next on "this week in defense news," the importance of the aerospace and defense

industry to america's economy, coast guard cuts, plus the results of a welcome to "this week in budget cuts was a surprise for the coast guard, eliminating two large cutters. we talk today one expert about what fewer ships mean. plus insights into military attitudes and morale from a surprising new poll. but, first, a new report produced by deloitte consultling on behalf of the aerospace industry's association details the importance of the defense and aerospace industry to the economy. slightly more than 1 million workers are employed directly by the industry who on average earn $80,000 a year, nearly double the average wage of an average american worker. what they spend in turn employs another 2.5 million people and that's not counting the impact

of nearly 850,000 other skilled aerospace and defense workers employed by government at maintainance and repair depos. the report is intended to be used as aia as ammunition to stave off deeper cuts that will cut high paid jobs as the future. joining me to discuss what's ahead for the aerospace industry are tom captain, vice president of deloitte and cord sterling, the vice president of legislative affairs at the aerospace industry association. gentlemen, welcome to the show. >> thank you for having us. >> what are the top findings of the report and the importance of the industry to the nation economically, financially for exports. >> well, those 1 million workers that work for the u.s. aerospace and defense industry drive $324 billion of sales for the companies that they work for. and they drive an $84 billion payroll, they pay $38 billion in taxes. and the numbers don't speak to all the contributions. this is an industry that punches well above its weight given the contributions it makes to many other areas,

including national defense, safety efficient air travel and so forth. >> and just technologically more across the board. >> the science and technology, the contributions that are made to med sition and to material sciences and others has gone beyond. >> cord, let me take you to something that aia has been warning for a while about a million jobs that will be lost. on the one hand the survey finds 1 million direct jobs and then you guys are talking about a million jobs being lost which obviously would be everybody in the sector. when you guys talk about a million jobs, what are you talking about? >> the one million includes all the people we help to employ. as tom indicated, it's a million direct jobs, but it also helps employ another 2 1/2 million jobs. if we have the sequestration that goes through, we will lose about 350,000 employees in our sector, but they help to employ another 650 in the economy at large out in main street. >> i want to get to sequestration a little later in

the segment, but what i want to go to is to the cuts and the personnel cuts themselves. at any point whether you're cutting government workers or you're going to be cutting aerospace workers, everybody understands there's a deficit problem and government spending has to be reduced. no matter what you do, aren't overall employment levels going to be impacted anyway? >> it depends on how the deficit and the debt are tackled. there's many ways that are being debated in congress and in washington today on how to do that. what we are trying to do is illustrate, make sure that everybody is aware and has the information on what the proposed impacts would be associated with the cuts that we're talking about here on the department of defense with sequestration. that doesn't even include when you look at the impacts on the faa, nasa and other activities which we help support. >> tom. >> yes. the industry has brought us i conic innovations in technology and science and that machine, that thing that we've had support for all these ages has brought us the internet, gps, the moon landing and all of

that only in the 108 years of this short history of our industry, since the wright brothers first flew. >> let me take you to the fundamental changes that the industry is undergoing because there are some folks who are looking at the debate a little bit and saying, well, wait a minute, we're really at a technological inflection point. we're not at the place where we need thousands of fighters anymore, we have better reconnaissance and greater precisions so we don't have to do a 1,000 bomber raid in order to take them out. aren't these two things coinciding or the cuts taking place at a time where there's a giant sectorial change that's unfolding? >> i think you raise a good point. that's part of our concerns. we also did another study and present td to the department of defense and what are the impacts on the defense industrial base and looking at -- if you're cutting back in your research and development, you're cutting back into your production, it's going to affect those very things. when you look at other nations that are looking at modernizing their forces and injecting into r and d and other activities, for us to be cutting back at

this time when we're looking at really a transition in many of these technologies, it's a critical time. >> tom. >> many of these technologies that we're talking about, nano fej and in particular the technology to fight the next threat that could be a threat to us and that's a cyber threat. this is something that takes people, scientists and technology innovation that just can't turn on and off like a spigot. it takes an infrastructure, it takes a skilled work force that has to be consistent and comparable over time. >> what message, cord, are you taking? i mean, obviously this administration has been talking a lot about the importance of the industrial defense -- defense industrial base. we're hearing the secretary of defense himself talking about this issue. what are some of the messages you're privately delivering or as publicly as you want to deliver your private messages. >> publicly and privately we're telling them with this level of cuts, there's going to be significant job loss. i think tom indicated that you've got certain things that we're going into. our work force really is our industrial base. the plant, the equipment, these are things that you can replace relatively quickly. the secretary has talked about

