Sequestration has already made a dent in local economies throughout Arizona, where 43,000 workers are employed by the defense industry, according to government officials.
Government and business leaders are most concerned about the impact on smaller companies, the second- and third-tier companies in the defense supply chain, reported Politico. One challenge for officials is that there is no warning when smaller suppliers are affected by production cutbacks at larger manufacturers.
“Boeing has over 500 local suppliers. If their production gets cut by 15 percent and all of a sudden those small companies have to lay off two or three people, we never hear about that,” Mesa Mayor Scott Smith told the publication.
Another concern is the difficulty in recreating firms with specialized talent after workers are laid off.
Barry Broome, president and CEO of the Greater Phoenix Economic Council, believes the state could be hurt worse than it was following the recent recession.
“These kind of economic behaviors are what kill places,” he said. “If you want to destroy somebody economically, it’s the slow loss of talent and the slow loss of export industry, and it’s the slow, steady slide of export capabilities.”