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The U.S. Defense Industrial Base:  Deterrence In Decline
AUTHOR Major Matt R. Morrison, USMC
CSC 1990
SUBJECT AREA Professional Military Education (PME)
                        EXECUTIVE SUMMARY
TITLE:  THE U.S. DEFENSE INDUSTRIAL BASE:  DETERRENCE IN
DECLINE
THESIS:  The U.S. defense industrial base, a key ingredient to
deterrence and national security, is deteriotating.
ISSUE:  Once the industrial base and economic might of the U.S.
was unsurpassed.  However, the industrial base has slipped from
its pre-eminent status.  The Department of Defense (DoD) has
noticed this slippage and is concerned with its impact on the
ability of the defense industrial base to provide essential
support for the military in the event of a crisis.  The fact
that the DoD purchases items from more than a quarter million
firms, within two hundred fifteen distinct industries,
indicates that the vitality of the defense industrial base is
undeniably linked to the health of the U.S. industrial base.  A
strong defense industrial base not only provides the military
might to wage war but the capability it represents also helps
deter aggression.  A policy of deterrence has been the defense
policy of the U.S. since the end of World War II.
Consequently, our deterrence strategy, and ultimately the
national security, depend upon a strong defense industrial
base.  A number of problems have been identified with the
defense industrial base.  A decline in the number of DoD
suppliers, a lack of surge capability, a dependence on foreign
sources of supply, and a low productivity growth rate in some
important industries provide examples of the types of current
problems with the defense industrial base.  Initiatives to
correct some of the problems have been taken by the DoD and by
other agencies within the government.  However, a
comprehensive, integrated approach to solving the problems does
not seem to exist.
CONCLUSION:  Recent events in the world have not reduced the
importance of a strong defense industrial base.  Rather, the
reduction of nuclear arms, and potential reduction of U.S. and
Soviet conventional forces, will increase our dependence upon
mobilization of reserve forces and the industrial base to meet
crises.  Our leaders must consider this fact as defense funding
is cut in the future; the defense industrial base must not be
allowed to slide further.  So too our leaders must consider
that the problem is a complicated issue, recovery from which
requires action in many areas in government and the private
sector.  The DoD cannot do it alone.  A sustained, coordinated
effort is required for recovery from a problem that has built
over a number of years.
THE DEFENSE INDUSTRIAL BASE: DETERRENCE IN DECLINE
                        OUTLINE
Thesis Statement:    The U.S. defense industrial base,  a key
ingredient to deterrence and national security, is deteriotating.
I.   Importance of a strong U.S. industrial base
     A. Effect on vitality of U.S. defense industrial base
     B. Defense industrial base importance to national security
II.  What is the defense industrial base?
     A. Definition
     B. Integration with the larger U.S. industrial base
III. The history of industrial preparedness in the U.S.
     A. World War I
     B. World War II
     C. Korea
     D. Vietnam
IV.  Current problems with the defense industrial base
     A. As cited in general by the Secretary of Defense in 1989
     B. As cited by the General Accounting Office (GAO) in 1985
         1.  Declining numbers of suppliers
         2.  Lack of surge capability
         3.  Dependence on foreign sources of supply
         4.  Low productivity growth rates
         5.  No comprehensive plans addressing industrial base
             preparedness issues
     C. Elaboration on GAOs concerns
     D. Other current defense industrial base concerns
         1.  Lack of U.S. industrial competitiveness
         2.  Foreign acquisition of U.S. firms
         3.  Slippage of U.S. technological advantage
V.   Examples of government initiatives to improve the defense
     industrial base
     A. Graduated Mobilization Response concept
     B. North American Defense Industrial Base Organization
VI.  Examples of DoD initiatives to improve the defense
industrial base
     A. New Deputy Under Secretary of Defense office established
    B. Defense Manufacturing Board
     C. Total Quality Management program
     D. Defense Industrial Network
     E. Joint Industrial Mobilization Planning Process
VII. Conclusions
     A. Strong defense industrial base is even more important in
        the changing world today
     B. Recovery of strong capability will require focused effort
        and time
THE U.S. DEFENSE INDUSTRIAL BASE:  DETERRENCE IN DECLINE
     The American public, and others in the world, have been
witnessing a decline in the economic might and industrial
strength of the United States (U.S.).  At a macro level in the
U.S., this is demonstrated by increasing trade imbalances with
developing nations, an out-of-control budget deficit, a
devaluation of the dollar, and a shift from a manufacturing
oriented to a service based economy.  At a lower level, the
U.S. consumer sees the effects of this economic shift in the
increasing amount of foreign products he purchases, most of
which he believes provide more value for the money or are
simply superior in quality to domestic products.
