus more toward Asia and as the Afghanistan war near an end, prompting the Army to reinvent itself.

The battle over the Bradley is part of a larger conflict over the future of the Army. That branch of the military is currently planning to cut its force size to 490,000 personnel from 562,000 over the next seven years. And that number could drop even further. As the number of soldiers drops, so does the need for armored vehicles to protect them.

Ashley Givens, an Army spokeswoman declined to discuss the Bradley, but said in an email that the “industrial base is critical to the Army’s success” and that the military is engaged with contractors to maintain “a robust and healthy combat vehicle industrial base.”

At its peak, BAE had 3,000 workers producing Bradley fighting vehicles at the York facility. That number has fallen to the current 1,250. The impact will hit hundreds of smaller companies that provide BAE support for the Bradley line.

BAE estimates that nearly 600 companies with upward of 7,000 workers in 44 states support the Bradley. Among those suppliers is AMZ Corp., a small business in York that does finishing work on Bradley vehicle parts. If the Army plan goes ahead, the company could be forced to quickly lay off a third of its 63 workers, said AMZ owner Jeff Adams.

“We’ll be able to survive in some form, but you’ve got little businesses like us that don’t have a lot of financial depth or stability,” he said.

While the Bradley was hailed as a lifesaver during the first Gulf War in Iraq, the military gradually reduced their combat role as hidden bombs took an increasing toll on the vehicles.

BAE is currently competing with General Dynamics Corp.’s GD +0.95% Land Systems unit for a contract to produce the Bradley replacement vehicle. But that project is already facing delays, and the replacement program is facing increased scrutiny in Congress, where lawmakers are questioning spending on the program.

Corrections & Amplifications

Sen. Bob Casey addressed the need to protect defense industry jobs. An earlier version of this article incorrectly attributed the remarks to Sen. Bob Corker.

via Cut Defense? A Fight Begins | Wall Street Journal.