After cuts, defense contractors report record operating margins

Tuesday - 7/31/2012, 7:33am EDT

With a tighter defense budget and the threat of sequestration, defense contractors say they may have to lay off thousands of workers and look for business overseas.

But for now, they have reason to stay put.

Washington-area defense contractors are reporting record operating margins. Washington Business Journal reports Lockheed Martin, Northrup Grumman and General Dynamics had stronger-than-expected earnings during the second quarter.

Analysts say the firms have reduced personnel and real estate, and they've made good business decisions to offset any declines in federal spending.

The same contractors, however, say they won't be immune to budget cuts. Lockheed Martin says it could lay off up to 10,000 workers under sequestration.

This story is part of Federal News Radio's daily DoD Report. For more defense news, click here.