     The Department of Defense (DoD) has also noticed this
slippage of economic and industrial strength.  The DoD is
interested with the impact of the slide on the ability of the
country to provide essential support for our military,
particularly in the event of a conflict.  The DoD, as a matter
of fact, has been concerned for the last decade.  The Defense
Science Board first raised a concern in a 1980 industrial
responsiveness report.  The board concluded in a report about a
year ago that the industrial and technology base has
deteriorated further. (1:13)  Quite simply, the strength of the
defense industrial base is derived from the strength of the
U.S. industrial base, and there-in lies the concern.  The U.S.
defense industrial base, a key ingredient to deterrence and
national security, is deteriotating.
     Why is the DoD concerned with the vitality and
technological leadership of the U.S. industrial base?  Simply
stated, a strong defense industrial base deters aggression, and
in the absence of deterrence it provides the means to wage war
and defeat our enemies.  The National Security Strategy of the
United States specifies that the defense policy since the end
of World War II has been aimed at deterring aggression against
both the United States and its allies.  This deterrence policy
is the military strategy against both conventional and nuclear
aggression.  Deterrence presumably works by persuading
potential adversaries that the costs of aggression will be
outweighed by any probable gains. (16:13)   An effective
mobilization base, of both manpower and industrial resources,
is not only essential to support our military capabilities, but
also in providing a clear means for the United States to
communicate resolve to potential adversaries in periods of
tension or crisis.  The maintenance of a broad, responsive,
technologically superior industrial base is fundamental to the
United States defense policy. (16:21)  The deterrence strategy,
and ultimately the national security, depend upon the continued
productive capacity of the defense industrial base.
     What is the defense industrial base?  It can be defined as
"that part of the total privately-owned and Government-owned
industrial production in the U.S. and Canada that is or should
be made available in an emergency for the manufacture of items
required by the U.S. Armed Forces and selected allies." (4:3-5)
Within the defense industrial base there are three categories
of firms producing supplies and equipment for the DoD.  The
government owns and operates some facilities.  These facilities
produce products that are somewhat specialized and for which
there is not a commercial application, i.e. munitions,
missiles, etc.  A government-owned and contractor-operated
facility represents a second category of supplier.  There are
relatively few government-owned firms however, as current
policy dictates that a minimum number of facilities be
government-owned.  The third category, the largest supplier to
the DoD, consists of contractor-owned and operated facilities.
     As previously stated, the defense industrial base receives
its strength from the broader U.S. national industrial base.
Military and civilian demands tap the same industries and
production inputs such as capital, technology, scientific and
skilled manpower, and management.  Consequently, the nation's
capability to satisfy military needs rests upon the same
foundation as its ability to produce goods for the civilian
sector. (17:37)  The fact that the DoD purchases manufactured
items from more than a quarter million firms representing more
than two hundred fifteen distinct industries, further
demonstrates that the defense industrial base is inseparable
from the U.S. industrial base as a whole. (1:13)
     Prior to turning to specific problems regarding the
defense industrial base, it is useful to briefly examine the
history of military industrial preparedness for major conflicts
in this century.  In World War I, the U.S. was basically
unprepared to support the effort with weapons and supplies due
to a lack of adequate prior planning.  Consequently, U.S.
troops were mainly equipped with British and French weapons.
