Revving up defense industry won't be easy
Outdated plants, manpower shortages cast doubt on contractors' ability to absorb $1 trillion in defense spending by mid-'80s.Skip to next paragraph
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While Congress argues over whether to cut the 1983 Reagan defense budget by a relatively paltry $10 billion or $15 billion, another troubling question persists:
Will American industry be able to handle the trillion-dollar-plus Pentagon buildup that will occur through the mid-1980s?
There is general agreement that the defense industrial base today is far from what it should be. Long lead times, increasing dependence on foreign suppliers, shortages of skilled manpower, and aging plants and equipment are just some of the problems. Without major changes by government and industry, defense analysts agree, increased spending could simply accelerate inflation and add to the cost-overruns that make the nation less secure.
In its first year, the Reagan administration has taken some steps toward solving a problem that continues to get worse. ''But we are not there yet,'' says Fred Ikle, undersecretary of defense for policy. ''And I am personally troubled that it takes so long to move ahead on this large and complex issue.''
Symptoms of the problem include:
* The National Science Foundation prediction of a 47 percent shortage in industrial engineers in the 1980s.
* A possible shortage of 250,000 machinists by the mid-1980s, even without rapid growth in the US arsenal, according to the Defense Science Board. Yet the average machinist in this country is 58 years old and may soon be retiring.
* Of the 26,000 metal cutting and forming tools owned by the government, 20, 000 are more than 20 years old and therefore inefficient, the Defense Science Board also reports.
* Of the 61 individual materials or family groups in the strategic stockpile, shortfalls exist in 37 (23 of which are at less than half the approved level).
Thousands of US defense contractors have folded or stopped taking Pentagon orders. As a result, bottlenecks occur and lead times lengthen. For example, the lead time for an F-16 jet fighter grew from 28 weeks in 1977 to 42 weeks three years later. Lead times for military jet engines and aircraft landing gear more than doubled over the same period.
''The unpredictability of defense spending has discouraged firms from modernizing,'' says Sikorsky Aircraft Company vice-president Harvey White. ''Scores of contractors have quit the defense business for more lucrative work.''
Says Jacques Gansler, a former Defense Department official who gathered much of this information in his book ''The Defense Industry,'' ''We're spending more and more dollars a year and getting less and less equipment.''
''Without changes, we'll get increases in the cost of defense goods without strengthening our posture,'' Dr. Gansler told a recent gathering of government officials, military officers, business executives, and defense analysts at the Brookings Institution.
This is especially true, others note, since military planning under the Reagan administration is shifting from the ''short-warning, short-war'' scenario to conflicts of longer duration on many fronts. If there is a longer conflict, the General Accounting Office warns, ''Huge gaps exist between when military stocks will be exhausted and when production will equal needs.''
All aspects of Pentagon spending are scheduled to rise steadily over the next five years. But the increase in spending for new weapons (procurement and research and development) is even sharper, more so than during the Vietnam war. Economist Charles Schultze estimates this to be 16 percent per year between 1981 and 1985 for a five-year total of 80 percent.
''This implies the rather startling conclusion that some 30 percent of the increase in the 'goods producing' GNP (Gross National Product) over the next four years will go to the military,'' Dr. Schultze told the congressional Joint Economic Committee.In other words, the defense industrial base could be severely strained by the increased defense buildup, the emphasis on mobility and readiness, and the goal of increasing ''surge capacity'' to meet military emergencies.Among the steps taken by the Reagan administration to relieve this potential strain are these: