This is the sort of thing that should keep you up at night.
At the start of the Korean War, the United States found itself low on the supplies it needed to help South Korea beat back an invasion by North Korea. But this was 1950 — and the heavily industrialized United States quickly ramped up production and helped push back the invasion, leading to the Armistice that remains in place today.
That is an oversimplified telling of a very complicated conflict, of course, but the point is that the United States had a robust defense industrial base in place that allowed it move to a war footing relatively quickly.
That defense industrial base is long gone — and it is leaving the United States not only unable to properly respond to conflicts already happening around the globe, but grossly unprepared should a direct fight with China or another adversary occur.
A new report from commercial data company Govini finds that “U.S. domestic production capacity is a shriveled shadow of its former self,” as “[c]rucial categories of industry for U.S. national defense are no longer built in any of the 50 states.” Furthermore, Govini predicts that “just 25 well-constructed attacks, using any of a variety of means, an adversarial military planner could cripple much of America’s manufacturing apparatus for producing advanced weapons.”
It’s an alarming analysis, sure, but it isn’t unexpected. The Alliance for American Manufacturing came up with similar conclusions back in 2013, when we commissioned the report ReMaking American Security: Supply Chain Vulnerabilities & National Security Risks Across the U.S. Defense Industrial Base. In that report, the firm Guardian Six identified a number of strategic areas in which the U.S. was overly reliant on imports for its military needs, from components needed to build everything from night vision googles and fighter jets to steel armor plate for tanks and components like lithium ion batteries.
More than a decade later, Govini has conducted a similar look at the readiness of the U.S. defense industrial base, and its findings are alarming, to say the least. In many cases, the problem has gotten worse since 2013:
While China cranks out advanced weapons at a prodigious rate, it has also embedded itself in the supply chains for vital components of U.S. military platforms and weapons systems, creating U.S. reliance on the Chinese industrial base. Data from Govini’s Ark.ai, the software system for defense acquisition, shows that between 2005 and 2020, the level of Chinese suppliers in the U.S. supply chains quadrupled. In categories such as electronics, industrial equipment, and transportation, China’s expansion is even more pronounced. Between 2014 and 2022, U.S. dependence on China for electronics increased by 600%
Govini offers several examples of ways in which the U.S. Department of Defense (DoD) is reliant on China. Take semiconductors. While the United States is spending billions to ramp up production of semiconductors, “more than 40% of the semiconductors that sustain DoD weapons systems and infrastructure depend on Chinese suppliers,” according to the report. And “Chinese semiconductor suppliers are inextricably linked to vital DoD weapons, such as the B-2 Bomber and Patriot air-defense missile.”
Part of the reason for the problem, Govini argues, is that the current government structure prioritizes “just in time” inventory practices as a way to, in theory, cut costs. But that effectively penalizes companies that would otherwise seek to invest in domestic facilities and recruit and train the specialized workforce needed to manufacture these critical supplies.
“The Pentagon’s ‘lowest price technically acceptable’ ethos, i.e., spending not a penny more than is necessary to meet the most basic immediate requirements, has brought damaging secondary effects,” the report argues. “Military manufacturing cannot quickly be turned on and off at will. Once DoD orders decline, defense manufacturers necessarily close production lines or reduce them to veritable runts. … A few mega-sized prime defense contractors sit atop a supply chain pyramid of tens of thousands of mid-to-small businesses. When the first tier curtails throughput, orders to smaller suppliers dry up. Some businesses may entirely close.”
Govini offers a number of strategies to get things back on track, including ramping up the purchases of critical arms and platforms to spur demand; incentivizing production; and creating an open-source office within DOD to “detail China’s entire defense industrial base.”
We’d add a few recommendations of our own. As the U.S. invests taxpayer money to incentivize production in critical areas, it must ensure Buy America provisions are applied to reinforce the overall goal of boosting domestic production. Otherwise, we may end up spending taxpayer money on imports, which does nothing to fix our depleted industrial base.
At the same time, strong trade enforcement mechanisms are needed to ensure that China and other potential adversaries are not able to penetrate our industrial base with dumped or unfairly traded goods. It is important to remember that part of China’s military strategy is to have the United States be reliant on Chinese products for the things we need. That can no longer continue.
Read the full Govini report, Numbers Matter: Defense Acquisition, U.S. Production Capacity, and Detering China.