The overall industrial mobilization effort did not become well
organized until the end of the war, at which time U.S. industry
was expanding rapidly.  However, the overall effort was
generally disappointing.  The military had not anticipated the
requirements of modern warfare, industry was not ready to
rapidly surge, and no good national control mechanism was in
effect. (5:4)
     Several years prior to the U.S. entry into World War II,
U.S. allies ordered large quantities of U.S. war supplies.  In
effect, this gave U.S. industrial mobilization a head start
prior to entry into the war.  This proved beneficial as
industrial preparedness again had not been given much
attention.  A review of the numbers of weapons the U.S was able
to produce is truly impressive.  However, even with the early
warning of war, and the demand to supply the allies with
weapons, U.S. industry had problems expanding output of war
materiels.  It took one and one-half to three and one-half
years to reach full-scale production and peak production of
munitions was not reached until early 1944, nearly five years
after the increased need had begun. (5:7)
     The country did not mobilize for the Korean war.  Rather,
the U.S. conducted a limited mobilization designed for the long
haul.  Therefore, industrial preparedness measures were
designed to address the threat of a third world war, not simply
the Korean conflict.  The industrial expansion was greatly
aided by assets remaining from the second World War.
Notwithstanding those residual assets, the U.S. had some
problems with industrial expansion.  Over two years after the
beginning of the war, two-thirds of the number of major items
ordered, i.e. aircraft, tanks, ammunition, etc., had still not
been produced.  A new concept of industrial preparedness, the
mobilization base, evolved from the experience of the war,
however. (5:10 to 12)
     During the Vietnam War, the country again did not
mobilize.  The demands on the industrial base were not really
tested because the U.S. controlled the escalation of
participation in the war. (5:15)
     As recent history indicates, traditionally the U.S.
industrial base has been largely ignored in times of peace and
geared up as rapidly as possible during a crisis.  The U.S.,
for the most part, has been successful with this reactive
approach.  However, those who cite the performance of the U.S.
industrial base during World War II and the Korean War as
examples of its responsiveness under pressure must consider the
conditions which aided its responsiveness.  Early warning
during World War II, and surplus assets during Korea, assisted
this responsiveness, and are conditions that do not apply
today.  The industrial base too, is not what it was.
     The current condition of the defense industrial base of
the United States, as viewed by the DoD, was probably best
expressed by the Secretary of Defense, Frank C. Carlucci, in
his annual report to Congress on January 17, 1989, when he
stated:
    In the 1980s we are witnessing an erosion in this
    critical defense foundation [industrial machines
    Today our once self-sufficient military supply base has
    become vulnerable.  We have become dependent on
    offshore suppliers for critical components of our
    weapons systems.  Our technological superiority has
    declined and in some cases vanished.  Acquisition
    policy complexities and instability, coupled with
    changes in trade, tax, environmental protection,
    socioeconomic and foreign policies, have decreased
    defense-industry profits, risk-taking and technological
    advance.  The price-earnings ratios on military company
    stocks are at a 25-year low.  Many military contractors
    are not willing to take the increased financial risk
    and are abandoning the defense business altogether.
    Many others are protecting short-term results by
    reducing their investment in new technologies.  These
    are serious challenges which must be addressed now.
    Our strategy of deterrence and ultimately our national
    security depend upon the continued productive
    capability of our industrial base. (14:119)
     What are some of the problems facing the defense
industrial base?  A good summary was provided by a 1985 General
Accounting Office (GAO) study which listed the following five
concerns: (13:12 to 16)
     1. The current defense industrial base is unbalanced.
This issue concerned the severe problems at the subcontractor
and supplier, specifically the declining number of those
suppliers.
     2. The current industrial base is incapable of surging
production rates in a timely fashion.
     3. The U.S. has become increasingly dependent on foreign
sources of supply.
     4. Productivity growth rates for the U.S. manufacturing
sector are among the lowest in the free world, with
productivity growth for the defense sector lower than the
manufacturing sector.
     5. There are no current programs to address the efficient
use of industrial resources to support the peacetime defense
program.  There are no comprehensive plans to address
industrial base preparedness issues.
     Elaboration on those five concerns will provide further
insight into the deterioration of the defense industrial base.
The first GAO issue, the declining number of U.S. firms
conducting business with the DoD, signals a decline in the
power of the U.S. defense industrial base.  A report issued by
the Center for Strategic and International Studies (CSIS) in
early 1989 entitled  Deterrence in Decay-The Future of the U.S.
