Automatic defense cuts triggered by budget act bad for Nevada

Gambling can be fun, especially when done responsibly in one of Nevada's famous casinos. But wagering the future of Nevada's small businesses? That's neither fun nor responsible.

But it's just what Congress and the Obama administration are doing. When the special budget supercommittee collapsed last fall, terms of the Budget Control Act triggered $1.2 trillion in automatic sequestration cuts, including more than $500 billion in reductions to investments in defense and civil aerospace and similarly blind cuts to other departments.

Everyone knows these cuts would be an economic disaster - experts conclude that more than 2 million jobs would be lost, 11,000 in Nevada alone. Yet nothing has been done to head off this outcome, whether through repeal of this law or creative compromise. Basically, Congress made a trillion-dollar bet on the supercommittee and crapped out.

In the aerospace sector, most of the pain from these cuts will not be felt by large corporations, but by the small and midsize businesses that form the extended supply chain. About two-thirds of an aircraft's value is contributed by smaller suppliers, and three-quarters of all aerospace and defense-related manufacturing jobs are at these firms. So cuts to large programs and their big prime contractors will immediately flow down to where most of the work is done.

My company, Click Bond Inc. in Carson City, is one of these firms. We engineer and manufacture adhesive bonded fastening systems that have revolutionized the assembly of aircraft, ships, spacecraft and other vehicles, supporting both government and commercial programs.

As such, sequestration will hit Click Bond and our country simultaneously. Indiscriminate cuts will devastate the economics of the F-35 Joint Strike Fighter program, cripple the modernization of our nation's air traffic control system, halt NASA aeronautics research and even jeopardize our network of weather satellites, all of which Click Bond contributes to, and all of which directly affect the safety and security of Americans.

Sequestration stands to negatively impact our planned growth through investments in equipment and construction, in research and technology and, most importantly, in hiring and training people. While we wait for Congress to act, the mere uncertainty surrounding sequestration makes running a business difficult. It's hard to invest in new products or hire new workers with the sequestration buzz saw hanging over aerospace and defense programs. It's risky investing in expensive tooling or materials for work on contracts that may be sequestered, but it's equally dangerous putting off work in the face of tight customer deadlines and long material lead times.

We must sign contracts now with our own suppliers on work for 2013, but it's impossible to know which projects will survive sequestration's scythe. Such judgments must be made by every firm up and down the entire supply chain, exponentially magnifying the damage that is already under way.

And the harm runs deeper still. Small and midsize businesses such as Click Bond are an essential reservoir of highly specialized manufacturing and engineering knowledge. These unique skills - often acquired through years of on-the-job training and research and development - are crucial to the strength of America's world-leading aerospace industry. They are the foundation of the high-tech edge that keeps our troops safe and helps make our military and our industry second to none.

Rebuilding these capabilities will not be as simple as restoring funding. It will take years to reassemble our businesses and refill the reservoir of industrial know-how, all while our international competitors continue operating unhindered, making our economy less competitive and our nation less secure.

As the economy continues to sputter, the last thing America needs is indiscriminate sequestration cuts that would destroy jobs and weaken the small business industrial base. Nevada's unemployment rate is currently the highest in the nation at 12.1 percent. We cannot afford to lose 11,000 jobs because Congress made a bad bet and can't find the will to make things right.

We understand the need to cut spending, but let's do it surgically, not stupidly.

Karl Hutter is chief operating officer of Carson City-based Click Bond Inc.