Has industry moved past the fear and angst of budget cuts?
By
Nick Wakeman
Companies have done a lot to prepare for the coming budget cuts and it is starting to show.
Over the last month I’ve moderated two panels of industry experts and sat in the audience during a third.
The general topic of discussion was the state of the industry and what’s going to happen this year and into 2013 when larger budget cuts are expected.
Obviously there are tons of unknowns. But among the certainties is that no one thinks a budget will pass this year, so the expectation is that a significant portion of 2013 will operate under a continuing resolution.
Beyond that all bets are off. How much turnover in the House and Senate will the November elections bring? Will we have new president? How will the coming fights over tax cuts, the debt ceiling et al trickle down to government operations?
Several significant decisions need to be made around the budget: extending the Bush tax cuts; dealing with the debt ceiling, doing something about sequestration, and the alternative minimum tax.
A common prediction is that Congress will take on these issues during a lame duck session but will most likely delay them because the two parties can’t agree and because there is a strong sentiment that the issues should be left to the president and the new Congress to work out.
The experts on the panels I moderated included several company executives as well as veteran industry observers, so I think they are representative of the level of anxiety and fear in the market.
And with that in mind, I have to say I was impressed by the lack of fear and anxiety. From these and other executives I’ve talked with in recent weeks, there is a decided absence of hand wringing and rending of clothing, unlike last year where the angst was much higher.
Not that people are expecting a sudden return to boom times. On the contrary, each expects tough year ahead.
The difference is that during the last 18 months there has been a lot of preparation on the part of contractors for tough times in 2013 and beyond. We’ve seen divestitures, restructurings and layoffs and other moves to lower costs and increase efficiency.
The industry is leaner today than a year ago, and it is probably just in time.