Homeland Defense National-security resources should not be manufactured in foreign lands.

NationalReviewOnline ^ | June 25, 2003 | By William R. Hawkins

[LibertyAndJusticeForAll]

Members of the House and Senate Armed Services committees have gone into conference to hash out some major differences in the 2004 Defense Authorization bills passed by each of the two congressional chambers. Among the contested issues is a major initiative launched by the House Armed Services Committee (HASC) to revive and maintain a robust industrial base in support of continued American military superiority. Unfortunately, some senators favor outsourcing defense projects to foreign corporations.

[LibertyAndJusticeForAll]

[the article continues]

People who get their news about the state of U.S. national security from television reports showing fighters launching from aircraft carriers and tanks rolling down the streets of Baghdad probably have a sanguine view of American power. What is not so readily seen is that beneath the military muscle is a deteriorating manufacturing sector that weakens the ability of the United States to remain the unchallenged superpower in the future.

The defense cuts of the 1990s, a dismal era which HASC chairman Duncan Hunter (R., Calif.) calls "the procurement holiday" devastated many of the industries that supply the U.S. military. Many firms dropped out the business of building parts for weapons systems due to lack of work. Many were bought up by foreign interests who wanted U.S. technology and know-how to add to their own industrial capabilities in competition with the surviving American firms. Though the Committee on Foreign Investment in the United States (CFIUS) is supposed to police the loss of American defense-related firms to overseas takeovers, it rarely intervenes. Though charged with protecting national security, CFIUS is chaired by the treasury — and the treasury's top concern is attracting back to American shores the dollars lost due to the nation's massive trade deficit. If foreigners won't buy American products, they will be offered American companies to purchase.

Examples of how fragile the U.S. defense industrial base has become abound. In April, Illinois-based Ingersoll Milling ceased operations. Ingersoll Milling was one of only two U.S. companies that can build the high-tech machine tools used to shape radar-absorbing composites into the skin of stealth aircraft. The other company, Cincinnati Machine, is moving to a smaller plant in Kentucky where it will cut its workforce in half. These are not buggy-whip makers, but firms engaged in the future of aircraft production. There are, however, two European firms, one French, one Spanish, who would love to tap into the lucrative U.S. aerospace industry and make it dependent on their supply of machine tools.

Last year, Silicon Valley Graphics (SVG) was taken over by the Dutch corporation ASM Lithography. SVG made the world's best high-end lithography machines — the devices that focus light finely enough to etch millions of microcircuits onto silicon computer chips. These leading-edge lithography machines helped ensure that the United States retained the earliest and broadest access to the world's most advanced semiconductors, which are central to advanced weapons. Only ASM and two Japanese firms have capabilities at this level of development, so the takeover of SVG means that the United States will no longer own a firm working on this technological frontier.

In addition, SVG's wholly owned subsidiary Tinsley Laboratories produces the advanced mirrors and lenses in the cameras carried by America's reconnaissance satellites. Now a Dutch firm controls these assets.

Are the Dutch reliable allies? They did support the United States in Iraq, which is why they are still on a list of nations Sen. John McCain (R., Ariz.) wants approved for defense contracts. However, when President George W. Bush promised eight diesel submarines to Taiwan, the Dutch — who build some of the best diesel subs in the world, declared that, because they have a different China policy, they would not cooperate with the United States. And because the United States does not build diesel submarines, it needs cooperation to fulfill its still unmet commitment.

Alliances are shifting in today's turbulent world. The debacle at the United Nations over Iraq was only the most visible aspect of this trend. During his May 1 testimony before the HASC, Pete Aldridge, then undersecretary of defense for acquisition, technology, and logistics, revealed that the delivery of Swiss-made parts for the Joint Direct Attack Munition (JDAM) had been halted during the Iraq war because the Swiss government opposed American action. The Pentagon then had to hussle to find an American supplier. The precision guided JDAMs were the main aerial weapon used by U.S. warplanes. To learn that the Pentagon had allowed it to become dependent on foreign parts should be as shocking to the American public as it was to the committee.

Examples like these prove why it is so important to the future of American military power and political independence that the HASC version of the defense-authorization legislation be the version that emerges from the House-Senate conference.

The HASC bill requires that all machine tools used in military production be made in the United States by 2007. It creates a $100 million fund to help firms reconstitute lost manufacturing capabilities vital to national defense. The HASC also mandates that the secretary of defense draw up a list of components and technologies that are critical to the production of U.S. weapon systems, and that the industrial capacity to produce such items be located within the sovereign jurisdiction of the United States. Even if that capacity is owned for foreign interests, as long as it is located here it is subject to American law; including the Defense Production Act, which gives Washington the power to require that in time of war, the American military has top production priority.

