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Defense Commissary Agency Mulls More Cuts in Spending

Defense Commissary Agency Mulls More Cuts in Spending

FORT LEE, Va. — Workers at the 247 military supermarkets around the world are facing pay cuts of up to 20% as the Department of Defense explores the possibility of further cuts due to sequestration, a top executive told SN last week.

“We’ve reduced spending, there’s no travel, no external training — and we are under a hiring freeze,” Mike Dowling, chief operating officer at the Defense Commissary Agency, or DeCA, told SN. “Without being able to hire anyone, that creates potential challenges in trying to staff the stores.

“But the real challenge will come when and if — and it is an ‘if’ — we actually are instructed to furlough [employees], which means we will shut down for one day a week in every one of our stores.”


Follow @SN_News for updates throughout the day.

He said Department of Defense administrators are currently mulling a plan that would furlough almost all employees for 14 days — down from a previous plan of 22 days — effective in June. The cuts are part of the billions of dollars in budget cuts known as sequestration that began rolling out in February.

About 174 of the DeCA commissaries are located in the U.S. They offer traditional groceries and other supplies at cost plus 5%, a significant savings for military families — many of whom also work in the stores.

Sales at DeCA commissaries totaled just over $6 billion last year, but have been a bit soft so far in 2013, Dowling said, even after accounting for some closures and cutbacks at the European military installations.

If the stores are closed one day a week, he said, sales could be more severely impacted.

“Will the customers continue to shop with us? Will they come back? Will it force them to realign their schedules?” Dowling wondered.

“We certainly believe that many of them will [continue to shop], but there will be some that will not. They have to have their gallon of milk right away, and will go someplace else.”

Earlier this year, Nash Finch Co., Minneapolis, a supplier to military commissaries, reported that the sequestration was already impacting demand as shoppers were concerned over potential cuts.

“Sequestration has already begun,” Alec Covington, president and chief executive officer, Nash Finch, said in a conference call in February. “Because we have noticed since Jan. 1 an impact in the domestic sales to commissaries, and that’s been driven by preparations for sequestration.”

Read more: Nash Finch Cites Impact of Sequestration

Dowling said he has seen “angst among employees and everyone involved — brokers, manufacturers, distributors — all certainly will be affected. We’ll have to work with distributors and change our schedules. There will be a domino  effect.”

A survey on the topic, the First Command Financial Behaviors Index, showed that 46 % of middle class DOD employees said they were preparing for sequestration by cutting back on everyday spending, up 7 points since January.

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