By Dow Jones Business News, October 07, 2013, 09:25:00 AM EDT
The Pentagon's largest contractors have dialed back plans for mass furloughs after the recall of much of the defense
department's own idled employees, though many remain exposed to the partial shutdown of other government agencies.
Lockheed Martin Corp. ( LMT ) said it would still furlough 2,400 staff from Monday in the wake of federal facility
closures and contract freezes, having warned last week that it would have to send home 3,000 employees.
United Technologies Corp. ( UTX ) dropped its plan to furlough as many as 4,000 employees at its aerospace units, while
the U.S. arm of BAE Systems PLC (BAESY, BA.LN) still has close to 1,000 on temporary--albeit paid--leave.
The financial cost of the shutdown isn't expected to emerge until U.S. contractors start reporting third-quarter
earnings later this month, though BAE is due to release a previously scheduled trading update Thursday.
The return this week of the bulk of the Pentagon's furloughed civilian workforce--following the weekend recall order
from Defense Secretary Chuck Hagel--has still left contractors exposed to other government departments, facing problems
such as shuttered facilities and stop-work orders because of lack of funds.
Lockheed, the largest Pentagon contractor by revenue, said only 300 of its now-furloughed staff were tied to defense
department work. The company generates around 20% of revenue from non-defense work for the government, ranging from
nuclear clean-up for the Department of Energy to modernizing air-traffic control systems and supporting government
scientists in Antarctica.
Defense contractors last week warned that thousands of workers may have to be idled, many of them tied to the furlough
of most of the 11,000 staff at the Defense Contract Management Agency, or DCMA, who inspect and sign off work at plants
producing equipment such as the Lockheed F-35 fighter jet or Sikorsky Black Hawk helicopters.
DCMA's civilian staff started returning to work late Sunday, prompting the Sikorsky Aircraft and Pratt & Whitney units
of United Technologies to drop plans to furlough 4,000 or more staff from Monday.
Agency director Charlie Williams Jnr. said in a message to staff that he hoped to all employees would be back in a
matter of days. Furloughs at the Defense Contract Audit Agency, which oversees Pentagon contracts, also contributed to
the problems, and its workers are also due to return over the next few days.
Lockheed shares ended three sessions of decline to close up 0.9% at $123.56 on Monday, with most other large
contractors also regaining some of the ground lost last week, when the Standard & Poor's aerospace and defense index
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