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Give US Industry a Seat at the Strategy Table

May. 12, 2013 - 02:31PM   |  
By GEORGE “CHIP” PICKETT   |   Comments
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Reading the history of US preparations for World War II is instructive.

Mobilizing American industry in the late 1930s and early 1940s involved a series of delays. President Franklin Roosevelt did not want to sound warlike for political reasons. Anti-war feelings were strong. Congress was internally divided on war and on other issues.

One subtle factor was that government personnel knew little about American industry. For example, the Army Air Corps was too optimistic about how fast production rates could be raised.

Defense companies had been attacked by Congress and the executive branch in the 1920s and 1930s as “merchants of death.” They had been punished by government buying practices. So they distrusted and refused to act on requests to increase capacity in the late 1930s.

For today, this history raises three questions:

* First, broadly speaking, how are things different?

Today, the government, like in the 1930s, maintains a posture, albeit sometimes a subtle one, that American industry is a key source of problems. Big companies are seen as inherently less creative and productive. Traditional industries are identified as the wrong places for investment.

Punishment for cost overruns is meted out to defense companies, but not to government personnel who run programs, control acquisitions or make politically based choices.

A big change, however, is the defense industry. Now it is a separate subindustry in America’s industrial environment. Many firms avoid investing in it because of its small size, limited growth potential, dominant companies and unique customer traits. Moreover, defense companies have become like most corporations. They are managed for economic performance.

* Second, should anyone care about future militarily oriented industrial capacity?

Yes. In expanding the military, the key issue in weapons and systems is time, not cost. No matter how much is spent, one cannot get a nuclear-powered attack submarine, more fighter jets or a new armored division in a few months.

In World War II, the enemies and our allies gave us four years to get ready. In the Cold War, the Soviets kept us postured for decades. Do we think that in future crises, enemies and allies will be so helpful?

Moreover, the US faces threats that are unclear. Like the 1930s, this provides the groundwork for politicians to postpone action.

Yet, war may be sudden and sweeping. Sept. 11 showed it cannot be kept “over there.” Nuclear proliferation may make it rapidly regional or global. It will (as always) be “come as you are.” Without industrial capacity, the US closet may not be able to quickly build itself into the larger or better wardrobe it needs.

* Third, are US industrial capabilities incorporated into national security planning?

No. DoD has staffs doing good work analyzing the defense industry. But the policy-level focus is on shrinkage, competition and other near-term concerns. When it comes to major industrial capabilities five to 10 to 15 years out, serious attention is minimal and action nonexistent.

A key piece of evidence is that American industry has no seat at the table when government leaders develop strategy.

The next Quadrennial Defense Review, for example, will likely resemble past ones. There will be big debates on force structure without asking what has to be done with industrial capacity to provide it. Like failing companies, the government tries to make strategy while ignoring its supply chain.

Shouldn’t we put industry at the strategy table for the first time?

George “Chip” Pickett is a retired defense company executive and author of a book on business strategies for defense companies.

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