A Defensive Strategy

The nation’s defense industry requires a strong domestic manufacturing base to ensure a steady supply of crucial parts during wartime. But as America’s auto suppliers — many of which support the defense sector — are threatened by the global economic meltdown, they need the support of government loans to survive and protect our nation’s freedom.
Eagle Boat
The first Eagle Boat made at the Rouge makes its entrance. Sixty of these were produced for hunting submarines, beginning in 1918. Photograph courtesy of Ford Motor Co.

If Benjamin Franklin were alive today, his proverb about the lack of a horseshoe nail ultimately causing the loss of a kingdom might run something like this: For want of a main bearing, the engine was lost; for want of an engine, the fuel tanker truck was lost; for want of fuel, the battle was lost.

Yes, combat effectiveness depends on the most mundane items. Somebody has to make that main bearing, or suspension system, or armor plate, or electrical connector, or computer chip. And if such products aren’t made here, what happens to our fighting ability? That’s the question many people are asking as America’s industrial base continues to erode. Some experts believe the threat to military power and national security is now grave.

The issue has special relevance in Detroit, economically, historically, and emotionally. Economically, because much of the current array of military hardware is produced by small, medium, and large manufacturers who also depend on General Motors Corp., Ford Motor Co., and Chrysler Corp. for sales and profit. “The deeper you go into the U.S. defense industrial base, the more likely you will find companies that depend on the auto industry for their survival,” writes Sheila R. Ronis, director of MBA programs at Walsh College in Troy and Novi. Ronis has spent some 20 years studying threats to national defense industries and is a consultant to the Project on National Security Reform, a Washington think tank that’s working out a broad new national defense posture for the nation. “The defense sector is small enough that, without the auto companies, a cascading collapse of small businesses could lead to a cascading collapse of the U.S. defense base,” she says.

The ubiquitous Humvee transport truck began life as a product of American Motors Corp. Photograph courtesy of AM General

Historically, Detroit’s crucial role in the production of war material stretches back to World War I when the brand-new Ford Rouge Industrial Complex produced submarine chaser Eagle patrol boats. This reached a crescendo in World War II, when Detroit built tanks, aircraft, trucks, engines, and transmissions for the U.S. military, and such a wide range of materials that it became renowned as the Arsenal of Democracy. The battles of World War II, former UAW president Walter Reuther famously remarked, were won on the assembly lines of Detroit. The imprint of the Detroit Three remains large in military hardware. The Abrams main battle tank was designed by Chrysler Defense, which was sold in the early 1980s to General Dynamics Corp. The ubiquitous Humvee transport truck began life as a product of American Motors Corp. and its now-independent subsidiary, AM General in South Bend, Ind. And the Stryker, an armored personnel carrier and fighting vehicle, was designed by a joint venture of GM and General Dynamics Land Systems.

Emotionally, there is lingering pride in Detroit about the industrial achievements of the past century, along with dismay over the sight of proud companies now forced to ask the federal government for a bailout.

Oddly, the recent hearings in Congress on financial aid for the Detroit Three automakers (mainly GM and Chrysler) contained just a passing mention of the dire implications for national defense if one or all three companies failed.

That’s no surprise to Ronis, who often has found many officials in Washington strangely unreceptive to warnings about the declining defense industrial base. “Their eyes glaze over whenever I mention this,” she says.

But, even if her case wasn’t compelling before, it becomes more so every day. The North American International Auto Show this year rang with warnings of impending auto supplier bankruptcies, amounting to the most severe threat to suppliers since the Great Depression. Citing a variety of experts and auto industry officials, Bloomberg News reported that as many as 100 companies could close. “We’re going to see a rash of failures throughout the supply industry and I think it’s going to be coming in the next month or so,” Magna International Inc. CEO Don Walker told an auto industry analysts conference at the auto show.

