Pentagon: US arms industry struggling to keep up with China

[Timber Rattler]

https://www.politico.com/news/2023/12/02/draft-pentagon-strategy-china-00129764

America’s defense industry is struggling to achieve the kind of speed and responsiveness to stay ahead in a high-tech arms race with competitors such as China, an unreleased draft of a new Pentagon report on the defense industry warns.

The first ever National Defense Industrial Strategy, which is set to be released in the coming weeks by Pentagon acquisition chief William LaPlante, is meant to be a comprehensive look at what the Pentagon needs in order to tap into the expertise of small tech firms, while funding and supporting traditional companies to move faster to develop new tech.

As it stands now, the U.S. defense industrial base “does not possess the capacity, capability, responsiveness, or resilience required to satisfy the full range of military production needs at speed and scale,” according to a draft version of the report, obtained by POLITICO.

The document, dated Nov. 27, adds that “just as significantly, the traditional defense contractors in the [defense industrial base] would be challenged to respond to modern conflict at the velocity, scale, and flexibility necessary to meet the dynamic requirements of a major modern conflict.”

It notes that America builds the best weapons in the world, but it can’t produce them quickly enough.

EXCERPT

[Timber Rattler]

Flashback to the so-called "Last Supper":

'The last supper': How a 1993 Pentagon dinner reshaped the defense industry

https://www.wbur.org/onpoint/2023/03/01/the-last-supper-how-a-1993-pentagon-dinner-reshaped-the-defense-industry

In 1993, then Secretary of Defense Les Aspin invited the CEOs of America's largest defense contractors to a secret dinner.

Norm Augustine, then the head of Martin Marietta, remembers getting the call.

"We showed up for dinner at the Pentagon one night dutifully, none of us knowing why we were there," Norman Augustine, former chairman and CEO of Lockheed Martin, says.

"I happened to be seated next Les Aspin, and I remember I said, ‘Les, this is awfully nice of you to invite us all to dinner, we’re all pleased to have a free meal, but why are we here?’ And he said, ‘Well, in about 15 minutes, you’re going to find out. You probably aren’t going to like it.’”

(snip)

AUGUSTINE: That's accurate. We went to a little room next to the dining room by the secretary's office. It really wasn't a conference room. More just a little presentation room with a screen and the 20 or 25 of us had chairs there and looked at the screen. The secretary welcomed us all. Then deputy secretary Bill Perry made a presentation.

CHAKRABARTI: And in that presentation, William Perry provides basically some information about what the Pentagon thinks is going to happen regarding its procurement over the next several years. What did Perry say?

AUGUSTINE: Well, it was ... obviously a difficult time for the Defense Department. As the U.S. has often done at the end of a war is cut way back in defense. And people spoke at that time of the defense dividend, the peace dividend, that was the end of the Cold War and that the country could divert funds to other reasons. The Defense Department clearly was going to have a major budget cut. And if I take the example of the industry I'm most familiar with, aerospace, at that time, there were about 15 companies.

And the ideal from a standpoint of national security would be to continue to have 15 very strong companies of various sizes. It would be good for competition, would be good for the industrial base. The problem was that wasn't a choice. And so I'm in no way critical of what the position that Secretary Perry took. I think they had bad choices to choose from, and he did the best you could have done under the circumstances.

(snip)

... Secretary Perry made a presentation using a graph that was projected on the screen. And it was a stunning graph, so much so that the following day I went over to the Pentagon and asked for a copy of it, which I still have. And what was startling about it was that the Defense Department was saying there are way too many companies in the defense industrial base. That we can't afford them. And that we couldn't have a bunch of companies with half full factories and not enough money to invest in research and development, huge overhead, high costs. And we need to consolidate the industry.

And just to give you an example, the chart had a column on it that showed how many companies in various categories of military equipment, like fighter airplanes, tanks or what have you, how many companies the Defense Department was going to be able to afford to keep in business. And as an example, there were 16 categories of equipment and there were three. The government said it could keep three companies in business in one of the categories. In another of the categories it could afford to keep, let's see, it was six categories, it could afford to keep two companies in business. And there were seven categories where it considered it could only keep one company in business.

(snip)

CHAKRABARTI: Mr. Augustine, you were just describing how at this last supper, Bill Perry had this chart. And it showed various categories of military equipment and spending. Bombers, submarines, tanks, things like that. And then there was one column that showed how many companies were currently providing that equipment. Like, say, I believe in the early 90s, there were like three main companies that were providing equipment for bombers, let's say. And then Perry had a second column that showed how many the Pentagon felt like they could keep in business or that they would need in the coming years, post-Cold War. And in some of those columns, there was just the number one. Do I have that right?

AUGUSTINE: That's accurate. Needless to say, I was stunned, for really two reasons. One, it pointed to how fragile our defense industrial base was going to become. But there was another factor that to me was also important, that in those areas there would not be competition. I happen to be a strong believer in competition. The free enterprise system, I think has served our country well. And apparently we were in such a financial position where we weren't going to be able to afford that and in some areas.

CHAKRABARTI: So then what did Aspen and Perry tell this gathering of CEOs from the defense industry? Like this is what's happening. The defense budget is going to decline. This is how many companies that we can continue to work with. Did they have any recommendations of what you should do as you filed out of the room?

AUGUSTINE: They did. They had made very clear what they could afford and they were going to pay for companies that had one third of all factories and inefficiencies to go with that. And they said that the government was not in the business of redesigning companies or consolidating industries or putting people in or out of business. That was up to us, the CEOs of the companies that were in the industry at the time.

And that was quite an awakening, they heard from the Defense Department on how small an industry would be afforded. And I should add to that that in serious war time, the defense industrial base is really the national industrial base. And it too had manufacturing was severely declining at the same time. And in 1980, 18% of the workforce in the nation was in the manufacturing world. Shortly after the Last Supper it was 7%. So the commercial industrial base was declining and the defense industrial was going to decline. Big worry for any future need for large scale military equipment.