Helicopter and jet engine supplier United Technologies could lay off 5,000 employees if the United States government is shutdown lasts over an extended period of time Bloomberg Businessweek reported.
"The effects of the shutdown are relatively slow at first," Jeffrey Ladewig, an associate professor of political science at the University of Connecticut told Bloomberg Businessweek. "The first wave are federal employees, the second wave would be contractors and then deeper into the economy would be the suppliers and distribution centers that support all those companies."
If the government shutdown is still in effect Oct. 7, the company will eliminate 2,000 positions at its Sikorsky Aircraft facility. Another 2,000 are expected at Pratt and Whitney, and UTC Aerospace Systems. However, if the shutdown continues into November, 5,000 employees could be let go.
The potential layoffs are part of the federal contractors' susceptibility in the midst of the meetings between President Barack Obama and congressional leaders to bring the U.S. back into operation.
According to Bloomberg Businessweek, there's no funding for government operations in place for the new fiscal year, which began Tuesday. Services affected by this lack of funding include medical research and tax audits.
United Technologies is affected by the shutdown because it relys on 18 percent of its revenue from the government. The company's products include Black Hawk helicopters, and engines for the F-35 joint strike fighter. The company has had to limit work on its helicopters because there is no money available to pay government inspectors to come examine them.
"(The effects on the division) are only manageable for a short time," Paul Jackson, a spokesman for United Technologies told Bloomberg Businessweek in an e-mail.
The company's shares decreased 1.4 percent to $103.48 Thursday morning as it continued toward its fifth consecutive decline in the last few days, and its longest streak since December.
