Defense industry worries about cutbacks

WSJ reports defense-industry executives are starting to worry that the costs of rescuing the financial industry will be taken in part out of the Pentagon's programs, and that could have a big impact on their companies.

As recently as a few weeks ago, the executives were relatively bullish about the long-term prospects for defense spending, regardless of which party wins the White House in November. But as the financial turmoil on Wall Street has spiraled into an international crisis, that optimism is fading. In a note last week to employees, Boeing (BA) Chief Executive Jim McNerney wrote that the world's biggest aerospace company by sales is "well positioned" to weather the financial turbulence because it has a solid credit rating and a big backlog of commercial airplane orders.

But addressing how the government's financial-industry bailout might affect Boeing's more than $30-billion-a-year defense business, Mr. McNerney said: "No one really yet knows when or to what extent defense spending could be affected, but it's unrealistic to think there won't be some measure of impact."

Howard Lance, chief executive of Harris (HRS), which specializes in defense communications and is expanding into the intelligence market, said in an interview this week that there is a sense in the industry that "everything is going to be subject to reconsideration," particularly big-ticket programs such as fighter jets, tanks and ships.

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Defense industry worries about cutbacks

Defense industry worries about cutbacks

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