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Top 13 In 2013, #1: The Shutdown Takes All

Fri, 12/20/2013 - 1:00pm
Joel Hans, Managing Editor, Manufacturing.net

Between December 9 and December 21, we'll be counting down the 13 biggest stories on Manufacturing.net throughout 2013. From pig problems (see below), to Tesla's on fire, and being held captive in China, we'll be looking into just why these stories resonated with readers here and elsewhere. For the full list, updated daily at 1:00pm EST until the 21st, visit the Top 13 In 2013 page.


Of any news that graced the pages of Manufacturing.net during 2013, the government shutdown was perhaps the most controversial and potentially damaging to the greater U.S. economy. While most manufacturers — with the exception of a few major defense contractors — were not directly affected by the 16-day shutdown, if only because all the furloughed workers were in the public sector, they certainly were worried by the greater economic instability caused by it.

On October 1, 800,000 federal workers were kept from showing up at work, and a number of “superfluous” federal programs were suspended indefinitely. Because the House is controlled by Republicans, and the Senate by Democrats, each body was able to immediately override any attempt by the other to bring new budget plans to the President. While many believed that the conflict would be settle after only a day, as members of Congress began to realize the gravity of what they had wrought, the bickering only continued.

As the days tallied, the effects of the shutdown began to strike at the overall economy, and at those select few manufacturers with ties to the agencies suspended on October 1. The Dow Jones Industrial Average dropped from just over 15,200 on October 1 to around 14,780 on October 8, and then quickly recovered. So, the financial markets were hit, but not cripplingly so, although overall confidence was most certainly dinged throughout the process.

The National Highway Traffic Safety Administration furloughed employees who investigate safety complaints and order automakers to recall vehicles, which concerned many, considering how many vehicles had already been recalled in 2013. Joan Claybrook, who was the agency’s head during the Carter administration, said: “Safety is being undermined. If unsafe cars are on the highway, if the agency isn't operating so it can't put out consumer alerts, if it can't finish up a recall notice that it wants to publish or negotiate with an auto company they want to do a recall, that puts the public at risk.”

United Technologies Corp. said it would furlough more than 5,000 workers if the shutdown continued into November, and that its Sikorsky division, which makes Black Hawk helicopters, would be hit first. The company even rolled out a timeline: On October 7, they would furlough those 2,000 people at Sikorsky. Another 2,000 United Technologies would be told to stay home if the shutdown lasted beyond October 14, and another thousand furloughed if there was no resolution by the time November came around.

Lockheed Martin announced a similar plan, with 3,000 jobs at risk, because those employees worked at government facilities or required government inspectors to complete their jobs. Pratt & Whitney complained because they couldn’t get civilian employees from the Defense Contract Management Agency to inspect and approve of their products before delivery to government agencies.

In bad news for beer lovers and new breweries, the he Alcohol and Tobacco Tax and Trade Bureau, a little-known branch of the Treasury Department, was one of the agencies shuttered. Its main purpose is to approve new breweries, recipes and labels, and without the ability to get that approval, there was a threat of massive delays as consumers demand more seasonal brews. Mike Brenner, one would-be brewmaster who couldn’t open his new brewery because of the shutdown, said, “This is something people don't mess around with. Even in a bad economy, people drink beer.”

Other businesses couldn’t receive the loans from the Small Business Administration, which meant they’d have to turn elsewhere to keep the lights on.

Furloughs at the EPA meant that no pesticides could be imported into the U.S., and exports of semiconductor manufacturing equipment was kept from being exported to other countries around the world.

Fortunately, on October 17, the government re-opened after Congress approved a bipartisan measure to fund the government, avoiding an even more damaging possibility: defaulting on U.S. loans. And while federal agencies got right back to business the same day, the effects of the shutdown were being felt all around the country. Standard & Poor's estimated the shutdown has taken $24 billion out of the economy, and there was still the threat of another debt impasse just a few months down the road.

It seems that in the aftermath, Republicans and Democrats are doing a better job of working together to avoid another shutdown, with the U.S. Senate sending a two-year budget framework to President Obama after approving it 64-36. This framework sets top-line spending levels for the next two years at $1.012 trillion and $1.014 trillion, respectively, and the relative agreement among parties could diffuse the threat of another shutdown, at least until our next presidential election.

Thanks for reading the Top 13 In 2013 countdown over the last two weeks. If you still need to catch up, head on over to our Top 13 In 2013 page, where you can see all the entries.

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