The ability of the United States to produce the necessary inventory for the Department of Defense is a key, if often overlooked, feature of its national security. That’s why the executive order that President Trump issued last Friday is so important.
The order directs a constellation of agencies, led by the Department of Defense, to study the condition of the defense industrial base, identify weaknesses, and recommend legislative or other measures to strengthen the supply chains that both produce the platforms needed for the force and protect the Department’s ability to sustain that force.
It’s a major problem, in part because, as the order notes, the United States has lost 60,000 factories and a number of manufacturing companies in the last 15 years. Whatever the effect on total manufacturing as a percentage of GDP, the industrial base is thinner and less resilient than it was.
The effect has been particularly pronounced in the defense industry, because there is only one consistent customer there, and that customer has, for a long time, not been a robust purchaser. The government has underfunded procurement for 20 years. Total defense spending has been, for most of that time, too low, and the department has consistently sacrificed its modernization programs, and reduced the number of service personnel, in order to maintain the readiness of the force that it has.
The defense sequester has exacerbated the problem. Not only has it yanked the defense topline at least $100 billion below what it is needed, but the imposition of the sequester, and its continuation in the face of the disastrous consequences it has caused, have created intense pressure on the industrial base to downsize.
That makes it hard for business leaders today to justify investing in defense manufacturing. There is a reason the United States has lost half of its public shipyards in the last 20 years.
To take another example, Boeing is one of two prime contractors that can produce tactical military fighter aircraft. The United States now has exactly one operational fifth-generation fighter line (the F-35), and there are periodically calls to shut that line down. It wouldn’t be unusual if the line did close; in the past, the government has terminated a number of modernization programs without buying anything near the stated requirement of platforms.
Boeing is not just a defense contractor. It also has a commercial airline business, and that side of the business is doing very well. Given that Boeing has a responsibility to its shareholders and employees, that the sequester is still in force, and that the trend line of defense procurement spending has been low for a long time, in which side of the business is Boeing likely to invest?
The weakness of the defense industrial base has not gone unnoticed in the past. There is an office in the Office of the Secretary of Defense that assesses the problem regularly. The Pentagon, and the House and Senate Armed Services Committees, spread some money around just to sustain certain vital supply lines. I remember, for example, working with then Senator Joe Lieberman ten years ago to put some funding into General Dynamics just to make sure that the United States retained the capacity to design nuclear submarines.
But the Trump order is the highest level and most comprehensive such directive since the Eisenhower years. It is evidence that the administration is taking a serious problem seriously, and it should produce a plan to address the shortfalls in the industrial base. But that plan will be just a plan unless there is money to operationalize it — and that means the budget caps, which should never have been on, must come off.