State of Manufacturing Base Is Cause for Concern

National Defense Magazine ^ | 02-01-04 | Lawrence P. Farrell Jr.

[NMC EXP]

One lesson that we learned from the “Buy America” debate last year was the need for a thorough and detailed discussion on a national level about the state of the U.S. industrial base, particularly the capabilities of American industry to manufacture sophisticated components for weapon systems.

The Buy America provisions passed by the House of Representatives as part of the Fiscal Year 2004 Defense Authorization Bill ultimately were defeated, given the strong resistance from the Bush Administration and defense industry leaders, who successfully argued that protectionist laws only would hurt the competitiveness of the industry and the ability of the Defense Department to obtain state-of-the-art technology from the most competitive suppliers.

The problem that needs more analysis and concerted action, however, is the decline in U.S. manufacturing capabilities.

If the decline continues, it could have an impact on our ability to access competitive sources in the military market. A strong industrial base is essential to competitive sourcing and a cornerstone of national security. The state of manufacturing capabilities in the United States today gives cause for concern about the health of those manufacturers that produce highly sophisticated weapons and components for the armed forces.

In objecting to the Buy America legislation, the Administration acknowledged the need to take a detailed look at the U.S. industrial base, its critical capabilities, and its ability to meet demands for advanced military technology and components at competitive prices.

What we are seeing today is that large defense firms gradually are outsourcing much of their manufacturing business. Most manufacturing now is done by small and medium-sized enterprises. Large manufacturers have downsized their workforces and are outsourcing production of final parts and components.

Mark Huston, of the National Center for Defense Machining & Manufacturing, points out that these smaller manufacturers typically lack the resources to invest in research and development. “The technologies they use today in many cases are not even state-of-the-market, let alone state-of-the-art,” says Huston.

His organization, NCDMM, has worked with defense contractors to help them upgrade outdated technology, improve processes and incorporate new tooling.

In recent years, says Huston, “we’ve fallen behind the curve.” A lot of know-how was lost as people retired, companies went out of business and cut back investments in R&D.

Government programs designed to fund advances in U.S. manufacturing technology—such as Mantech, the Advanced Technology Program and the Manufacturing Extension Program—are helpful, but their budgets have been shrinking. “It’s not sufficient to close the gap we need to close here,” says Huston.

The numbers are sobering. According to the Association for Manufacturing Technology, as of August 2003, the manufacturing sector had sustained 37 consecutive months of job losses. More than 2.7 million manufacturing jobs disappeared in the United States during the three-year period beginning in mid-2000.

The impact of these changes can be seen most clearly in the loss of traditional machine tool companies, says AMT. More than 30 closed shop between January 2002 and July 2003, representing nearly 10 percent of the companies in the entire industry.

As we try to envision what lies ahead for the defense industrial base, one thought that comes to mind is that we cannot continue to lose ground, and get to the point where we cannot manufacture critical items that the military services require for their weapon systems.

The debate that surrounded the Buy America bill—and the resulting studies—should prompt us to take a hard look at our manufacturing capabilities, and see what can be done to increase competitiveness in this vital industrial arena.

The bottom line is that the United States has to have machine tools, technology and manufacturing capability to remain internationally competitive. Protectionism is not the answer, but there is a compelling case to be made that both the federal government and the private sector need to step up their investments in manufacturing technology, so we can stay on par with countries such as Japan, Germany and China, which is poised to become the world’s manufacturing powerhouse of the 21st century.

One area that needs more investment is “smart machines.” AMT notes that the most promising manufacturing technologies involve machines that can “think” and quickly produce parts to exact specifications, without unscheduled delays over extended work cycles.

The United States, to be sure, is achieving key breakthroughs in smart technology, but our competitors are investing heavily and gaining ground.

We may not be in a crisis yet, but there is enough evidence to suggest a crisis may not be far off, when the dependence on foreign suppliers for critical manufacturing technologies may reach an uncomfortable level. Pentagon officials repeatedly have assured Congress and others that the Defense Department is satisfied with the capabilities of the U.S. industrial base and that, in cases of emergency, they would be able to obtain domestic sources for items currently bought from foreign vendors.

Clearly, buying American products for the sake of buying American is not the answer, if U.S.-made technologies are not the latest and greatest. That would not help us. But given the increasing sophistication of military technology and the expectation that the demand for high-tech weapon systems will grow, a major deficit in U.S. manufacturing capabilities cannot be ignored. The risk of failing to take action would be, regrettably, to lose the edge on the battlefield.

[NMC EXP]

I suppose the PRC will sell us the material we need if we ever get in a real war.

Or maybe the WTO will call a time out on the war so we have time to retool?

Regards

J.R.

[NMC EXP]

An adios to manufacturing heads up.....

[truthkeeper]

Another BFO alert. (Blinding flash of the obvious.)
Thanks, good post.

[Willie Green]

Articles previously found at TradeAlert.org are now at AmericanEconomicAlert.org

[hedgetrimmer]

The Navy League has been sounding the alarm on the ship building industry for years.

What has happened to this country that people don't know or care that our ability to produce our own food and manufacture goods sought worldwide for their quality, engineering and inventiveness are what made America great?

