Federal Shutdown Ripples Through Industry

Chicago, IL – The shutdown of the U.S. federal government, now in its third week, is having a domino effect on the A/E industry.  Engineering giants URS and BAE announced massive furlough numbers in addition to the 800,000 federal workers who were put on temporary leave.
Now the ripple effect is working its way to state governments.
• Arkansas has laid off 673 workers and could furlough an additional 4,000 if the federal shutdown continues another week.
• Maine, Illinois, Arizona, Virginia and Washington have laid off hundreds of workers tied to federal funding.
• Maryland has dipped into a $100 million reserve fund created to compensate for a federal shutdown.
Of the original 800,000 federal employees furloughed, nearly half of them are civilian Defense Department workers who have been summoned back to the job.

“They are trying to bring back folks when there is a crisis,” said Tim Kauffman, spokesman for the American Federation of Government Employees. Kauffman said about half the 670,000 federation members were furloughed, but many have returned to their jobs.

The shutdown could still have other spillover effects. Merrill Lynch economists warned late last week that “many sectors that rely on the federal government for approvals or information are impacted. The tourism and travel industry is hurt by the shutdown of national parks. And companies in the defense industry are already starting layoffs.”

Boeing, one of the major federal contractors with some $32B in contracts, says it is looking at furloughs if the shutdown continues. “Workforce reductions could be triggered by customers issuing stop-work orders, limited access to federal installations where its employees work, funding cuts or a shortage of government inspectors,” said Dan Beck, a Boeing spokesman.

Pete Ruane, president and CEO of the American Road and Transportation Builders Association, said the shutdown could slow major transportation projects that are in the environmental review process.

“Non-transportation agencies that play major roles in the review process for transportation projects include the Advisory Council on Historic Preservation, Army Corps of Engineers, Environmental Protection Agency and the Fish and Wildlife Service,” said Ruane. “To put this in context, the Federal Highway Administration states that as of Aug. 22, there are 129 projects from 35 states currently undergoing the Environmental Impact Statement process.”

Ruane said a prolonged shutdown will affect highway project schedules. “Due to furloughs in the environmental and resource agencies, the approval process for transportation projects is encountering more obstacles. This outcome is the exact opposite of the goals of MAP-21’s streamlining provisions,” he said. “There are two things that the construction industry needs to deliver the transportation network that moves our economy—adequate and reliable funding and approved projects. The fact remains that if environmental regulators can’t do their job, we can’t do ours.”