reversibility. you cannot reverse if you lose your skilled engineers, scientists, technicians. these are skills that take 10 years or more to really develop in order to work on some of those very technologies and putting out the equipment that our men and women in uniform are using. >> we'll lose those people. when we lose those people, we lose the ability not only to provide that equipment, but we lose those jobs in the community. >> for reconstitution, obviously. tom, let me take you to the health of the aerospace and defense industry overall. past downturns, companies have gone into it in financial distress, companies have been preparing for a long time. what is the health of this sector overall? >> it's safe to say that the industry is fragile and has been. it's a profit -- its profit margin is one of the lowest in all of north america. 10.5%, that's including commercial, so you gotta think defense is even lower than that. that's even where we have fixed price contracts. defense contractors take enormous risk in technology development and they have to eat the costs of overruns, so

it's not fair to say that the industry is very healthy. it's obviously an industry that continues to struggle to attract the kind of talent, attract the kind of capital to a low margin industry and is growing very slowly. in fact, last year it only grew 1.9%. an interesting aside, in the last five years, the employment history tab flat, yet the defense budget has gone up some 50%. in fact, the industry is becoming much more efficient, delivering more value for the same amount of money. >> let me take you to sequestration. what are the case that you guys .p/ >> going back to what i talked about, the jobs that will be lost, the industrial capability that will be lost, we cannot reverse it if you do sequestration. they're going to have some level of cuts. we all know that, we recognize it. it's that next level associated with sequestration that really is a meat ax as the secretary of state indicated on the industry and the department of defense. it's a very, very partisan

year. there are a lot of members, particularly on the republican side who are saying, you know, there's a certain degree of an miss of raising the debt ceiling no matter what happens. is this message penetrating this is outcome is going to be particularly bad? >> it's already penetrating. they're recognizing in the district that this is not some philosophical argument here in washington d.c., but it is affecting people out in their communities, that is affecting the jobs, it's affecting their communities as a whole as they see announcements come out with job layoffs and things of that nature. i think when the department indicated they're going to request another round of brac, that also brought home the reality of this. this is not a political science argument, it's real. >> great, guys. thanks very much. coming up next, two stunning cuts to the u.s. coast guard.

the department of homeland security's 2013 budget request cuts two large cutters for the coast guard saving about $1.4 over the coming years. it only funds one of three large ice breakers the service says it needs. that would leave the coast guard with six large cutters to replace aging hamilton class ships that are being retired after four decades of service. heavy ice breakers are needed making the polar ice caps and a half gabl. the coast guard is going to have to pick up pace on the lower intensity maritime missions. here to tell us what all of this means is scott of greuber technologies, an analyst and

consultant who regularly advises coast guard and navy leaders. welcome to the program. >> thank you, vago. good to be here. >> let's take this from the very top. how are these cuts going to affect the coast guard and how is the service going to work around them to perform its multiplicity of admissions? >> coast guard cuts are going to be broad, but not as bad as it was during the 1990 whz they were underfunded by about 6,000 people. they've got the 6,000 people back and looks like they're going to cut about 1,000 from the current workload, so they can actually do that. in terms of the forestructure, the cutting of the two national security cutters is a significant impact because it's actually going to affect grately their ability to -- greatly their ability to carry out missions that they're told to do. it's not a mission set of their making, it's something that congress has foifted upon them. >> correct. because it's something like 30 some coast guard has on the books. 11. >> but depending on how you slice them.

