AMERICA’S VANISHING DEFENSE INDUSTRY
n a stunning series of across the board reports from defense analysts, retired military leaders, manufacturers, elected officials, unions and Congressional committees over the past several years, it has been revealed that America’s ability to produce the weapons and technology vital to our national defense is rapidly vanishing.
An analysis prepared by the Industrial Union Council of the AFL-CIO
reports that:
“…a much greater number of items once supplied by U.S. manufacturers are now obtained from foreign suppliers–flat panel displays, machine tools, advanced electronics and information technologies–because they are not readily available from U.S. producers.” The study reports that U.S. Joint Forces Command Colonel Michael Cole believes that the problem is not just a matter of a handful of highly specialized items designed to meet narrow defense requirements, but the “eradication of the U.S. industry capacity.” Col. Cole also is concerned that current strategies to address the crisis are not working… ”
Those concerns are echoed by The Alliance for American Manufacturing:
“The United States’ national security is threatened by our military’s growing and dangerous reliance on foreign nations for the raw materials, parts, and finished products needed to defend the American people. The health of our manufacturing sector is inextricably intertwined with our national security, and it is vital that we strengthen the sector. The health of the United States’ defense industrial base–and our national security–is in jeopardy. We are vulnerable to major disruptions in foreign supplies that could make it impossible for U.S. warriors, warships, tanks, aircraft, and missiles to operate effectively.”
According to the Alliance, “China controls key inputs needed for military equipment…The United States is completely dependent on a single Chinese company for the chemical needed to produce solid rocket fuel used to propel Hellfire missiles.”
The news gets worse. High-tech magnets are vital components in military equipment and vehicles. The United States does not produce any of these key parts, but China manufactures 75% of the world’s supply.
The crisis extends also to essential raw materials. America imports 91% of the rare-earth element lanthanum, used for night vision, from China.”
HOW IT HAPPENED
America’s dependence on overseas sources is not merely the result of a change in global economics. Much of it is the unintentional result of financial policies which have driven U.S. manufacturers out of business, a downturn in military procurement, and, most recently, the intentional actions of the Obama Administration.
A key case in point concerns the Abrams tank, America’s premier fighting vehicle. There is only one plant–in Lima, Ohio–in the entire USA that manufactures these machines. There was another facility near Detroit, but it was closed in 1996. President Obama has sought to shut the Lima down, leaving America without the ability to produce this essential part of our defense. The plant’s life has been extended for two years, but the future looks uncertain.
Rep. Bud McKeon (R-Ca.), Chair of the House of Representatives Armed Forces Committee, notes that planned cuts would “devastate” the industrial base:
“Even without sequestration, companies are cutting investments, shuttering operations, and laying off workers because of the uncertainty emanating from Washington. Sequestration would risk severe and permanent damage to the defense industrial base as a competitive commercial enterprise, reliable provider of urgent wartime needs, and as a national strategic assets. Massive layoffs will lead to a lost generation of skilled workers that will be impossible to replace; Slashing R&D spending will stifle the innovation that keeps our military the most advanced in the world; Consolidation by large contractors will reduce competition, crush small businesses, and increase costs.”
The Industrial Union Council reports that, “No single indicator by itself can represent economy-wide manufacturing capabilities or trends. But [there are] several key indicators of domestic economic performance:
“value-added output, industrial capacity and capacity utilization, employment, and number of establishments-and global competitiveness-balance of trade in goods and import penetration rate–when taken together,provide strong evidence that America’s manufacturing base has greatly weakened over the last decade. The former indicators reflect the economy’s ability to maintain and increase output growth over the long run. The latter reflect the American manufacturers’ ability to compete with foreign producers in domestic and global markets.
“Well-known examples of defense critical technologies where domestic sourcing is endangered include propellant chemicals, space qualified electronics, power sources for space and military applications (batteries and photovoltaics), specialty metals, hard disk drives, and flat panel displays (LCDs). University of Texas at Austin engineering professor Michael Webber
evaluated the economic health of sixteen industrial sectors ‘within the manufacturing support base’ of the U.S. defense industrial system, ‘that have a direct bearing on innovation and production of novel mechanical products and systems,’ and whose output ‘is used directly in the design process of other industries.” Of the sixteen industries he examined, thirteen showed
significant signs of erosion, especially since 2001.
“These industries supply critical materials, components and parts used in defense systems or they are enablers and enhancers of innovation within industries important to national security, including aerospace. The movement of these industries oversea, which increases the dependence of the defense industrial base on offshore or foreign-owned components and equipment (e.g., semiconductors, PCBs, machine tools), can adversely impact national security…
“The erosion and migration of domestic manufacturing is also weakening the America’s R&D and innovation capacity and undermining its global technological leadership. The design, development and production of both commercial and defense-specific technologies and products are tightly linked. As Michael Webber warned, if the U.S. manufacturing base “that props up the
entire national innovation system continues to deteriorate in the United States, but grows and thrives overseas, then large numbers of America’s most innovative companies might be inclined to move overseas to be closer to production and the necessary support base. . . . Significant deterioration of companies that design and make discrete components is triggering a fundamental hollowing out of the national innovation system.”
