Roadmap to a Self-Sufficient Industrial Base
Category: Advocacy • Jul 30, 2020
By Chuck Schroeder, IMTS Media Representative/Owner – Insight Marketing
Roadmap to a Self-Sufficient Industrial Base
The importance of a self-sufficient U.S. manufacturing sector is as old as the nation itself. In his 1791 magnum opus Report on the Subject of Manufactures, Secretary of the Treasury Alexander Hamilton stated:
“It would, also, be a material aid to manufacturers…as well as a mean of public security, if provision should be made for an annual purchase of military weapons, of home manufacture…so as always to have in store the quantity of each kind which should be deemed a competent supply.”
The COVID-19 health crisis exposed a fractured supply chain for critical medical supplies risking public health and safety, but the vulnerabilities were already there. Had the crisis been of a different nature, such as one related to national defense, it would have revealed weaknesses in America’s manufacturing and industrial base supply chains that we know exist today. This erosion threatens not only our defense readiness, but also innovation, economic growth, and job creation.
Assessing the Industrial Base
In 2017, President Trump issued an executive order directing the Department of Defense (DoD) to lead an interagency task force for an in-depth analysis of our industrial base capabilities and report on its findings and recommendations for a more secure nation. The 2018 report, titled Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States, identified critical defense needs (Figure 1) and the macro forces behind our inability to fulfill those needs (Figure 2).
The roots of America’s defense industrial base, according to the report, “are planted in the broader manufacturing ecosystem. Not only is the manufacturing sector the backbone of U.S. military technical advantage, but also a major contributor to the U.S. economy, accounting for 9 percent of employment, 12 percent of GDP, 60 percent of exports, 55 percent of patents, and 70 percent of U.S. R&D. The National Security Strategy highlights the importance of a vibrant manufacturing sector to comprehensive national power, while warning of the dangers inherent in the weakening of America’s manufacturing base.”
The task force found that, “Increasing globalization of the supply chain and a diminishing domestic manufacturing sector are combining to create human capital gaps and erosion of American capabilities. STEM knowledge and core trade skills are necessary to ensure the holistic and synergistic health of the defense ecosystem. Skill gaps in both areas entail inherent risk, from a decline in production capacity to decreased innovation.”
The task force asked AMT – The Association For Manufacturing Technology to lead a workshop of AMT members (domestic and U.S.-based multinational companies) to provide input for the report. The workshop identified challenges and made recommendations for a self-reliant U.S. industrial base based on this country’s ability to produce critical manufacturing equipment and maintain a skilled workforce.
Workshop participants commented that while all components are critical, some are more critical than others. These include linear guides, spindles, and electronics (e.g., controls, drives, and PLCs), motors, ball screws, castings for machine tool foundations, and raw materials (lithium, titanium, and tungsten). Such components have a functional impact on machines, but their lead-times are just as sensitive. Sourcing these components revealed bottlenecks in the past, such as when the tsunami of 2011 struck Japan. One attendee stated, “If you want a viable machine tool industry in this country, we must bring these components back.” In the instances where critical components can’t be made competitively in the United States because of tighter environmental regulations here than in other countries, our government must invest in the R&D to develop new technologies or processes to produce critical components.
The workshop concluded that the United States has passed the point where it can produce a purely domestic machine tool industry but noted that this country has a means through Title III of the Defense Production Act (DPA) program to help “ensure the timely availability of essential domestic industrial resources to support national defense and homeland security requirements through the use of highly tailored economic incentives.”
A Blueprint for Action
The concept of “bringing back” work does not mean “going back” to old ways. Rather, it means rethinking what self-sufficiency means.
“We have to have core competencies,” says AMT President Doug Woods. “Going forward, we need to nurture digital manufacturing technologies, materials development, and other areas where the United States competes effectively on a global scale.”
The task force report outlines actions the U.S. government is taking and should take to support a secure, robust, resilient, and ready industrial base. Ongoing efforts include:
- Increased DoD budget stability.
- Combating foreign industrial policies targeting American intellectual property through Sec. 301 of the Trade Act of 1974.
- Restructuring the Defense Acquisition University to create workforce education and training resources.
- Creation of a National Advanced Manufacturing Strategy.
- Formation of a task force led by the Department of Labor on apprenticeship expansion, particularly in industries where they are insufficient.
- Development a DoD microelectronics program to increase domestic capabilities and enhance technology adoption.
The report’s recommendations underscore a whole of government approach, highlighting the roles that the Secretaries of Defense, Energy, and Labor can play. They include producing a national industrial policy, directing investment in the lower tier of the industrial base, growing domestic STEM/critical trade skills, and diversifying away from complete dependency on sources of supply in politically unstable countries.
The AMT workshop group agreed that there needs to be more intentional collaboration between government agencies and departments, and other stakeholders should also be included. Potential collaborations include workshops spun off from the Strategy for American Leadership in Advanced Manufacturing Technology submissions (such as Manufacturing USA workshops); collaboration on emerging technologies, as embodied in the public-private sector work of the Energy Department’s Oak Ridge National Laboratory (a partner in AMT’s Emerging Technology Center at IMTS); creating intern/apprentice incentives for manufacturers sponsored by the government; and redeveloping the U.S. approach to schools and manufacturing career choices.
AMT members also shared recommendations for how the government could remove obstacles to improve the readiness of U.S. industrial base. These include mitigating the risk of technology investment (see story on the Tax Cut and Jobs Act), streamlining export control process, promoting fair trade, increasing stability in DoD investment, and preventing DoD procurement of foreign equipment when a domestic alternative exists.
We Can’t Leave our Security to Chance
If COVID-19 taught us one lesson, it is that chance favors the prepared. It’s been almost two years since the task force report was issued, and we find ourselves in much the same place.
AMT’s Woods, ever an optimist, says that internalizing the report’s conclusions should become part of a new manufacturing mindset.
“I predict that people will do what it takes,” he says. “We’ll rediscover the pride in saying we make it here; we make it in your community; we make it for you; we can get it to you quicker; and we can make it better. Those things will become part of the new American ethos.”