South Windsor Defense Supplier Struggles With Sequestration, Obamacare Uncertainty
After giving him the tour, executives of a military component manufacturer in South Windsor had plenty of questions for U.S. Sen. Richard Blumenthal on Monday. The company is struggling with uncertainty from the federal government on issues ranging from sequestration to healthcare.
Blumenthal toured the manufacturing floor of Capewell Components, a South Windsor manufacturer that specializes in parts used by military aircraft to conduct aerial deliveries. In Connecticut, the company employs about 180 people. Around 100 work in South Windsor and the rest work at another location in Cromwell.
Following the tour, Blumenthal took questions on the potential impact of both looming defense cuts and the coming implementation of the Affordable Care Act.
Richard Wheeler, Capewell Components’ president, said both sequestration and the ACA are constructs of the federal government that have made it difficult for his company to do business.
“We’re in an atmosphere of not knowing a lot and that’s the worst thing in the world for business people. You can plan for bad news, you can plan for good news, but you can’t plan for no news and that’s where we are,” he said.
Wheeler asked Blumenthal what to expect from sequestration, the across-the-board federal spending cuts Congress put in place in 2011 if it couldn’t agree to a budget deal.
Blumenthal said the cuts “could imperil” contracts like the ones Capewell specializes in if they are allowed to continue across-the-board next year. He has sought a more tailored approach to cutting the defense budget. He said he hopes Capewell won’t be affected. Their aerial delivery systems are essential to the U.S. troop drawdown in Afghanistan, Blumenthal said.
Wheeler said the continued uncertainty forces his company to plan for a “worst-case scenario” in which its defense projects are cut and the company must transition to survive.
So far, Capewell has watched the sequester cuts unfold at a distance. The company works closely with the Army’s Natick Soldier Systems Center in Massachusetts. Wheeler said the Natick facility’s civilian workers have been subject to furlough days under the sequester, making them occasionally hard to contact.
That has been the extent of the impact, but Wheeler said the indirect impact has been more damaging.
“We haven’t seen programs cut. We haven’t seen monies cut. But we’ve seen something almost worse in that nobody wants to go forward with a project because they don’t know if it’s going to be funded,” he said.
The implementation of the Affordable Care Act also has caused the company uncertainty. Wheeler said Capewell has tried hard to keep the premiums in their insurance plan low for employees. Part of that effort is improving their health by offering them gym memberships and access to smoking cessation and weight loss programs.
“No matter how hard we work, we’re being told [premiums] are going to go up. So it disincentivizes us to really work hard to keep our premiums down,” he said. “. . . We want to know what are we dealing with and right now, we don’t.”
Wheeler said he did not believe many of his employees would choose to seek insurance through the state’s healthcare exchange. But he said they will be required to decide soon after Oct. 1. He said his company’s open enrollment period will not begin until March. The exchanges open on Jan. 1, 2014.
During the transitional phase, Wheeler said his employees are being asked to make big decisions based on minimal information and the company’s management is not in a position to answer their questions.
“We’re trying to be able to say intelligent things to them and provide them information so they can make the best choices for their family, but we can’t. We don’t know what to say to them. And now we’re waiting,” he said.
But Blumenthal was unable to give him any hope that federal government would be able to resolve some of the issues with the new law.
Blumenthal said he would like to see some changes to increase the efficiency of the law, but said it will be up to individual states to address any problems that emerge. He said Democrats in Congress can’t make changes to the law because Republicans in the House of Representatives want to scrap it altogether.
“The House really has one interest and only one interest, which is to abolish the program, whereas I think there are improvements that can and should be made,” he said.
Wheeler said he understood the political realities in Congress, but said he hopes the impact of the law is clarified soon.
With the possibility of cuts on the horizon, he said the federal government has made it difficult for Capewell to plan. He said uncertainty makes the U.S. seem less competitive than other countries.
“People that sit in seats like I do — we have to look at maybe going to other countries to make things rather than just stay here,” he said.
Wheeler said Capewell already has two facilities overseas, one in the United Kingdom and another in China.
“If I have to expand those facilities to sustain the business, I will. But that’s going to be on the back of Connecticut workers. We’ve not done that and I hope I don’t have to. That’s what I’m trying avoid,” he said.