Retired U.S. Army Brigadier General John Adams has called for a joint strategy by government, industry, academic research institutions, and the military to increase U.S. domestic production of manufactured items and recovery of natural resources that the armed forces require. In addition, his recommendations emphasize the importance of investment today in the technological innovation, education, and training needed to keep America secure tomorrow.
Sequestration, if implemented as planned, will have a further devastating impact both to existing U.S. forces as well as the American defense industrial base. According to Rep. McKeon, the impact would be “catastrophic.” The House Armed Forces committeereports:
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“The Numbers: the defense budget would be cut an additional $55 billion per year from the levels established in the Budget Control Act. That would mean an additional $492 billion in cuts on top of the $487 billion already being implemented. In total, over $1 trillion would be cut over the next ten years with disastrous consequences for soldiers, veterans, national security, and the economy.
A Historically Small Military
in an Extraordinarily Dangerous World
“In the midst of the most dynamic and complex security environment in recent memory, sequestration would severely diminish America’s global posture. An additional 100,000 soldiers, sailors, Marines, and airmen would be separated from service. Those reductions would lead to The smallest ground force since 1940.
• A fleet of fewer than 230 ships, the smallest level since 1915
• The smallest tactical fighter force in the history of the Air Force
“Precisely at the moment when advanced military technology is spreading around the world, America would be forced to make severe cutbacks, eroding our technological advantage. The cuts would include:
• Termination of the Joint Strike Fighter, minimal upgrades to existing forces, and a wider “fighter gap”
• Termination of the new strategic bomber critical to America’s future posture in the Asia-Pacific
• Delaying new submarines and cutting the existing fleet as nations like China expand anti-sub capabilities
• Shrinking America’s aircraft carrier fleet, reducing power projection capability
• Termination of the littoral combat ship essential to defeating anti-access threats from nations like Iran
“The combination of cuts to force structure and advanced technology would lead to a hollow force increasingly uncertain of its ability to defend the nation.”
Jobs, Jobs, Jobs
Cuts to spending for the acquisition of military equipment alone would lead the loss of over 1,000,000 private sector jobs. These cuts could push unemployment back up to 9%. Cuts to active-duty and DOD civilian personnel would amount to over 350,000 jobs lost. The impact will be borne disproportionately by some states. The ten states that will feel the largest pain as a percentage of the state economy are Virginia, Connecticut, Alabama, Arizona, Maryland, Alaska, Hawaii, Wisconsin, Massachusetts, and Missouri.
Economic Impact
Stephen S. Fuller, PH.D., performed a study for George Mason University in 2011 that examined the potential economic impact of proposed DOD spending reductions in 2013. The study is an instructive example of the negative effect on the economy this particular area of government cutting could have.
“Deductions for the acquisition of military Equipment… will significantly exceed the initial dollar value of these spending reductions as measured by lost jobs and personal income …reduced non wage expenditures, and a decreased rate of economic growth…Additionally, the impacts of these losses will extend across the full breadth of the U.S. economy, as this decreased spending will result in reduced spending for consumer goods and services. For each job lost by DOD’s prime contractors and their direct and indirect suppliers within the aerospace and military equipment industry as a result of DOD cutbacks for the acquisition of military equipment, three additional jobs would be lost in other sectors across the breadth of the U.S. economy. These job losses in non-military equipment manufacturing would occur in professional and business services, financial, information and administrative services, retail trade, leisure and hospitality services, education and health services, construction and other manufacturing.”
According to Frank Gaffney, Jr., Director of the Center for Security Policy, the worst impact will be on the national safety of the United States. Reductions due to sequestration could cut $500 billion in planned defense spending over a decade. but the economic impact of the resulting loss of… jobs, 88% of which will be in small businesses, will also be devastating. Additonal problems resulting from reducing loan guarantees from the Export-Import Bank for arms manufcturers will also have dire consequences.
Recommendations
The Alliance for American Manufacturing provides the following recommendations:
1. Increasing long-term federal investment in high-technology industries, particularly those involving advanced research and manufacturing capabilities.
2. Properly applying and enforcing existing laws and regulations to support the U.S. defense industrial base.
3. Developing domestic sources of key natural resources required by our armed forces.
4. Developing plans to strengthen our defense industrial base in the U.S. National Military Strategy, National Security Strategy, and the Quadrennial Defense Review process.
5. Building consensus among government, industry, the defense industrial base workforce, and the military on the best ways to strengthen the defense industrial base.
6. Increasing cooperation among federal agencies and between government and industry to build a healthier defense industrial base. U.S. manufacturing jobs has reduced the size of the workforce skilled in research, development, and advanced manufacturing processes.
7. Strengthening collaboration between government, industry, and academic research institutions to education, train, and retain people with specialized skills.
8. Crafting legislation to support a broadly representative defense industrial base strategy. Congress and the Administration must collaborate on economic and fiscal policies that budget for enduring national security capabilities and sustain the industrial base necessary to support them.
9. Modernizing and securing defense supply chains through networked operations.
10. Identifying potential defense supply chain chokepoints and planning to prevent disruptions.