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RTI president/CEO: Looming budget cuts affecting production
RTI President and CEO Dawne Hickton addresses those gathered for RTI’s announcement of its certified commercial production startup. She is standing in front of artwork showing an Airbus jet.
Friday, October 12, 2012
By GINNY WRAY - Bulletin Staff Writer
Production at RTI’s new titanium plant in Martinsville is being impacted by sequestration, the $1.2 trillion in budget cuts that, lacking congressional action, will take effect in January.
“This plant would have twice the production without sequestration,” said Dawne Hickton, RTI vice chairman, president and chief executive officer.
She spoke after announcing Thursday that the $135 million Martinsville plant had produced its first certified commercial aerospace titanium at the plant. It has 25 employees, with more expected as grinding and rolling mill processes meet customers’ qualifications in the future.
Sequestration resulted from last summer’s debt ceiling deal, which cut $1 trillion in government spending over the next decade and then put the responsibility for finding another $1.2 trillion in cuts on Congress, according to online reports.
Because Congress failed to agree on the combination of lower spending and higher taxes to meet the $1.2 trillion mark, a mechanism in the debt ceiling legislation causes spending decreases to do it, reports state. That is estimated to mean a cut of about $109 billion in government spending every year for the next decade.
For the defense industry, sequestration would result in a 9.4 percent reduction in non-exempt defense discretionary funding and an 8.2 percent reduction in non-exempt nondefense discretionary funding.
RTI had planned that 50 percent of the titanium processed at the new Martinsville plant would go for defense purposes, Hickton said Thursday. Two years ago, 40 percent of RTI’s work was defense-related; now it is slightly above 20 percent, she said.
That reflects the company’s shift into the medical field, and it plans to grow its energy-related production, Hickton said.
Now, none of the Martinsville plant’s titanium will be defense-related, according to Hickton. Instead, the plant will supply aircraft manufacturer Airbus with titanium.
Hickton criticized the congressional gridlock and inaction that have created the funding problems and looming sequestration. People are pointing fingers instead of compromising, she added.
Regardless of their political party, “we need people to act” and end the uncertainties that are causing companies to put off decisions on expanding plants and hiring, she said.
“I don’t have the answer,” Hickton said when asked what she believes will happen to avoid the cuts. She added that she “supposes” decisions will be delayed, which will not help businesses.
Gov. Bob McDonnell, who attended RTI’s announcement on Thursday, afterward criticized the defense cuts in sequestration, which are expected to have a huge impact on Virginia.
The budget, he said, “shouldn’t be balanced on the backs of the military. ... Cuts have to be made ... but not at a time of war.”
He said he has written to President Barack Obama about the situation but “the president refuses to lead.”
On the economy of Southside Virginia, McDonnell said progress is being made, as evidenced by the drop in the unemployment rate and the return of some companies and relocations of others, such as ICF in the Patriot Centre industrial park in Henry County.
He said when he and state officials travel, “we always talk about the advantages of companies locating in Southside. ... Better days are ahead.”
McDonnell acknowledged that “pain is still here” from the economic downturn and loss of thousands of jobs, but he said he remains “committed to finding more ways to bring businesses here.”