Industrial Base found that the number of U.S. companies doing
business with the DoD had declined sharply.  The report
indicated that in 1987 there were about eighty thousand less
firms selling to DoD than in 1982.  The report did not specify
how many of the firms which stopped doing business with the DoD
simply merged with other defense companies, or whether the
number of firms in 1987 was a more optimum, efficient number
than in 1982 (qualitative ability versus quantitative
capacity).  However, the CSIS found that while eighty thousand
firms dropped out of defense, an increase of about thirty
thousand firms conducting business in the U.S. occurred.  This
seems to indicate that the commercial sector of the economy was
growing while the defense sector was shrinking. (7:10)
     The second GAO issue, the ability of the industrial base
to adequately surge has been a concern for some time.  A number
of factors have contributed to this situation.  Military
weapons have become so dependent on technology that large
quantities are not only difficult to produce in a short period
but expeditious startup and production is more difficult.  Long
leadtime contracts and increased dependence upon foreign
sources for supplies and materiels have also contributed to the
sluggish expansion potential of the industrial base.
     The lack of ability to rapidly expand production was
recently commented upon by two officers familiar with the
situation.  General Robert T. Marsh, retired Commander of the
Air Force Systems Command and chairman of the Air Force
Association's Science and Technology Committee stated in 1988
that:
    The defense industry has no real capacity for surge
    production.  About all that's possible is to up your
    rates a little bit for things that are already in the
    pipeline, and then wait for eighteen months to two
    years to build up.  The nation needs an industrial base
    that can respond much faster than that to a call for
    mobilization or surge production.  (2:81)
General Charles C. McDonald, Commander, Air Force Logistics
Command, recently validated General Marsh's opinion in an
interview in January 1990.  When questioned about Air Force
sustainability and spares he stated that, "in the area of
spares, typically the leadtime is two to two-and-a-half years."
(6:76)
     Recent war game simulations also indicate problems with
industrial base capacity and surge capability.  One such
example is Global War Game 39, conducted by the Naval War
College during July, 1989.  Several comments in the summary
indicated the problems encountered during the exercise.
    A disturbing aspect of game play was the surprise, even
    shock, expressed by many senior political and military
    declsionmakers (remembering back to past times) at the
    extent of the decline in U.S. industrial capacity and
    the long timelines required for even limited
    amelioration of sustainability problems. (10:1, Section
    III)
    The game amply illustrated that sustainability was and
    is unarguably a very serious concern, even in a limited
    conflict. Dispute over the details--are there 30 or 60
    or even 100 days of supply?--is beside the point.  The
    industrial base clearly is not what it was at the end
    of World War II.  Serious thought needs to be continued
    on how to address the present and future shortfalls in
    sustainability and industrial mobilization. (10:27,
    Section III)
     The decline of certain basic manufacturing industries
critical to defense has potentially threatened the ability of
U.S. industry to respond to national emergencies.  Industries
in areas such as machine tools, precision optics, and bearings
are examples. (3:33)  The decline of basic metalworking
industries, without which it is impossible to produce realistic
volumes of aircraft, naval vessels, trucks and ammunition,
provides another example of industrial base decline directly
impacting upon the defense industrial base.
     Regarding GAOs third concern, one reason for increased
dependence on foreign sources of supply is the decline of U.S.
industries important to defense.  Their decline normally causes
increased dependence upon foreign sources of supply.  The
machine tool industry is an example.  As a matter of
background, machine tools manufacture the machines that produce
both equipment for civilian use and defense related equipment,
i.e. tanks, missiles, vehicles, planes, etc.  It is estimated
that companies in the U.S. have lost two-thirds of the domestic
market for machining centers since about 1973.  The U.S.
currently has less than half the share of the world machine
tool market that it enjoyed in 1980. (1:13)  Additionally, over
one-half of the computer-controlled machining centers sold in
the U.S. in the middle of the last decade were imported from
Japan.  The fact that Japan's manufacturing base is 99 percent
dependent upon imported resources places the U.S. in an even
more tenuous situation in this area. (13:13)  While Japan may
be willing to provide the U.S. with these items, circumstances
arising beyond their control may preclude their ability to do
so in a crisis situation.
     The dependence of the U.S. upon foreign suppliers is most
notable at the weapon system component level, as opposed to the
finished system level.  However, there are some notable
deficiencies in the ability of the U.S. industrial base to
produce larger items as well.  The fact that we no longer have
the capability of casting tank hulls or turrets in this country
is one example. (2:81)
     The extent to which U.S. manufacturers depend on foreign
suppliers is illustrated in the events that took place after
Toshiba and Kongsberg sold naval technology to the Soviet Union
in 1986.  The immediate reaction by the Congress was to punish
both companies through a ban on sales of their products in this
country.  However, members of Congress later learned how much a
ban would affect weapons components manufactured primarily by
U.S. companies, but contain Toshiba components.  The economic
impact was determined to be so widespread that a ban could not
be applied without layoff of U.S. workers. (8:92)
     Historical statistics validate GAOs fourth concern by
indicating a decline of U.S. industrial productivity in a
number of areas.  One example is within the manufacturing
sector.  Manufacturing capability in the U.S. increased 4.5
percent during the period 1977 and 1981.  Japan's and
Germany's, in comparison, increased 29.4 percent and 12.8
percent respectively. (13:16)  Overall, U.S. productively shows
a similar downward trend.  The U.S. experienced an average
productivity growth rate of 1.2 percent from 1960 to 1983,
which was lower than all of its major trading partners.  Japan
and Germany experienced a 5.9 and 3.4 percentage annual growth
rate respectively during the period, while South Korea's was
5.3 percent, France's was 3.7 percent, and England's was 2.3
percent.  During the period the U.S. created thirty-three
million jobs, while Europe experienced a net loss.  However,
the new jobs were created without investment in productivity
enhancement tools necessary to provide the work force a
competitive advantage.  The decline of real rates of return on
manufacturing over the last several decades has also hurt as it
has kept investors from putting funds into the manufacturing
base. (17:40)
     A recent examination of the problems facing the U.S.
defense industrial base was completed by the DoD on July 15,
1988 and provides insight into the status of productivity in
the defense sector.  The final product of this effort, entitled
Bolstering Defense Industrial Competitiveness, provided some
general conclusions regarding the overall strength of defense-
critical industries, to include productivity growth within the
defense sector.  A definition of critical industries was
established as those in which the majority of the DoD budget
was spent, directly and indirectly, as well as industries vital
to defense production.  Thus, two hundred fifteen individual
industries were identified, accounting for about ninety-five
percent of Department purchases from the manufacturing sector.
Six indicators were then developed and applied to each
industry.  Comparisons, based on those indicators, were then
drawn between the defense-critical industries and the overall
U.S. manufacturing sector for the period 1980 through 1985.
The results indicated that critical defense industries did no
worse in maintaining a domestic market share in the face of
import growth and achieved average or above average
profitability.  However, forty-seven percent of critical
defense industries had below average productivity growth, while
the majority did worse than the overall manufacturing sector in
terms of real shipments growth, capital expenditures, and
adding productive capacity.  The DoD stated that the resultant
trends "while not definitive, are disturbing, particularly with
respect to future productivity and competitiveness." (15:25 to
26)
     In addition to those problems noted by the GAO regarding
the industrial base, several other areas are currently of
concern.  The general lack of U.S. competitiveness in world
markets in industries cited earlier, such as semiconductors,
bearings, machine tools and precision optics, indicates a
fundamental deterioration of manufacturing capability in this
country.  Numerous factors have contributed to industry
erosion.  The foreign acquisition of U.S. firms is cited as one
factor.  The extent of foreign ownership of U.S. defense
industries is hard to determine since no systematic data base
exists to determine this.  However, the trend indicates that
foreign purchases of U.S. defense firms is increasing. (11:32)
In the semiconductor industry, as an example, some believe that
the Japanese acquisition of U.S. manufacturers lead to the
demise of the domestic industry.  They believe that subsequent
to gaining a foothold in the U.S. market, aggressive Japanese
pricing of memory devices, including dumping of some products,
eventually drove all but two domestic firms out of the market.
(11:31)
     The U.S., for a number of years, has depended upon its
technological superiority to counter the numerical strength of
its adversaries.  Therefore, there is a concern that the U.S.
is losing its advantage in this area also.  The flow of
technology from foreign acquisition of U.S. firms is cited as
one factor detrimental to maintaining a technological advantage
and competitiveness in the world. (11:31)  The fact that some
U.S. industries do not invest in sufficient research to
maintain an advantage is another factor cited.  In the field of
microelectronics, a field pioneered by U.S. industry, the U.S.
has slipped over the last two decades from a position of pre-
eminence.  The Japanese, on the other hand, are quickly moving
to the front and the U.S. is losing ground rapidly in a growing
number of related microelectronics fabrication technologies.
The fact that U.S. firms spend fifteen percent of their sales
on semiconductor research, while the Japanese spend
approximately twice that amount, is considered a large factor
in this shift of industry leadership.  Thus it is estimated
that by the year 2000, the U.S. may be completely dependent on
the Japanese for key electronic components and equipment.
(1:13)
     Are there no comprehensive plans to address industrial
preparedness issues, as raised by the GAOs fifth concern?
Within the government as a total, coordinated effort, perhaps
not.  However, several initiatives have been taken within the
government in an attempt to ensure that the industrial base
will be more responsive when needed.  The Graduated
Mobilization Response (GMR) concept and the North American
Defense Industrial Base Organization (NADIBO) are two such
efforts.
     The GMR concept is under development in the DoD and other
agencies having mobilization responsibilities.  The concept was
initiated in 1987.  At the national level, GMR actions are
developed under the auspices of the National Security Emergency
Planning Senior Interagency Group.  The National Security
Council provides the management structure to suffuse the
concept throughout the government.  Mobilization is inherently
an expensive, disruptive process.  Consequently, the GMR
concept is based on a graduated response, or a pump priming
approach to mobilization.  It is expected that this approach is
not only less disruptive and expensive, but would enable the
U.S. to mobilize more quickly and efficiently than a policy of
mobilizing from a standing start.  The following is the purpose
of GMR:
    The purpose of GMR is to provide the National Command
    Authorities a range of political, economic, and
    military options that will assist in the management of
    a national security crisis.  These options are designed
    with two goals in mind: first, to improve deterrence
    and avoid war; and second, to prepare for war should it
    come. (12:ii)
A number of preparatory actions could be taken under the GMR
concept to not only start a gradual mobilization process if a
crisis begins to worsen, but to send a strong foreign policy
signal to a potential adversary.  The accelerated purchase of
overseas raw materials required for mobilization, the placement
of orders for long leadtime items, and the preparation to
convert flexible manufacturing systems from commercial to
defense production are all examples. (9:39)
     The NADIBO was formed in 1987 with the signing of a
Charter by the governments of the U.S. and Canada.  It is an
effort by both countries to take advantage of the complimentary
nature of their defense industries.  The Canadian defense
industrial base is highly specialized, fragmented and reliant
on U.S. industry in order to meet many operational requirements
of the Canadian Forces.  As has been discussed previously, the
U.S. industrial base, although large and technologically
diverse, is highly dependent on foreign sources of supply for
many critical materials, components and end items.  Thus both
nations, faced with a challenge to meet industrial preparedness
demands independently, recognized that enhanced integration of
their defense industrial bases could take advantage of the
complementary nature of their defense industries to provide
both countries increased security and economic gain.  Among
other things, the NADIBO strives to promote the development and
administration of coordinated industrial preparedness programs,
and a mutually effective industrial base.
     At the DoD a number of steps have been taken in an attempt
to invigorate the defense industrial base and increase its
responsiveness.  Several examples will provide a flavor for the
types of efforts being made.
     A new Deputy Under Secretary of Defense (Industrial and
International Programs) has recently been established.  In
part, the DoD's recognition that a worldwide interdependence of
industrial bases exists, which cannot be treated as separate
entities, led to the creation of this new position.  In
addition to building a co-operative relationship with industry,
the office will strive to enhance the DoD's ability to leverage
buying power through more cooperation with U.S. allies.  It is
hoped that improved U.S. access to Allied markets and
enhancement of the U.S. technology base can be achieved. (3:34)
     A number of studies found that an adversarial relationship
existed between the DoD and industry contributed to erosion of
the defense industrial base.  Consequently, the DoD has
established a Defense Manufacturing Board to help improve
communication and interaction with industry.  Acting as an
advisory board similar to the Defense Science Board, experts
from labor, academia and industry focus on how the DoD can
improve quality and manufacturing effectiveness.
