Industry

Revenues of the world’s top defense firms decreased 1 percent in the first half of 2012 compared to last year, according to a new report from Deloitte.

The report found that of the top 20 global aerospace and defense companies, defense contractors saw revenues drop $1.3 billion in the first six months of 2012, on top of a 3.3 percent decline in 2011 revenues.

The study cited domestic budget pressures in and shrinking defense budgets in both the United States and Europe for the drop, as companies prepare for slimmer times following a decade of rapid growth in the defense industry.

Lockheed made the announcement in response to the administration saying it would pay severance costs due to sequestration. 

Senator says he'll do "everything in my power" to prevent funds from reimbursing companies that avoid layoff notices.

The Obama administration issued new guidance intended for defense contractors Friday afternoon, reiterating the administration’s position that the companies should not be issuing layoff notices over sequestration.

The Labor Department issued guidance in July saying it would be “inappropriate” for contractors to issue notices of potential layoffs tied to sequestration cuts. But a few contractors, most notably Lockheed Martin, said they still were considering whether to issue the notices — which would be sent out just days before the November election.

But the Friday guidance from the Office of Management and Budget raised the stakes in the dispute, telling contractors that they would be compensated for legal costs if layoffs occur due to contract cancellations under sequestration — but only if the contractors follow the Labor guidance.

Defense firm BAE Systems has begun holding closed-door meetings with Pentagon officials on its proposed mega merger with European defense juggernaut EADS, which would create the biggest defense and aerospace conglomerate in recent history. 

EADS CEO Tom Enders said Thursday that he doesn’t intend to extend an Oct. 10 deadline to complete a merger with BAE Systems, a move that will put pressure three European governments to get the details quickly ironed out for the proposed deal.

Enders told The Wall Street Journal Deutschland that the two companies had agreed upon the terms of the merger, and now it was up to the governments involved.

“I don't see any reason to presume that the still-open questions cannot be cleared up by October 10," Enders told the Journal.

The German defense minister said more time was needed to iron out the details of a proposed merger between European companies BAE Systems and EADS, suggesting discussions would push past a British Oct. 10 deadline.

After speaking with his French and British counterparts Thursday, German Defense Minister Thomas de Maiziere told reporters that the October deadline might need to be extended, Reuters reported.

British merger rules give the two companies until Oct. 10 to finalize details of the deal, which is complicated by the involvement of the governments of Germany and France in EADS and Britain in BAE.

German lawmakers said they could block a planned merger between European companies BAE Systems and EADS after EADS CEO Tom Enders addressed the parliament Wednesday.

Kerstin Andreae, a member of the German parliament's economic committee, said lawmakers were raising questions over whether the merger should proceed due to disagreements between the government and EADS, the Guardian reported.

"More questions were left open than answered," she said. "There are disagreements between the government and Tom Enders on the question of the valuation of the golden share,” referring to state holdings in the companies.

The Pentagon’s budget crunch has pushed the helicopter manufacturer Sikorsky to close a plant in upstate New York.

Boeing’s chief defense official thinks the proposed merger between BAE Systems and EADS needs careful scrutiny from government regulators over potential issues with both national security as well as the defense industry.

Dennis Muilenburg, head of Boeing’s defense operations, told Reuters on Wednesday that the merger had “national security, industrial questions” that would have to be dealt with.

“This is a serious matter that needs to be scrutinized," Muilenburg said.