but in explaining the homeland security secretary napolitano repeatedly expressed hope that well, sort of, you know, some of this would depend on the navy in terms of what happens next. is it hoping that the navy is going to pick up some of these missions? is that what was sort of intended there a little bit? >> i don't know. i was surprised to see it myself because it indicated perhaps a lack of conversation with people over in the navy department. the navy is struggling to maintain the 285 ships it has right now. it's not going to be able to meet the 316 ships or maybe even more given forestructure studies that are under way for 20 years. so the navy is looking at -- itself is looking at its core mission set, what do i need by way of ships. and the small end of the ship structure within the navy is the latorial combat ship. they are addressing the requirements, but i don't think there's a whole lot of conversation between secretary

mabious and the dhs secretary. >> let me go to also sort of the mission that the wash navy is is now doing because it had a much broader maritime strategy that was a consolidated strategy between the marine corps, the coast guard -- or among the marine corps, coast guard and navy and it appears as though the navy is relooking at some of these missions and saying, look, on the lower intensity stuff, i shouldn't be doing that if final's a shrinking fleet, -- if i'm a shrinking fleet, i should be focusing on the higher end, especially if the coast guard doesn't have that capability to pick up what the navy reduces. >> it will be interesting to see because the coast guard has looked at itself as a national security and national defense armas part of title 14. when it comes to putting together a forestructure that makes sense with the navy, it's going to be tough to do. >> and there's no other person to be able to pick up some of these things that the higher end ships do? >> well, from the coast guard.

the national security cutter could be part of battle groups, for example, and hamilton class cutters have been. but they have their own mission sets in the medium to low region in the maritime defense as well as the coast guard, they're over in the persian gulf right now. >> and has always been sort of an easier way to open up some ports and open up a dialogue, particularly with the chinese, the coast guard has been particularly effective at creating a dialogue that other services find more difficult. >> the coast guard, our leader a couple of years ago use today talk about acceptable presence. the white hall warship with a racing stripe, the cutter was able to be in certain areas that would otherwise -- >> that white hall would have had a problem. >> the coast guard has long been talking about the need for heavy ice breakers, they've cited climate change in that greater navigatability in certain waters that used to be frozen. that service now is contracted

from other countries. when the other countries can actually contract them to us, what happens if the united states isn't building a fleet of heavy ice breakers? >> well, they're not building a fleet of heavy ice breakers. thad allen, the comdant a couple of years ago said i need six heavy ice breakers, but that looks like fantasy. >> then the number was reduced to three where folks have talkeds about three as more acceptable. >> right now it's going to maintain helium, bring back the aging polar star. we just don't have the assets for it. what will happen is in some future crisis, like a deepwater horizon in the arctic, assuming we've opened up the north shelf for oil production, the first time that we can't get to a crisis like that with the assets we have, some future coast guard comdant is going to be hauled off on to the quarter deck and shot. why did you allow our capability in this area to be so anemic. >> scott, thanks very much for joining us.

we really appreciate it. up next, surprising insights from a new poll of active

each year the military times surveys its audience in a detailed tracking poll that measures attitudes and morale across a range of issues and concerns. military times, a sister organization to defense news conducted its latest poll this winter and will report the results in this week's editions of army times, navy times, air force times and marine corps times. chuck vinch is the managing ed iter of the military news times service and helped oversee every poll since they started in 2005. chuck, welcome to the show. >> thank you very much. >> what's the mood of the force this year, what are the top issue? >> well, 2011 was quite gloomy in a lot of respects, personally in the personal satisfaction indicators we track from year to year. most of those indicators have edged upward this year which is good news. the biggest jump we've seen was in personal finances, troops'

concerns about their personal financial situation, the percentage of those who said they were very or somewhat worried about their finances dropped a full nine points this year to 42%, and in the context of this poll, movement in the satisfaction indicators, what we call them, usually one, two, three points, so it dropped a swing either way, either a drop or increase of nine points is significant. so that's good news that the troops are feeling a little better about their personal financial situations. some of the other satisfaction indicators are also up a few points, satisfaction with housing, pay, quality of their enlisted and officer leaders. the one big reversal this year came, an interesting one, personal satisfaction with marriages, active duty troops who are married, 9 percentage point drop in satisfaction of the marriages. it's still 85% which is quite robust, but, again, that's a big swing in the context of this poll. >> why is that? is it because folks are not deployed as much? >> it may be. obviously we need to dig a little deeper into this and do more reporting. but off the cuff, my