     The lack of quality in domestic products is often cited as
a reason foreign sources are utilized.  The DoD has attempted
to increase the quality of products produced by defense firms,
thereby increasing their competitiveness and the quality of
products provided to the DoD.  An effort in this direction is
the establishment of the DoD's Total Quality Management (TQM)
program.  The TQM program takes the approach that quality must
be designed and manufactured in a product, not simply
"inspected in" it.  The program integrates basic management
techniques, improvement efforts, and technical tools into an
approach aimed at continuous process improvement.  It is
expected that improved performance will increase quality,
reduce cost, assure production on schedule, and meet mission
needs. (3:35)
     Development of a system called the Defense Industrial
Network is partially completed.  When operational it will
provide the DoD data necessary to monitor trends affecting the
responsiveness of the U.S. industrial base.  It is anticipated
that the system will be merged with another DoD data base,
Project Socrates, which enables the planning of technological
strategies for U.S. economic and military competitiveness.  The
DoD anticipates that together these systems will greatly
enhance the ability to evaluate and analyze U.S. manufacturing
capabilities. (3:34)
     Another development, initiated in 1987 by the Joint Staff
(of the Joint Chiefs of Staff), is the Joint Industrial
Mobilization Planning Process (JIMPP).  Portions of the system
are finished, with completion projected for fiscal year 1991.
The JIMPP will be used by the Services, Defense Agencies, and
the Joint Staff.  The JIMPP will provide a baseline for
establishing national industrial capability goals, tied to
potential military demands, required by the national military
strategy.  The system will provide a view of the productive
capacity of the U.S. industrial base from both a weapon system
or munitions perspective, and the larger, aggregate capability
of the industrial base to support mobilization.  The system
will compare these capabilities to military requirements and
determine the time, funding, and specific improvements needed
for the industrial base to adequately support a specific set of
requirements.  It is further expected that the JIMPP will
provide a picture of material shortfalls, investment costs, and
leadtime required by the GMR concept. (7:25)
     There is clear evidence, some of which was presented
above, that the defense industrial base has been declining for
a number of years.  The issue has been documented and studied
to death.  The results indicate that the days of the U.S.
industrial complex being able to mobilize and produce military
requirements at the outset of a conflict are long gone.  Only
good industrial preparedness planning can assure that forces in
future conflicts will be sustained with supplies and equipment
required in war.
     It is also clear that during the past several years we
have seen major changes throughout the world.  Nuclear arms
reduction agreements, a substantial easing of East-West
relations, the rejection of Communism by many East bloc
nations, and the potential for U.S. and Soviet conventional
force reductions in the future have contributed to making the
world a safer place in the view of most people.  Does that mean
the ability of the nation to mobilize and the defense
industrial base to respond is now less important?  I think just
the opposite.  As reliance on nuclear arms decreases, and
conventional force reductions are achieved, we will become more
dependent upon the ability to mobilize our reserve forces and
the industrial base to meet crises.  Our leaders must not lose
sight of this as defense cutbacks occur; the defense industrial
base should not be allowed to continue the slide.
     The ability to get the defense industrial base back on
track is a large, complicated task which cuts across many areas
in government and the private sector.  The DoD cannot do it
alone.  Many essential elements for a robust industrial base
are outside the DoD's direct responsibility and influence.
Problem  correction will require not only a focused effort by
the DoD but also cooperation among other government activities,
and the private sector.  Actions are being taken, some of which
were described previously.  Is enough being done?  That is of
course debatable, and will only be determined in a future
emergency.  However, some believe that it will take a great
amount of time to get to where we need to be.  In 1988, General
Marsh succinctly described the situation:  "It took the nation
thirty years to build the problem.  Recovery will require a
sustained effort, perhaps a decade of it, before the job is
done." (2:81)
                        BIBLIOGRAPHY
1.   Atwood, Donald J., "Industrial Base: Vital to Defense."
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2.   Correll, John T., "Industry's Long Slide." Air Force
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3.   Costello, Dr. Robert B., "Increasing Defense Industry's
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4.  Defense Systems Management College. Integrating Industrial
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9.  Miskel, James and Muckerman, Joseph E., "Mobilization:
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11. Schwartz, Bernard L., "Foreign Ownership of U.S. Defense
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12. Taible, Paul E. Graduated Mobilization Response: A Key
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13. Tomlinson, M. T., LTC. Industrial Mobilization and the
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