Northland Businesses Concerned about Sequester Cuts

Posted at: 02/28/2013 5:54 PM
Updated at: 02/28/2013 6:24 PM
By: Travis Dill

Defense contracts bring millions of dollars to Northland businesses, but federal budget cuts might leave those companies hanging.

Friday is the deadline to avoid the automatic federal spending cuts that are better known as sequestration cuts.

It's unclear who will be affected in the Northland, but the contracts are a big deal for local businesses. The looming cuts have raised concerns for some businesses in Minnesota.

Granite Gear is a small shop in Two Harbors. Employees there cut and sew durable backpacks and other gear for military units. CEO Jeff Knight said those orders make up half the company's sales, and the federal spending cuts could mean jobs lost.

“Most of our staff that we have on our production are affected by those contracts. If they were to go away we wouldn't be able to keep them all employed,” Knight said.

He said military orders usually come by February, but he said they haven't been place yet because of the budget cut unknowns.

Knight said he is confident the contracts will come through, but the uncertainty is leaving his business in limbo.

“For this program we really need to be delivering in 60 days, which means we need to have the materials on hand and ready. Which takes good projections to do,” Knight said.

Cirrus Aircraft is another local business with defense contracts. While those contracts are secure, a company spokesperson said the federal cuts could cause other problems.

Cirrus said closures of air traffic towers could give pause to customers purchasing new planes.

The cuts have left many in doubt. Knight said Democrats and Republicans should work together for the sake of businesses like Granite Gear.

“Because it seems to me that is what it's going to take, a compromise,” Knight said. “It seems to me it's time to figure this out.”

The federal cuts would take $85 billion from domestic and defense spending. How that will affect local businesses is still unclear, but millions will be cut from areas like education in both Minnesota and Wisconsin.