Reshoring critical manufacturing production and strengthening our industrial base is essential to shoring up our defense, according to a new report.
The Defense Department is out with a new report that warns that while America’s defense capabilities remain strong, supply chain gaps and deindustrialization mean that the United States could face “a growing and likely permanent national security deficit.”
The 184-page Fiscal Year 2020 Industrial Capabilities Report to Congress outlines how America is falling behind in many advanced technologies, in part because we simply do not make enough of the things we need in the United States. Domestic supply chains in microelectronics, space, cyber, nuclear and hypersonics, for example, are not keeping up with what is being produced by China.
Simply put, America is no longer flexing its manufacturing might in a way that gained it the moniker of “Arsenal of Democracy.”
“America’s defense industrial base was once the wonder of the free world, constituting a so-called ‘military-industrial complex’ that, regardless of criticism, was the model for, and envy of, every other country – and the mainstay of peace and freedom for two generations after World War II,” the report reads. “Today, however, that base faces problems that necessitate continued and accelerated national focus over the coming decade, and that cannot be solved by assuming that advanced technologies like autonomous systems and artificial intelligence (AI) and 5G and quantum will wave those challenges away, and magically preserve American leadership. On the contrary, those advanced technologies themselves rely on a manufacturing complex whose capability and capacity will have to be trusted and secure to protect the Pentagon’s most vital supply chains.”
Over the past five decades, there has been a steady deindustrialization of the United States. In the 1960s, 40 percent of the gross domestic product (GDP) came from manufacturing. Today, manufacturing is a paltry 12 percent of the GDP. Millions of manufacturing jobs have been lost.
The number of defense contractors supplying America’s military has also greatly decreased over the past 20 years, while China has seen an eye-opening increase in its military spending and manufacturers, the report notes. Meanwhile, China has built the world’s largest naval fleet, with 350 vessels, while the U.S. Navy’s Battle Force consists of 297 ships.
China’s shipbuilders also enjoy the advantage of being part of the world’s largest national steel producer and user. The United States is fourth, after China, India and Japan.
The report specifically indicates how important it is for America to have a strong and prolific steel industry, capable of supplying our Naval Fleet in short order. As we have learned from the COVID-19 pandemic, America should have supply chains intact to manufacture immediately without lag time in case a sudden defense and military response is needed.
Ellen M. Lord, who served as the undersecretary of Defense for Acquisition and Sustainability in the Trump administration, expressed her concerns about America’s military supply chain during a recent interview with the Hudson Institute.
“Over a period of years, we have offshored many, many sources of supply,” she said. “It’s not for one reason; it’s for a variety of reasons, whether it be regulations, whether it be labor costs, whether it be government support of different industries.”
Lord said the U.S. must reshore more of its industrial base by bringing it back to the U.S. and U.S. allies. Many of you may have read about these concerns in this space since 2013, warned most diligently by Brigadier General John Adams (U.S. Army, Ret.).
Even the decrease in smaller manufacturing operations hurts our defense capabilities. The report notes that the machine tool industry “laid the groundwork for the mobilization miracle of World War II.” But of the world’s top 21 machine tool makers today, only two are American.
“America has allowed its machine tool sector to turn from a national asset into a national security vulnerability,” the report reads.
There are other examples of areas in which the U.S. once led production but unwisely moved production overseas. The production of semiconductors and microelectronics is one example.
Three decades ago, more than one-third of all microchips produced worldwide “came out of the American companies that gave Silicon Valley its name.” Now just 12 percent of chips are produced stateside; most production happens in Asia, and China is projected to dominate global semiconductor production by 2030.
“Beijing is already in a position, through its geographic and political position, to threaten virtually our entire supply chain through theft, corruption of microelectronic products, disruption of supply, coercion, and other measures even short of military action,” the report warns. “This leaves American deterrence and critical warfighting capabilities at the mercy of our main strategic competitor.”
The report stresses the development of a modern manufacturing and engineering workforce along with a more robust research and development base.
“Ultimately, the most important asset our defense industrial base possesses isn’t machines or facilities, but people. America needs an ambitious
effort, like the Eisenhower National Defense Education Act, to support education and training for manufacturing skills required to meet DoD
and wider U.S. requirements,” the report reads.
Declines in both science, technology, engineering and mathematics (STEM) education and industrial jobs hurt the ability of the defense industrial base to innovate, Lord said.
“We want to make sure that we have modern manufacturing and engineering expertise,” she said. “We do not have nearly the number of scientists and engineers as China has. We need to make sure that we develop our talent to be able to leverage on these critical areas.”
The Defense Department report outlines a four-part program that will keep America at the forefront of national security protection.
First, the United States must reshore our defense industrial base and supply chains to the U.S. and allies, starting with microelectronics. It’s also imperative that we reshore our shipbuilding base.
Second, the U.S. needs to build a modern manufacturing and engineering workforce and research and development base.
Third, the U.S. needs to continue to modernize the defense acquisition process to fit 21st century realities.
And finally, our nation needs to find new ways to partner private sector innovation with public sector resources and demand.
All these steps will be necessary to create a robust, resilient, secure and innovative industrial base, according to the report, which you can read in full here.