Magazine article National Defense

Balancing Act: Uncertainty about Budgets, Workforce Shape Future of U.S. Weapons Industry

Magazine article National Defense

Balancing Act: Uncertainty about Budgets, Workforce Shape Future of U.S. Weapons Industry

Article excerpt


Uncertainty about future conflicts and the capabilities of potential enemies raise complex questions about what weaponry the U.S. military will need to counter a wide spectrum of threats.

From top to bottom, they range from low-tech insurgencies to sophisticated peer competitors.

As a result, the U.S. government must carefully consider how to best protect domestic industrial capacity to produce a broad range of weapons and to ensure there is a technologically skilled workforce to support future needs, concludes a study completed last year by a group of military officers and government civilians at the Industrial College of the Armed Forces.

The group visited dozens of private and public weapons production and research facilities in the United States and overseas.

The industrial base for developing and sustaining modem systems is shrinking, says the study. The government must recognize this and deal with the possibility that the armed forces might reach a point where the weapons on hand today cannot be adequately maintained by a shrunken base.

Since World War I, the United States has relied on its industrial base to provide the tools of wars. But the government has been reluctant to develop a defense industrial policy, and has relied on the provisions of the Defense Production Act of 1950 to manage the industrial base.

One issue of concern, the study points out, is the capability of the U.S. industrial base to rapidly surge the production of critical systems.

Currently, there is little capability for a fast large surge in production because of what the study describes as the "dormant state of excess capacity."

Equipment requirements for the Iraq war are a case in point. Once the Defense Department realized it needed to increase production of body and truck armor, it took two years to procure and deliver the equipment. The government strategy is to fight from the war reserve stocks and replenish during peacetime. The excess capacity necessary for replenishment comes at a cost premium. For many weapons key components, there is limited excess production capacity available to support a production surge or acceleration.

The private sector has made great strides in reducing, if not eliminating, excess capacity. The Defense Department has tried to reduce costs and sees excess depot capacity as an area that it is willing to decrease, knowingly accepting the risk.

Former Defense Secretary Donald Rumsfeld notably said, 'ms you know, you go to war with the Army you have .... not the Army you might.., wish to have at a later time." His comments highlight a view of lightening speed modem warfare that does not take into account the mobilization of the defense industry and depots, says the study. One will consume the weapons systems on hand. But what if the war is not ended in the secretary's time frame?

The domestic weapons industrial base comprises a diverse group of producers. Suppliers include small independently owned micro-unmanned aerial vehicle businesses to the large government owned and government operated depots, arsenals and ammunition manufacturing plants. In most segments of the market, there is a strong interdependency between the government buyer and the suppliers. Unlike Japan where Mitsubishi Heavy Industries relies on the government for only 2 percent to 3 percent of its revenue, the U.S. weapons industry derives most of its earnings from Defense Department contracts and as a result will expand or contract along with the defense budget.

The cyclical nature of the defense budget has had a significant impact on shaping the market, the study says. As spending increases, there are new suppliers entering the market. Conversely, as the budget contracts these late entrants either fold or are absorbed by the larger corporations.

As weapons have become more technologically advanced, the makeup of the weapons industry has changed. …

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