supposition might be the end of the iraq war and the significant easing of the high deployment operation tempo has put more troops at home for longer periods of time, and i think maybe, you know, after a decade of deployments that could prove to be an adjustment for some couples. >> and when you talk about 80% satisfaction, that's also with partner relationships you guys tracked as well, so they're not exclusively in marriages, but also in cohabitation relationships. >> yes, personal relationships satisfaction. >> how do troops feel about the iraq and afghanistan missions at this point? >> some interesting things there. we ask each year, we have since the beginning of the poll, two questions on each of the wars, one, do you think the u.s. should have gone to war in iraq and afghanistan and the other one is what do you think the outlook for long-term success of those two missions is. this year quite a bit of pessimism about the prospects for success in iraq, nine-point drop to 61%. however, the percentage of troops who say the u.s. should

have gone into iraq in the first place remained unchanged at 40%. both indicators declined for afghanistan. there was an increase in one point who think there's going to be long-term success there and also a four-point drop in troops who think that that mission was worth undertaking in the first place which is kind of interesting because analysts would say just the opposite, that afghanistan was the font of al-qaida. that's where the focus should have been all along. the troops seem to have a little bit of a different opinion there. >> that's interesting. one of the issues that you guys ask in each of these polls is how the troops feel about their commander in chief. how do they feel about president obama? >> well, not surprisingly, the force leans a little bit rightward politically. we asked questions, two questions, how do you rate president obama's performance as president and specifically as commander in chief. he gets low- to mid-20 approval ratings for both of those. that's about less than half of the approval ratings that former president bush enjoyed. however, we also asked troops

about how they identify politically and we've seen some interesting movement there. the number who ides democrats typically stays low, 10%, 11%, 12% and that remains steady from year to year. but we've seen some movement among independents and republicans. toward the end of the bush administration, more troops loss among those who identified with republicans. there seemed to be a direct cause-and-effect illusion there. since obama has been elected, that's begun to reverse. we're seeing more troops -- again, not significant, but a slightly higher level of troops indicating they're republican at the expense of the independent demographic. kind of an interesting transition there. >> did you ask anything particularly new this year? >> a couple of new things. we put topical issues from year to year that we may track for a year or two or three or maybe just one year. this year we had questions asking troops about if they've had problem with their mortgages, obviously the housing crisis a big issue in the news. ed good news there, -- the good

news there is a full 73% of military troops said they own or have owned a home at some point. only 13% said they'd had trouble with their mortgages being either under water or foreclosed on or just having trouble making payments even. i've seen some other studies that suggest, for example, that 23% of mortgages nationwide are under water. so by that measure troops seem to be doing a little better. another new area we asked about was a little bit of a controversy, one we asked about sex and romance on deployments, have you ever had a sexual or romantic relationship while you were deployed in a forward area, obviously iraq and afghanistan principally. of the 700 troops who said they had been deployed, 116 said they had engaged in a sexual or romantic relationship while they were deployed. now, again, this is a small sample size. 20% of that subset which is about 32, 33 people said they had engaged in a sexual or romantic relationship that involved cheating on their spouse. >> wow! in 10 seconds or less, don't

ask don't tell, was it an issue of the troops? >> doesn't seem to be much of a story there. so far the impact the troops report on their unit has been negligible. we asked them to predict the peablght on the unit last year -- impact on the unit

for going on two decades, coast guard leaders have argued that eight new large cutters could replace 12 existing long- range ships as the core of their force. critics have always questioned what would happen if fewer large ships were bought. now the department of homeland security's budget request eliminates the last two legend class cutters from the coast guard's plan, leaving it with just six ships for a mission now performed by 12. there's only one new large ice breaker in the budget instead of the three the service needs,

forcing america, and arctic nation to continue leasing ice- breaking services from russia. true the cuts could save $1.4 billion over coming years and homeland security secretary janet napolitano says the cuts could be reversed in the future depending on what the navy does and whether circumstances change. but the navy isn't getting any larger either. in fact, it's considering dropping lower intensity missions like mairmt security that overlap with the coast guards to focus on high-end war fighting. clearly these are tough times and the administration deserves credit for making hard but measured choices. on this score, it's made a mistake. america's maritime nation and the coast guard is critical to protecting its interests in the atlantic, pacific, arctic and elsewhere and must be properly resourced. thanks for joining us for "this week in defense news." i'm vago muradian. you can watch this program online at defensenewstv.com or you can e-mail me at vago@defensenewstv.com. i'll be back next week at the same time. until then, have a great week.