mandate already causing problems for defense contractors

Employees are staging protests and walkouts in response to the federal mandate, which requires all government contractors to be fully vaccinated against COVID-19 by Jan. 4. Unlike private employers covered by the Biden mandate, federal contractors haven’t been given the option to test workers weekly for COVID-19, and the recent OSHA enforcement suspension does not apply to them.

As the deadline approaches, major defense companies expect to see employees quit rather than be vaccinated. Losing this human capital will, in turn, cause delays in time-sensitive defense programs at a time when the country can least afford them. On-time delivery of items such as F-35 fighter jets and the Columbia-class submarine is crucial in the U.S.’s competition with China.
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The subject was popular in companies’ recent quarterly earnings calls. Raytheon CEO Greg Hayes said the company is “expecting some level of disruption, some level of challenge in the supply chain.” He told CNBC that the company expects to lose “several thousand” of its 125,000 employees.

The vaccine mandate “has not been well received by a pretty sizable portion of our employees,” Textron CEO Scott Donnelly reported. “There’s no question that we’re going to lose some employees because of this,” he added.

Losing a sizable chunk of the workforce would disrupt any industry, but defense manufacturing is particularly vulnerable. The labor market for the highly skilled – and highly specialized – manufacturing done in our nation’s shipyards, munitions plants and the rest of the industrial base is a very tight and often fragile market.

Taking these trends into account, a recent Defense Department report found that gaps in U.S.-based human capital are a major risk factor for several defense industry sectors: ground systems, machine tools, missiles and munitions, shipbuilding, software engineering, space and the organic (or government-owned) industrial base.

When highly skilled employees in these sectors quit over the vaccine mandate, it will be very difficult, if not impossible, to replace them. This will be a problem for the largest prime contractors but will be especially difficult for smaller subcontractors, since small and mid-sized companies do not have the hiring resources, training programs and other tools that the largest companies use to attract new hires.

It doesn’t have to be this way. Defense firms have been open for business throughout the pandemic, even during state and local shutdowns, because they were considered part of U.S. “critical infrastructure.” All that time, they have followed safety protocols, requiring that employees wear masks and maintain social distancing in the workplace.

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