That’s a bloodbath; but in reality it’s just the culmination of a decades-long weakening of the supplier base. The decimation of America’s machine tool industry — they make the tools that make and assemble auto parts — began in the early 1980s. Touring U.S. automotive plants today, it’s difficult to find a major tooling line made by an American company. Pioneers in industrial robotics, like Cincinnati Milacron, gave way long ago to Asian firms. Virtually all metal stamping presses used to make car body panels in American plants are built by Japanese or German firms. Small-time tool and die makers, once a business consisting of hundreds of entrepreneurial privately owned small shops, are disappearing at an alarming rate. Drive down any main industrial corridor in metro Detroit and you’ll quickly lose count of the number of once-thriving machine shops, tool shops, and small-parts manufacturers that have been permanently shuttered. The Original Equipment Suppliers Association, a supplier trade group headquartered in Troy, conducts bimonthly surveys of its members. In mid-January, respondents listed “bankruptcy of a customer” among their top three concerns, along with falling production volumes and evaporating cash flow. This process has been going on for so long that well before the current crisis, Ronis and others were warning that it would be difficult for Detroit, in any national emergency, to resume its role as the Arsenal of Democracy.

The relatively small scale of combat equipment manufacturing in recent years, in part, has masked the problem. For instance, AM General has built just under 200,000 Humvee vehicles since 1985 — well below the annual output of a full-scale GM, Ford, or Chrysler plant assembling a similar product. Defense manufacturers usually are required to maintain so-called “surge capacity” to quickly boost production if a declaration of war made that necessary. Will they be up to that task if their subcontractors begin to disappear?

“America’s national security requires a healthy market-based economy with a strong industrial base of globally competitive industries,” Ronis says. “But in many cases the United States is already unable to manufacture the equipment and technology used to fight and win the nation’s wars.”

GM, Ford, and Chrysler are no longer major defense contractors, but that could change in at least one area: advanced batteries needed for hybrid and electric vehicles. Officials across Michigan sighed in relief in January as GM announced it would locate a plant in the state to build new-generation batteries for the Chevrolet Volt plug-in hybrid car. And so did U.S. Sen. Carl Levin, the Michigan Democrat who chairs the Senate Armed Services Committee. Levin has been campaigning for a $1 billion federal program to fund research on advanced batteries, and he made certain that the 2009 Defense Department budget had a substantial sum — $100 million — for research on energy-saving powertrains in military vehicles. Although advanced battery technology was invented in the U.S., Levin points out most commercial versions now come from Asian companies. Indeed, the Volt initially will use lithium-ion battery cells produced by a South Korean firm, GM said.

“We’re at a critical juncture in the commercialization of advanced battery technology to power the next generation of green vehicles,” Levin says. “We must be in a position to produce the essential components in the U.S. and not rely on advanced technology and critical building blocks produced elsewhere and brought to the U.S. for assembly.”

The Abrams main battle tank, which was originally designed by Chrysler Defense.

Also deeply interested in GM’s announcement were engineers and officials at the U.S. Army Tank-Automotive Research, Development, and Engineering Center (TARDEC) in Warren. They have been investigating hybrid and electrical vehicle technology for several years, and would love to see full-scale domestic commercial development of battery technologies that can be adapted for military use.

Their concern is simple: The wars in Iraq exposed again the immense logistics problem of supplying fuel to a mechanized army on the march — especially in crossing vast expanses of empty desert. If a hybrid engine could cut fuel consumption by just 25 percent, it would greatly reduce the strain on combat supply systems. But there are also humane concerns.

“We have men and women at risk from moving fuel in theater,” TARDEC’s executive director for product development, Thomas Mathes, said recently at a conference to launch the Defense Department’s fuel-efficient ground vehicle demonstrator program. “If we can improve fuel efficiency, we can take war fighters out of harm’s way.”

The Stryker was designed by a joint venture of GM and General Dynamics Land Systems. Photographs courtesy of U.S. Army

Can these concerns reach a wider American audience? To do that, Ronis has adopted a new tactic: drama. She has drawn up a detailed scenario, quite plausible in her view, about a future American military disaster. It’s 2011. China launches a full-scale attack on its ancient adversary, Taiwan. The powerful U.S. Seventh Fleet, armed with an impressive array of lethal high-tech weaponry, moves to cut off the invasion force. As the battle begins, American ships and planes suddenly lose their targeting, communications, and control systems. Ships are dead in the water, planes fall from the sky, and the fleet is completely annihilated. The problem: By 2011, China controls most of the world’s production of electrical connectors. It has acquired U.S. technology on “smart” connectors, including ways to program them remotely. In short, they’ve short-circuited the U.S. Navy and dealt it one of history’s most one-sided and decisive military defeats.

Farfetched? Perhaps. On the other hand, here’s a challenge: Go to your local discount department store, and try to find something made in America. Wal-Mart, critics say, must not become the model for U.S. defense contracting.

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