When American soldiers, sailors, airmen, and Marines go into combat, putting their lives on the line for their country, they need to feel certain that Washington has done everything in its power to create and protect the economic infrastructure that supplies them with the weapons and other support they need to win their battles and come home safe. It would not do their morale any good to believe that in order for some corporation to make an extra buck, their fate had been entrusted to some outsourced, overseas contractor whose reliability was subject to foreign whim.

As Adam Smith advised in The Wealth of Nations, "It is of importance that the kingdom depend as little as possible upon its neighbors for the manufactures necessary for its defense."

— William R. Hawkins is senior fellow for National Security Studies at the U.S. Business and Industry Council in Washington, DC.

[the gillman@blacklagoon.com]

...Homeland Defense National-security resources should not be manufactured in foreign lands...

Why not? Everyone else's jobs are going.

Americans just have to get used to the idea that we aren't going to be making weapons in America anymore.

Along with everything from buggy whips to computer software.

[LibertyAndJusticeForAll]

Outsourcing of DoD alert!

[Doctor Stochastic]

Perhaps the Government will just have to set up factories to manufacture these things themselves.

[the gillman@blacklagoon.com]

Factories in America?
That's crazy talk!

[harpseal]

More evidence about how the Fre Traitors are harming America

[Calpernia]

Bump!

[LibertyAndJusticeForAll]

The last line of the article quotes the father of free trade, which should cause our free-traitors to at least pause and think a teeny bit before spewing forth with their usual knee-jerk reaction:
As Adam Smith advised in The Wealth of Nations, "It is of importance that the kingdom depend as little as possible upon its neighbors for the manufactures necessary for its defense."

[Ravenstar]

Thanks for the alert. and Bump.

Ravenstar

[Regulator]

The author, William Hawkins, is one of the sharpest minds in Washington. His other book, "Importing Revolution: Open Borders and the Radical Agenda", written in 1994, was prophetic in its predictions.

[AngrySpud]

I do Homeland Security planning in my county health department. When I make purchases, I make sure it's for American-made goods and services. DOD should be doing the same.

[Jeff Head]

More indications that we are on the road to Dragon's Fury or somethingsimilar. it is amazing that peoplem can think this way. I pray that those seeking to revitalize our capabilities prevail.

[Jeff Head]

More indications that we are on the road to Dragon's Fury or something similar. it is amazing that peoplem can think this way. I pray that those seeking to revitalize our capabilities prevail.

[dennisw]

China Surges Economically While America Falters

William R. Hawkins/ Friday, April 18, 2003

My last column argued that while media and popular attention will always focus on dramatic events like wars, it is the day-in, day-out grind of business which over time shifts the balance of power. Commerce can redistribute industrial capacity, capital and technology between rival states, which in turn convert growing national wealth into expanding international power.

In the last few days, more data has been released by U.S. and Chinese sources that further highlight how Beijing continues to surge forward while Washington falters at home despite its recent demonstration of military power in Iraq. Military power is a lagging indicator. Nations need to create an industrial base upon which to build modern combat capabilities. That capability can then persist for years even if its underlying economic foundation starts to crumble. However, once a state starts to lose its economic edge, it becomes ever more difficult and costly to maintain its military advantages.

Last week's column looked at China's steel industry. The pattern seen there of meeting growing demand from domestic production is seen in other areas of heavy industry as well. China has become one of the biggest markets for excavators, with sales of more than 17,000 units during 2002. To meet this demand, the Swedish firm Volvo announced last year the establishment of a wholly-owned production facility in Shanghai's Pudong area. For an investment of around $15 million, Volvo will have a capacity of several thousand units per year with initial production focusing on its newest 20 ton class crawler excavators.

American heavy equipment manufacturer Caterpillar has lobbied hard for detente between Washington and Beijing to create a favorable business climate. Its goals are proclaimed on its corporate website "to be a major supplier of earthmoving and mining equipment, diesel and natural gas engines and electric power generator sets in China. Its strategy for achieving that goal includes establishing a manufacturing base in China. China's goal of quadrupling the gross national output and establishing a 'Socialist market economy' present great opportunity for companies such as Caterpillar that can invest in and sell to the massive infrastructure development driving much of that growth." To that end, Caterpillar Xuzhou Ltd., a joint venture between Caterpillar and Xuzhou Construction Machinery Group, was established "committed to being the leading manufacturer of world-class hydraulic excavators and road building machinery in China." Caterpillar already produces a variety of engines and chassis components in China within other joint ventures.

In an interview with Barron's published April 9, General Motors retiring chairman John F. Smith, Jr. said Western automotive-technology companies will be looking for Chinese partners to expand operations in the Chinese vehicle market, as well as to meet demand from U.S., European, and Japanese auto makers for lower-cost vehicle parts. GM, Ford and other large auto makers have outlined ambitious goals to purchase billions of dollars worth of vehicle components from China.

One of the main drivers of Chinese growth is the demand for cars, just as was the case in the United States a half century ago. Almost 440,000 cars rolled off Chinese production lines in the first quarter of this year, as manufacturers raced to keep up with sales that expanded by 56 per cent to 1.13 million units last year. Part of Beijing's desire to increase domestic steel production has been to provide inputs to the auto industry.

