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U.S. companies warn of delays, furloughs from shutdown

The Boeing logo is seen at their headquarters in Chicago, April 24, 2013. REUTERS/Jim Young
The Boeing logo is seen at their headquarters in Chicago, April 24, 2013. REUTERS/Jim Young

By Alwyn Scott

NEW YORK (Reuters) - The U.S. government shutdown is beginning to hit the factory floor, with major manufacturers like Boeing Co and United Technologies Corp warning of delays and employee furloughs in the thousands if the budget impasse persists.

Companies that rely on federal workers to inspect and approve their products or on government money to fund their operations said they are preparing to slow or stop work if the first government shutdown in 17 years continues into next week.

United Technologies said nearly 2,000 workers in its Sikorsky Aircraft division, which makes the Black Hawk military helicopter, would be placed on furlough Monday if the shutdown continues. That number would climb to more than 5,000 and include employees at its Pratt & Whitney engine unit and Aerospace Systems unit if the shutdown continues into November, the company said in a statement.

The Sikorsky employees who would be affected work at facilities in Stratford, Connecticut, West Palm Beach, Florida and Troy, Alabama.

The Pratt & Whitney and Aerospace Systems divisions would be affected if the shutdown persists through next week, UTC said.

UTC relies on the government's Defense Contract Management Agency to audit and approve manufacturing processes for its military products. The DCMA inspectors were deemed non-essential federal employees and are on furlough, UTC said.

Aircraft maker Boeing said it is taking steps to deal with possible delays in jetliner deliveries, including its new 787 Dreamliner, because thousands of U.S. aviation officials needed to certify the planes have been idled.

Any delays would likely affect the plane maker's newest models and could affect development of other models such as the stretched 787-9 derivative, the company said.

Older models like the 737, which don't require significant engineering as part of the production, are less likely to be affected.

Boeing said the potential delays depend on how long the shutdown lasts. It also would affect numerous programs and products in the company's defense business.

"We anticipate that we'll be able to deliver some airplanes during the shutdown," said John Dern, a spokesman at Boeing's headquarters in Chicago.

"For models that we've delivered lots of before with the same engineering, we have the authority, delegated to us by the FAA" to certify, Dern added, referring to the Federal Aviation Administration.

The FAA said on Wednesday it is furloughing 15,500 workers out of 46,000 employees. The agency said that while some aircraft certification work will continue during the shutdown, it will be limited.

The slowdown would affect Boeing's 787 factory in North Charleston, South Carolina, because the FAA has held on to some of its airplane certification roles at that relatively new factory, Dern said.

Boeing said it was taking steps to deal with potential delays, but declined to be specific.

Companies who rely heavily on government funds are also vulnerable. USEC Inc , a supplier of enriched uranium for commercial nuclear power plants, said it may have to furlough some workers at an enrichment project in Ohio if the shutdown extends beyond October 15.

USEC needs about $48 million to complete the $350 million American Centrifuge project, which is 80 percent funded by the U.S. Department of Energy.

The plant, which will produce low-enriched uranium used to make nuclear fuel, employs 959 workers, mainly in Ohio and Tennessee. It is scheduled to be completed by the end of this year.

"The money that would allow us to carry on for the next two weeks is the fiscal year 2013 funds that we have been able to carry over," Paul Jacobson, vice president of corporate communications, told Reuters.

USEC, which has about 1,770 employees, did not disclose how many employees could be furloughed.

(Additional reporting by Nichola Groom in Los Angeles; Editing by Leslie Gevirtz)

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