Defense Industrial Base at a Crossroads

Restoring America's Industrial Edge

The Defense Industrial Base (DIB) forms the bedrock of our national security, encompassing the intricate network of entities that supply the U.S. government, especially the Department of Defense, with materials, products, and services crucial for our military's function and innovation.

As defined by several government organizations, including the Congressional Research Service, the DIB involves a diverse range of entities – from commercial firms to government-owned facilities, all contributing to everything from large-scale weapons systems to everyday operational support. However, recent reports from McKinsey and the Manufacturing Institute highlight concerning trends that warrant attention.

The challenge of off-shoring a significant portion of our manufacturing capabilities adds another layer of complexity to the Defense Industrial Base dilemma. While cost-effectiveness and global trade may have incentivized the practice, the Congressional Research Service highlights that this approach has led to a heavy reliance on foreign sources, leaving the U.S. vulnerable to disruptions in the supply chain during times of conflict or geopolitical tension. As echoed by defense policy experts, this dependence on off-shored manufacturing intensifies the urgency to reinvigorate domestic production capacities, securing critical supply chains and ensuring an autonomous defense infrastructure.

Another problem with our DIB today is the aging of its workforce, as nearly one-fourth of workers are over 55 years old. This demographic shift, mentioned in the Census Bureau's reports, poses a potential labor shortage, potentially crippling the DIB's efficacy.

Moreover, the McKinsey report underscores that the U.S. has fallen behind in munitions production, emphasizing the risk of ammunition shortages during major conflicts, as witnessed in current conflicts such as the situation in Ukraine. NATO's struggles to keep up with the demand highlight the vulnerability of our defense capabilities, per NPR's reports.

This underlines the pressing need for collaborative efforts across sectors to revitalize and bolster the DIB. Neglecting this vital sector could pose severe risks in the face of emerging global challenges, as highlighted by experts like Mark Cancian from the Center for Strategic and International Studies.

In a promising sign, Defense Production is currently outpacing all other Industrial Production in the United States, according to the Fed. Unfortunately, much of the defense production of the past 30 years has been focused on things efficiencies, just-in-time capabilities, etc (Source: Bloomberg)

For a robust and resilient national security infrastructure, it's pivotal that we collectively address the challenges facing the DIB. As we navigate this crucial juncture, investment, innovation, and strategic policy interventions must converge to fortify this cornerstone of our national defense.

As the Undersecretary of Defense for Acquisition and Sustainment, Bill LaPlante highlighted this weekend at the Reagan National Defense Forum, solving this problem will require collaboration between the public and private sectors. Let's join forces to safeguard the Defense Industrial Base, ensuring its readiness to meet the dynamic challenges of the 21st century.

Keep building!

Andrew