[NMC EXP]

Seems like all these "BFO's" are bad news.

Regards

J.R.

[hedgetrimmer]

Protectionism is not the answer

Why?

[NMC EXP]

Thanks....got it bookmarked.

Regards

J.R.

[truthkeeper]

How can we forget how quickly we were up and running after Pearl Harbor? All thanks to our strong manufacturing base.

I mean, it's not like all our "friends" are going to come to our assistance the next time, is it?

[NMC EXP]

What has happened to this country that people don't know or care that our ability to produce our own food and manufacture goods sought worldwide for their quality, engineering and inventiveness are what made America great?

I could write a book but here is the Cliffs notes version:

(1) corporations managing quarterly earnings reports rather than a company in it for the long haul. Corporations which bribe congress and administrations to implement GATT, NAFTA, WTO, FTAA, ad nauseum.

(2) egalatarian altruism infecting decision makers -- export US wealth to the rest of the world to ease the suffering in poorer countries.

(3) a secondary and college education system which has elevated "free trade" to the status of a civil religion.

(4) an ignorant and uninformed public.

Regards

J.R.

[NMC EXP]

THe author writes for a defense industry magazine.

He knows which side of his bread is buttered. He is not going to take a shot at "free trade".

Instead he goes on to say that "government and industry" should spend more on tooling and R&D.

In other words he wants our taxdollars to support defense related R&D and excess manufacturing capacity in the US because the major corporations will not do it.

Regards

J.R.

[meenie]

Sadly we are not the same country that we were after Pearl Harbor. Short term profit takes precedence over the health of our nation. You cannot maintain a national defense without a national manufacturing base. Without a national manufacturing base, we cannot maintain an economy to support the expenditures a first rate military has to have to remain strong. Rosy the Riveter was just as important in WW II as GI Joe for the victory over the Axis Powers.

[neutrino]

Great post! And your comments about our leaders' misguided altruism is right on target.

We are committing national suicide in the name of getting cheaper trash that we neither need nor really want. I fear we - or, perhaps our children - will pay a terrible price.

[WilliamofCarmichael]

Protectionists! :>)

Yeah, it's called national defense.

With tin foil hat in place I am seriously saying that I agree with any argument that "cheaper trash" is a diversion.

"Export[ing] US wealth to the rest of the world" is the objective. Another form of Kyoto? (A cheap commie trick.)

A product of the "Third Way?"

A big step toward disarming / hamstringing our military? That after all leads to the co-objective: the destruction of our miltary.

But who is doing this....

[WilliamofCarmichael]

Or is it just useful idiots like Lenin said?

[DustyMoment]

Someone in the Administration needs to think back to December 7, 1941.

We don't have the same capability in the US today to build enough war weapons to defeat the Japanese and the Germans. Given our current manufacturing capacity we MIGHT be able to wage a protracted war with the French (eventually wearing them down and accepting all their surrenders), or be able to wage a sustained war against an army from Madagascar consisting of people who don't give a d*mn one way or the other.

But we can never repeat the feats our manufacturing capability allowed us to accomplish between December 7, 1941 and August 14, 1945.

[primeval patriot]

Watch cases to war production. His hair is white, but his eye is keen. Fifty years of precision work for a Kentucky watch-case manufacturer, now converted to war production, gave this artisan rare skill in developing fine dies for the arsenal of democracy. Wadsworth Watch Company, Louisville, Kentucky.

Palmer, Alfred T., photographer.

CREATED/PUBLISHED 1942 Feb.

Squaring part of a torpedo. Skilled machine operator working on the process of torpedo manufacture in an eastern Navy arsenal.

more here

One of America's thousands of skilled women war workers, this young Midwesterner twirls the wheel that controls the drilling of holes in machine gun parts. A skilled machine operator, she formerly processed spark plugs on a similar machine, but turned her efforts to war work when the factory was converted to the manufacture of machine guns. A.C. Spark Plugs.

Rosener, Ann, photographer.

CREATED/PUBLISHED 1942 July.

Women in war. Machine gun production. Intent on the important job at hand, Elsie M. Terry uses a precision snap gauge on the machine gun part she has milled. One of 2,000 women employed by a Midwest plant, converted from spark plugs to machine gun manufacture, Mrs. Terry typified the American woman war worker. Serious, skilled and reliable, she is making an invaluable contribution to the war effort. A.C. Spark Plugs.

Rosener, Ann, photographer.

CREATED/PUBLISHED 1942 July.

[Minuteman23]

I suppose the PRC will sell us the material we need if we ever get in a real war. Or maybe the WTO will call a time out on the war so we have time to retool?

Nothing more needs to be said.

[Minuteman23]

I suppose the PRC will sell us the material we need if we ever get in a real war. Or maybe the WTO will call a time out on the war so we have time to retool?

Nothing more needs to be said.

[LibertyAndJusticeForAll]

Good post.
Henry Kissinger, Senator Lieberman, Congressman Duncan Hunter and others have spoken on this issue, not in terms of economics (which brings in so many pet theories), but in terms of national defense. Unfortunately, there has been little notice by the media or the GOP.