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.
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.