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Budget Cuts Hit: What’s the Supply Chain Impact?

The sun rose on the United States today, which, if you've followed some fevered commentary about the so-called federal sequestration budget cuts, came as a surprise.

Congressional leaders and President Obama failed to reach agreement to avert $85 billion in domestic cuts across federal agencies, and so those cuts hit automatically starting today. Earlier in the week, the president said the “pain will be real.”

It's hard to tell how it will affect the electronics industry and its supply chain. We got some insight earlier this week about how it may hit the military-electronics sector. (See: Will Sequestration Cuts Slam Military Electronics Supply Chain?)

A number of charts have flown around showing that in the big scheme of things, the impact is much ado about nothing:

Fractional impact: You need reading glasses to see the impact of  the automatic federal budgets that triggered Friday March 1.

Fractional impact: You need reading glasses to see the impact of
the automatic federal budgets that triggered Friday March 1.

In chatting with a number of people this week, any worries over revenue impact are unnecessary.

But when we polled you, you had a different take:

Big concerns: EBN readers believe revenues will decline  significantly thanks to triggered federal budget cuts.

Big concerns: EBN readers believe revenues will decline
significantly thanks to triggered federal budget cuts.

A third of you said the cuts would have no impact, but nearly 30 percent feel the cuts will hit revenues 10 percent or more.

If you haven't taken the poll, let us know what you think. Additionally, let us know what you're hearing from customers and suppliers as this story unfolds.

4 comments on “Budget Cuts Hit: What’s the Supply Chain Impact?

  1. Brian Fuller
    March 2, 2013
  2. _hm
    March 3, 2013

    Sequestration is applied across the board, to all agencies. That is very sound strategy, and in hind sight President Obama does like and agree to it. But this should not create any job loss. Do not layoff any person. Just reduce take home pay for every federal employee by equal percentage, including President Obama. As related to their performance most of them if not all of them are overpaid with plethora of holidays.

     

  3. Austin Tech Watcher
    March 4, 2013

    Military suppliers that have new technologies on the verge of being accepted or rejected will suffer, as decisions are delayed. One fellow told me his company is working on carbon-nanotube-based armoring for airplanes, which is much lighter in weight than composite metals. Just when they were on the verge of getting approvals, the sequester gummed up the works.

  4. Brian Fuller
    March 5, 2013

    Ouch. That always hurts. But seriously, one would hope that really promising leading-edge technologies like nanotubes don't lose momentum because of this (regardless of an order delay or two). 

     

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