Pratt & Whitney President David Hess addresses journalists at a Newsmakers session at the National Press Club where he explained the dire consequences of sequestration on the aerospace industry and our nation. He and approximately 115 other senior industry leaders today sent letters to the president and Congress urging them to resolve this issue as soon as possible for the sake of our national security, economic security and global competitiveness, as well as the 2.1 million jobs threatened by sequestration.
CNBC Street Signs interview with David Hess [Watch Now]
Defense Sequestration Is 'Irrational': Pratt & Whitney CEO [CNBC]
Hundreds of jobs to go if sequester ax falls - Pratt & Whitney's Hess [Reuters TV]
Defense Industry CEOs on Fiscal Cliff, Security [Bloomberg]
Appeal to Lawmakers: Step Back from the Fiscal Cliff
Pratt & Whitney President David Hess, in his role as chairman of the Aerospace Industries Association, joined a panel of chief executive officers from the defense industry for a panel discussion on the threat of sequestration on national security.
The newsmakers news conference at the National Press Club also featured Wes Bush, chairman, chief executive officer and president of Northrop Grumman Corp.; Dawne Hickton, vice chair, president and chief executive officer of RTI International Metals Inc.; and David Langstaff, president and chief executive officer of TASC.
Thank you for joining us here today, and I want to thank my colleagues Wes, David and Dawne for taking the time out of their schedules to help us once again emphasize the importance we place on Congress and the Administration finding an alternative to sequestration and the fiscal cliff.
As many of you know, I am David Hess, President of Pratt & Whitney, a United Technologies company. I am also Chairman of the Aerospace Industries Association, a role I will be handing over to Wes Bush in 2013. Congratulations, Wes …
He made me promise to have the sequestration issue resolved before he takes over, and all I can say is that we're doing everything we can.
I keep telling him that it's not up to me, but that it's up to policymakers in Washington – and of course, that's why we're here.
Today, 115 industry leaders have signed a letter to President Obama and Congressional leaders, urging them to work together on a deal to avert sequestration and adopt an approach that addresses the country's long-term fiscal challenges.
Since the election, there has been a lot of discussion about who has a "mandate" going into the lame duck session and 2013. But with the political dynamics in the House, Senate and Administration, the only real way forward is through an agreement that transcends partisanship and overcomes differences in ideology.
As an industry, we've endured not only the existing cuts from the Budget Control Act, but also more than a year of uncertainty as we waited to see how the problem of sequestration would be addressed.
The existing cuts are something we understand as a necessary part of getting the country's fiscal house in order. Sequestration is something else entirely. And the uncertainty in the marketplace over the past year has had a real impact on jobs, investment and innovation. Uncertainty is forcing companies to defer investments and hiring today, when we need it most. This is particularly hard on our suppliers, who may not have the same flexibility that we and other large companies have to weather ups and downs in the marketplace.
That is why we need lawmakers to address sequestration now.
Since the failure of the supercommittee last year, we've waited for a sense of urgency to develop around the issue – during Presidential addresses, sessions of Congress, conventions, the debates, the election, and now the lame duck session. Today, there is finally a sense of urgency; and failing to act would be devastating.
And still, this has not prevented some people from arguing that the cliff isn't really a cliff at all, and that it's not a big deal if we go over the edge.
This view simply doesn't square with the facts. According to CBO, going over the cliff would drive unemployment up to 9.1 percent by the end of 2013, slash GDP by half a percent, and cause another recession.
In terms of defense, Secretary Panetta says that the existing cuts are about as far as we can go, and he has repeatedly warned that additional cuts would undermine our national security.
It's important to remember that sequestration would also impact the FAA and U.S. space programs, having negative consequences on everything from air traffic control to weather satellites.
FAA cuts would undermine the national transportation infrastructure, especially the NextGen air traffic control upgrade. Under sequestration, NextGen could be delayed by nearly a decade. The consequences are severe: we'll lose $300 billion in economic benefits, add about 27 million hours in flight delays, and increase aircraft emissions by 216 metric tons.
Cuts to NASA would erode U.S. leadership in space, and require us to keep paying the Russians $60 million a seat to carry our astronauts into space. Cuts to NOAA could create a dangerous satellite coverage gap and limit our ability to predict severe weather events like snowstorms and hurricanes.
For generations, America has prospered on a strong foundation of manufacturing excellence and technological innovation. But sequestration cuts would needlessly erode this economic bedrock, choking off critical investments in research and basic science, and forfeit our global leadership in aerospace and defense.
With only 28 days to the sequestration trigger, it's time for a bipartisan solution. This is not a controversial idea. A recent CNN poll said that 7 out of 10 Americans want leaders from both parties to sit across the table from one another and find common ground on a plan to avoid going over the fiscal cliff.
The time to find that common ground is now.
Thank you. And with that, I'll turn things over to Wes.