Workers at General Dynamics’ (NYSE:GD) NASSCO shipyards are bracing for pink slips resulting from sequester-mandated defense spending cuts.
The company, which builds U.S. Navy ships, has notified 1,040 workers that they could be laid off indefinitely starting in late April. Large businesses are required to give workers a warning 60 days before major payroll reductions, Reuters noted.
NASSCO operates three shipyards based in Florida, Virginia and California. It operates the West Coast’s biggest full-service shipyard.
Under the sequester, which took effect after the White House and Congress failed to reach a budget deal last week, federal discretionary spending will be trimmed by $85 billion this year. A substantial portion of the cuts will hit Defense Department contractors.
Despite the news, shares of General Dynamics rose fractionally in Tuesday morning trading. Other major defense contractors, including Boeing (NYSE:BA), Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC) were also trading modestly higher.