At times, a major cutback in a Defense contract results in substantial job losses. OEA provides community economic adjustment assistance to States and communities affected by the cutbacks to pursue economic adjustment strategies appropriate to their particular problem. OEA also serves as the focal point for information on other relevant Federal assistance programs that can support coordinated programs to plan and implement adjustment strategies.
For example, the McDonnell Douglas Corporation had 40,000 defense-related jobs in St. Louis.
After two layoffs of 5,000 each over a six month period and continuing smaller layoffs and attrition, jobs at McDonnell Douglas in St. Louis had fallen to about 20,000. In addition to this direct job loss, numerous subcontractors and suppliers were also adversely affected. An OEA-funded planning effort identified the impacts of the downsizing, and developed a strategy for community response. Over the next several years, OEA provided planning and organizational funding to support a coordinated and comprehensive, regional response to the downsizing.
In another situation, OEA awarded a planning grant to the State of New York to address the significant shrinkage of defense industrial activity on Long Island. This area was the home of Grumman Aerospace and other defense contractors. At its peak, prime contracts to these firms exceeded $4 billion. In the years that followed, however, Long Island experienced severe cuts as contractors left the island. New York State government became the focal point of efforts by the local communities to address the impacts of this very significant economic dislocation. The communities, with State assistance, focused on refining their adjustment strategy. They developed a methodology to identify subcontractors and suppliers most likely to succeed in diversifying into other industrial sectors. A second effort focused on facilitating better synergy among the educational institutions, research laboratories and high tech businesses to create business and employment opportunities for those dislocated by the Defense downsizing. By the end of the decade, the Long Island economy had rebounded from Defense industry cutbacks.
For further information, see DIA Program Overview and Defense Industry Adjustment Guide.
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