DEFENDING THE FOUNDATIONS OF DEFENSE
by William R. Hawkins

I had the opportunity to speak at the 2nd Annual Navy-Industry R&D Partnership Conference, held in Washington August 13. The stated purpose of the conference was to help the private sector to better understand Navy technology and equipment needs. The Navy wants private firms, including non-traditional businesses with no prior defense contracting experience, to think about doing business with the Navy.

The Navy needs "new blood" in its industrial base.  Commercial technology is advancing much faster than military-funded technology.  New consumer products are designed, developed, and brought to market far faster than is military hardware.  The slow pace of weapons procurement guarantees that much of the supporting and implementing technology behind cutting edge military systems is obsolete before the first units enter service.  Furthermore, with warships expected to remain in the fleet for 30-50 years, and even aircraft being expected to fly for 20 years (the average age of a Navy plane today is 18.5 years), the military fears being left far behind if they cannot find ways to more rapidly incorporate new ideas into planned and existing forces.

Unfortunately, the industrial base withered during the "procurement holiday" of the 1990s when the Clinton Administration decided to simply coast on the work done by the Reagan Administration.  Chief of Naval Operations Admiral Vern Clark has complained that the Navy has had to seek out manufacturers who can build key replacement components from scratch (greatly driving up costs) because the original firm is no longer in the business.  It is difficult, however, to entice new firms to invest their time, effort, and capital into building substantial new links with the Pentagon without some assurance that the government is serious about a long-term reconstitution of the nation's military strength.

Take, for example, the shipbuilding industry which, along with its networks of suppliers, constitutes the industrial base of the Navy.  This industry has lost 40% of its workforce since the 1980s, and is operating today at only half-capacity.  The supplier bases has shrunk, in some case down to single sources, because for most of the 1990s, the Navy ordered only 6 ships a year.

Ten new ships per year are needed to maintain the current fleet of 315 ships, which means that the fleet will continue to shrink.  In testimony before the House Armed Services Subcommittee on Military Procurement in early 2000, Vice-Admiral Conrad Lautenbacher, Deputy Chief of Naval Operations for Warfare Requirements, stated that a 350-ship fleet is needed to meet the country's major war fighting requirements.  This level would require building 14 ships a year.  Yet, despite his verbal commitments during his election campaign, President George W. Bush is not expected to present a defense budget that comes anywhere close to this construction rate.

In the face of inadequate shipbuilding effort, the Navy's main concern should be not to make matters any worse.  The first mistake to avoid is any movement towards opening naval ship construction to foreign yards, or giving foreign firms a larger piece of the pie, either as subcontractors or through their take-overs of American firms.  The United States needs to control its own defense industrial base.  Driving American firms to the wall, then inviting in foreign firms to beat up on the survivors would be reprehensible and irresponsible.

We all know horror stories about the unreliability of foreign providers during the Gulf War.  The United States had to charter foreign-flagged ships to carry about half the cargo deliveries that supported its war effort.  Some foreign ships refused to enter the Gulf because they feared attack ? a problem that will only get worse as anti-ship missiles, mines, ballistic missiles and "weapons of mass destruction" proliferate.  Japan, the world's second largest shipbuilding nation and an ally of the United States, refused to allow its ships to carry weapons or war supplies ? only food and medicine.  These problems slowed the buildup of American forces for the counterattack to liberate Kuwait.  Iraq was foolish enough to give us the extra time, but a future enemy may not.

There may also be policy differences that will make foreign suppliers unreliable.  The Bush Administration's offer to provide Taiwan with eight diesel submarines has been stalled because the White House has not been able to find a foreign builder willing to provide subs to Taiwan.  This is a critical issue for the United States, as the only area where China has a marked conventional combat edge over Taiwan is in underwater warfare.  The Dutch make some of the best diesel subs the world, but they immediately declared that, because they have a different China policy (one more favorable to Beijing), they would not cooperate with the United States on this issue.  Their refusal to cooperate proves once again that if you cannot produce something yourself, you cannot make policy about it.

The Defense Department must keep a closer eye on "globalization" and serve as the guardian of the nation's industrial base in the battle with other government agencies.  The defense industrial base is just not another part of the economy. The sentiment denoted by the silly statement attributed to Michael Boskin, Chairman of the Council of Economic Advisors in the early 1980s,  "computer chips, potato chips, what's the difference?" is, unfortunately, still alive and well. A recent paper by a civilian professor at the National Defense University (but published by the Cato Institute, one of those well-funded groups working against the very concept of thinking in terms of national security) argued against a more independent energy policy by asking whether there was any real difference between oil and coffee!

If either of these gentlemen were ever responsible for guiding a missile with potato chips or fueling a warship with coffee, the differences might occur to them.  Refusing to think seriously about issues does not mean that problems go away ? only that they will appear as surprises and be that much more devastating as no preparations have been made to deal with them.

Because so many firms in the defense industry do not produce only (or even primarily) for the military, it is quite possible that foreign commercial competition could put them out of business.  Thus, the DOD needs to monitor trade negotiations and play an active part in designing U.S. strategy at places like the upcoming World Trade Organization conference this November in Qatar.

The survival of the American defense industrial base cannot be left to the not-so-tender mercies of the U.S. Trade Representative or the Treasury Department, whose concerns are not national security and whose constituency is composed of transnational corporate managers exhibiting at best a diminishing sense of national loyalty.  There must be located somewhere in the government a strong force to protect the economic sinews of U.S. power.  Such a force will find substantial popular support.

---