Adherents of the "big emerging market" thesis popular among some American "free trade" economists and Clinton administration officials in the 1990s, had argued that the decline in vehicle import tariffs required of Beijing under its World Trade Organization accession agreement would mean a flow of imported cars to China. Instead, Ford, Mercedes Benz and other major foreign automakers are expanding production in China to meet the demand.

This pattern confirms the view of Professor Robert S. Ross of Boston College that, "China, unlike Japan, has the natural resources to sustain economic development and strategic autonomy .... Chinese enterprises, following market forces, will be able to move further into China's interior to exploit an inexhaustible, inexpensive and relatively reliable labor force." At the seventh investment and trade fair held in early April at Xi'an, capital of the western Shaanxi Province, 40 of the world's top 500 companies from the United States, France, Germany and Japan attended. Contracts for over $400 million were signed.

While economic stagnation afflicts much of the world, Chinese industrial output has maintained strong growth for 14 months in a row, and in the first two months of this year, the industrial added value increased 17.5 per cent over the same period last year, a record high since 1996.

In contrast, the Federal Reserve reported April 15 that total output from U.S. manufacturers fell again in February and March, continuing three years of decline. The current downturn - despite increased demand growth - is similar to the disastrous period from 1979-1982 that was the worst since the 1930s. American demand is being met increasingly by imported manufactures.

China's foreign trade displayed strong growth in the first quarter, as the export of machinery and electronics products, which account for half of China's total exports, increased 42.1 per cent in the first two months, 20 percentage points higher than the same period last year. The export of new and high-tech products increased 51.8 per cent.

For the United States, the Commerce Department reported on April 16 that for 2002, the U.S. current-account deficit increased by $110.0 billion, to $503.4 billion total, mostly due to adverse trends in trade. Exports of goods were down $36.3 billion in 2002 compared to 2001, while total imports were up $51 billion. There is no way to spin such bad news on both sides of the trade ledger.

Washington's obsession with trade in the 1990s has failed to advance the nation's position in the world system, and there is not a single set of trade negotiations now in progress that can reasonably offer any change in current trends. Policy must now shift to the domestic economy by redirecting the efforts of America firms from developing rival industries overseas to reviving capabilities at home. It will take direct presidential leadership on a par with what has been shown in other areas foreign policy to accomplish this goal, but it must be done if the United States is to hold its lead as the world's most powerful nation. William R. Hawkins--- is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.

---

[LibertyAndJusticeForAll]

I missed this article of 2 months ago! Thank You! Why on earth are we STILL helping China with foreign aid, in the form of OPIC, etc.
The last line of the article you just posted is for all the free-traitors:
"Washington's obsession with trade in the 1990s has failed to advance the nation's position in the world system, and there is not a single set of trade negotiations now in progress that can reasonably offer any change in current trends. Policy must now shift to the domestic economy by redirecting the efforts of America firms from developing rival industries overseas to reviving capabilities at home. It will take direct presidential leadership on a par with what has been shown in other areas foreign policy to accomplish this goal, but it must be done if the United States is to hold its lead as the world's most powerful nation."
I think I'll e-mail this exact quote to the President.

[lelio]

American heavy equipment manufacturer Caterpillar has lobbied hard for detente between Washington and Beijing to create a favorable business climate.

Why should it? What benefit does this have for America? It looks like all the money will go into Caterpillar's executive pay packages.

[hedgetrimmer]

Bumping...

[maui_hawaii]

some senators favor outsourcing defense projects to foreign corporations.

I want a list of names.

If its public policy then it should be made public, and there should be public debate on it. These SOBs have an opinion about everything except for things they want done in private. Then no one has an opinion.

[Paul Ross]

People who get their news about the state of U.S. national security from television reports showing fighters launching from aircraft carriers and tanks rolling down the streets of Baghdad probably have a sanguine view of American power. What is not so readily seen is that beneath the military muscle is a deteriorating manufacturing sector that weakens the ability of the United States to remain the unchallenged superpower in the future. The defense cuts of the 1990s, a dismal era which HASC chairman Duncan Hunter (R., Calif.) calls "the procurement holiday" devastated many of the industries that supply the U.S. military. Many firms dropped out the business of building parts for weapons systems due to lack of work. Many were bought up by foreign interests who wanted U.S. technology and know-how to add to their own industrial capabilities in competition with the surviving American firms. Though the Committee on Foreign Investment in the United States (CFIUS) is supposed to police the loss of American defense-related firms to overseas takeovers, it rarely intervenes. Though charged with protecting national security, CFIUS is chaired by the treasury — and the treasury's top concern is attracting back to American shores the dollars lost due to the nation's massive trade deficit. If foreigners won't buy American products, they will be offered American companies to purchase.

[Paul Ross]

Ping