The annual Industrial Capabilities report, put out by the Pentagon’s Office of Manufacturing and Industrial Base Policy, has concluded that the industrial base of the munitions sector is particularly strained, something the report blames on the start-and-stop nature of munitions procurement over the last 20 years, as well as the lack of new designs being internally developed.
Some suppliers have dropped out entirely, leaving no option for replacing vital materials. Other key suppliers are foreign-owned, with no indigenous capability to produce vital parts and materials ― setting up the risk that a conflict with China could rely on Chinese-made parts.
And the military’s desire to tinker with existing designs rather than create band-new weapons has left the industrial base with a lack of design experience, which means “design skills for critical components within the missile sector industrial base are at risk,” the authors write.
All this is happening as the U.S. is expending munitions at a rapid rate. For instance, the Special Inspector General for Afghanistan Reconstruction concluded that 1,186 munitions were dropped in that country during the first quarter of 2018 ― the highest number recorded for the first three months of the year since tracking began in 2013; that number is also more than two and a half times the amount dropped in the first quarter of 2017.
Mackenzie Eaglen, a defense expert with the American Enterprise Institute, said figures in the report line up with worries from senior military leaders over the last two years.
“This report puts a bunch of solid facts and figures, and real companies and impact, behind the anecdotal concerns of leadership,” Eaglen said, who added that the overall facts show “munitions production is then at risk.”
Parts and pieces
An overall issue identified by the report is a lack of diversity in the industrial base, as well as a lack of knowledge on how to develop new systems.
“The loss of this design and production capability could result in costly delays, unanticipated expense, and a significant impact to many current and future missile programs, damaging the readiness of the Department [of Defense] and negatively impacting a foundational national defense priority by placing the ballistic missile production capability at risk,” according to the report.
While there are a pair of new projects underway ― the Long-Range Anti-Ship Missile and the Joint Air to Ground Missile ― neither is truly a new design as much as it is modernization for existing capabilities. Neither program features “significant design work,” the authors note, adding that the DoD “remains concerned that the design engineering capabilities needed for tactical and strategic missile systems may not be readily available in the absence of a long-term demand signal.”
As to diversity in the industrial base, well ― there isn’t any, with the authors concluding that Raytheon and Lockheed Martin account for about 97 percent of the DoD’s munitions and missile procurement funding.
But while those two firms are doing well, there are concerns about sub-tier suppliers in the realm of “thermal batteries, SRMs [solid rocket motors], fuzes, jet engines, inertial measurement units (IMUs), GPS receivers, seekers, and warheads,” as well as how healthy that base will remain in the future.
Four industrial areas stand out as “high risk” areas of concern:
- Solid rocket motors. A military-only technology, SRMs are basically split between Orbital ATK and AerojetRocketdyne. However, Orbital is set to take on a broader section of this production, essentially leaving the U.S. with only one producer of this vital equipment, which the authors warn “can lead to cost increases due to lack of competition, decreases in internal research and development efforts, and risk of security of supply if a catastrophic accident should occur.”
- Thermal batteries. Used in all DoD missiles and guided munitions, there is one (unnamed) manufacturer of these technologies who controls about 80 percent of the market. Should something happen to that company, the DoD’s munitions stock could be endangered. In addition, the near monopoly means there has been a lack of investment in improving the technology.
- Fuzes. Used on all munitions, there is actually an excess of fuze capacity in the industrial base, due in part to improvements in other areas making the fuze less important. “Excess capacity limits manufacturers from being cost competitive and limits investment in improvements to fuze technologies, including sustaining a viable design engineering cadre,” the authors write.
- Small turbine engines. There are currently two companies involved in this sector, but one ― Teledyne Turbine Engines ― has announced it will be leaving the business in 2018, leaving only Williams International to supply this capability.
Overall, the authors found that of the 121 second-tier suppliers for munition capabilities, 98 percent of them were single/sole source. And of the 73 third-tier suppliers, 98 percent were also single/sole source.
There are also concerns about materials used in the systems. For example, the department is facing rising costs for ammonium perchlorate, used in almost all DoD missile programs. The sole producer, American Pacific, is only operating at 10-15 percent of capacity due to limited demand; as a result, there have been large increases in cost per round of chemical compound, a trend likely to continue into the 2020s.
Another example: Dechlorane Plus 25, a component in the insulation of weapons. “There is no domestic supplier for this material; the sole source is Occidental Chemical in Belgium,” the authors write. “Even more concerning is that the pre-cursor to make Dechlorane came from China. The Chinese source can no longer produce that pre-cursor and so there is now no source for Dechlorane in the world.”
And the sole producer of dimeryl diisocyanate, a key propellant ingredient used in systems like the AIM-9X and AMRAAM missiles, has informed the Pentagon it will be leaving the business shortly, leaving the DoD with “no qualified source” of the material.
The Pentagon is left to scramble to find potential replacements for these materials, which the authors optimistically conclude could be “the beginning of what could serve as a model for mitigating material obsolescence in the future.” But Eaglen thinks the issue of foreign suppliers needs to be dealt with quickly, or risk getting out of hand.
“It’s worrisome enough for a capability that is essential in hostilities that policymakers will likely want to start considering special protections and/or subsidies when needed,” she said. “I’m not sure the bell can be un-rung in the case of Chinese suppliers.
“We may be too far down the path to resurrect an authentic munitions industrial base. So then the question becomes: Now what?”