July 24, 2012 / 3:55 PM / 7 years ago

Lockheed CEO sees supply chain shocks from mandatory budget cuts

WASHINGTON, July 24 (Reuters) - Mandatory across-the-board U.S. defense budget cuts due to take effect in January could result in “significant shocks” to the defense industrial supply chain, Lockheed Martin Corp Robert Stevens told analysts on an earnings call on Tuesday.

“We’re still struggling with exactly how this will impact our business. We are very concerned about the supply chain, particularly small disadvantaged minority-owned businesses at what we regard as the edge of that supply chain,” Stevens said.

He said some of those companies would be in jeopardy of exiting the business if $500 billion in additional cuts were implemented over the next decade, on top of $487 billion in cuts already slated to take effect over that period.

“I think there are significant shocks to the industrial base,” Stevens said. “We are very, very concerned about the across-the-board nature with an automatic trigger.”

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