shutdown

How the Government Shutdown is Impacting Industry

Amid disagreements between Congress and President Donald Trump regarding federal funding for a wall along the border between the U.S. and Mexico, the government enacted a partial shutdown on December 22, 2018. As of January 14, the shutdown had entered its 24th day, making this the longest government shutdown in U.S. History.
 

The shutdown has affected nine federal agencies: Agriculture, Commerce, Justice, Homeland Security, Housing and Urban Development, Interior, State, Transportation, and the Treasury. This has impacted an estimated 800,000 government workers.

In addition to the federal employees who find themselves without pay, the shutdown is also having a ripple effect on many industries throughout the country, including:

Construction

All federal construction contracts, as well as any projects funded by one of the nine federal agencies, are being temporarily delayed. As a result, many construction workers have been furloughed. This will likely also have an impact on the general public, as some of these projects involve the repair or construction of public infrastructure.

Manufacturing

Because the Department of Commerce is shut down, the review process for steel and aluminum tariff exemptions has been put on hold; manufacturing companies that have submitted requests for exemptions are dealing with delays, finding themselves unable to plan ahead in estimating material costs.

Agriculture

Of all the agricultural services and government agencies whose shutdowns can affect U.S. farmers’ work, the USDA’s is the most drastic. Prior to the shutdown, the USDA was reviewing applications from farmers looking for emergency aid during the U.S.-China trade war; this process is now on hold. In addition, regular non-emergency services, such as mortgage assistance and loans, have been suspended.

Food and Beverage

The FDA, which is responsible for food safety inspections, is currently not performing routine inspections for vegetables, fruits, seafood, and other foods due to the shutdown. Although some staff members of the Agricultural Department are still conducting inspections on domestic poultry and meat as well as imported foods, they are doing so without pay.

Despite these limitations, FDA commissioner Dr. Scott Gottlieb has stated that the agency is continuing its observation of domestic facilities with a history of problems, which will hopefully mitigate any potential risks. The shutdown is also impacting smaller food and beverage industries, such as the beer brewing industry, because the Alcohol and Tobacco Tax and Trade Bureau, an agency within the Treasury responsible for approving beer bottle labels, is currently closed. Without label approval, beer producers are unable to sell their product in bottle form.

Aircraft and Aerospace

Airline safety has been hit particularly hard, on several fronts. For one, many airline safety employees, including TSA workers and air traffic controllers, are considered “essential staff,” and as such are being forced to work without pay. Furthermore, all Federal Aviation Administration (FAA) safety inspectors have been furloughed, which means planes are not being inspected.

Preparing Your Business for Shutdown Impacts

A partial government shutdown is always a serious situation with complex consequences that reverberate across the country. For now, companies are urged to plan for the worst and develop a comprehensive survival plan that takes into consideration the possible effects of a long-term shutdown.

Image courtesy of Paul Brady Photography/Shutterstock.com.

About the Author

Kristin Manganello is a Thomas Insights staff writer for Thomas. Prior to working at Thomas, Kristin received a bachelor’s degree in English from Rutgers University, and worked various writing and editing jobs in a wide range of markets.
 

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