It's difficult to understate the importance of Lockheed Martin's latest announcement on the race for the White House: the defense contractor said on Monday it will not be issuing employee layoff notices to 123,000 workers on Nov. 2—just four days before the presidential election. Amidst all of the super PACs and campaign ads, the threat of telling a sizable chunk of voters in key areas of the country that they could lose their jobs if the election didn't go Lockheed's way was one of the most potent examples of corporate electioneering. But the layoff threat was largely unreported outside of Beltway trade publications. Here's why today's announcement matters:
Why was Lockheed Martin threatening to send layoff notices to 123,000 employees?
In one word: Sequestration, the Congress-approved plan to strip some $500 billion in defense spending over the next ten years. In June, Lockheed said it would have to issue layoff notices to workers under the Worker Adjustment and Retraining Notification Act due to impending Pentagon budget cuts. Lockheed wanted assurances from the government that its contracts wouldn't be affected by sequestration.
Do you know where many of Lockheed Martin's employees reside? Virginia, one of the all-important swing states of this election. It's a historically Republican state. In fact, before Obama's 2008 election, no Democratic presidential candidate had won the state since Lyndon Johnson's 1964 bid. And pretty much all electoral map prognosticators say that if Obama wins both Virginia and Ohio this year, Mitt Romney has practically no chance of winning the presidential race. That's why if one of the biggest employers in the state were to issue layoff notices days ahead of the election, it could be devastating for President Obama.
OK. So why aren't the layoffs happening?
On Friday, the Pentagon issued guidance that promised two important things. "The guidance said the Pentagon did not anticipate killing any contracts on Jan. 2, the day automatic spending cuts are set to begin hitting defense spending," reports The Hill's Jeremy Herb. "The guidance also said the federal government would cover severance costs that are mandated under a federal layoff notices law." Voila! The next business day, Lockheed Martin announces it will no longer be issuing layoff notices.
Wow. But could this really have affected the race?
Definitely. Romney and Obama are neck-and-neck in Virginia, as CNN's political unit reports:
It is very close. In two out of three recent polls, the margin of error, coupled with the percentage of undecided voters, leaves Virginia up for grabs. The latest, a Suffolk University/WWBT-Richmond survey, shows Obama with a 46%-44% edge among likely voters in Virginia. Two point margin is within the poll's sampling error. Seven percent are undecided.
That brings up the issue of how many Lockheed employees actually live in Virginia. While hard stats are difficult to find, Lockheed does list the number of workers employed by individual Virginia plants, which include locations in Alexandira, Fairfax, Hampton, Herndon and Manassas. In total, those plants employ 41,400 workers, a huge amount of the electorate when you consider that voting-age relatives of the employees may also be influenced by layoff notices. Another thing to keep in mind: In 2008, Obama beat McCain by more than 200,000 votes, winning 52.6 percent to McCain's 46.3 percent. With the latest polls showing Obama only beating Romney 46 percent to 44 percent, within the margin of error, sending dispiriting layoff notices to 41,400 workers could have had a significant effect. Overall, it goes without saying that the president dodged a major bullet with today's announcement, and the Romney campaign missed out an a huge opportunity to win over jittery Virginia voters.