Sunday, June 03, 2007

Deindustrailization has Consequences

Defense Industry Daily: 17,000 MRAP Vehicles to Replace Hummers?
After 4 years of combat in an arena that featured IED land mines as the #1 threat, the US military's success in fielding limited numbers of blast-resistant Cougar and Buffalo vehicles finally drew the attention of senior military officials, and the civilian politicians to whom they report. The military's order of MRAP (Mine-Resistant, Ambush Protected) vehicles went from 1,000 vehicles in 2006, to 4,100 later that year, and soon thereafter to 7,774 vehicles. Within that expanded order, however, only 2,500 were for the Army; 3,700 were for the US Marines, who vowed to make every patrol vehicle operating "outside the wire" in Iraq's Anbar province an MRAP vehicle.

.....The House Armed Services Seapower and Expeditionary Forces Subcommittee under Chairman Gene Taylor [D-MS] and Ranking Member Roscoe Bartlett [R-MD] recently proposed, in coordination with Chairman Abercrombie [D-HI] of the Air and Land Subcommittee, proposed $4.1 billion for MRAP vehicles for full House Armed Services committee consideration, re: the FY 2008 "request for ongoing military operations" (supplemental).

Even this request, however, was in the context of fulfilling the $8.4 billion order for 7,774 vehicles within the goal of a 2-year time frame. Now the Army is looking to add from 15,000-17,000 vehicles for production from FY 2008 - FY 2010.

Which raises the question of how the manufacturers, whose production lines are currently built for 100 vehicles or so per month, will manage. At present, 400 vehicles per month appears to be the most any MRAP manufacturer has promised to produce, and that's assuming production growth over the course of the contract. A total of 23,000-25,000 vehicles in 2 1/2 years is likely to prove something of a challenge, therefore, even with several vendors participating. Even, one might add, with BAE Systems $4.53 billion purchase of production at Armor Holdings.

America used to be known as "The Arsenal of Democracy", now 4 years in we don't have production capacity to get the tool our troops need into the field. The change is partially due to a lack of mobilization (which is part and parcel of the low commitment war), but also stems from the limited industrial capacity available in the specialty heavy truck manufacturing industry.

Given our ever declining manufacturing capacity and our dependence on the Middle East for oil (we were an oil exporter in WW2) it seems like an open question if we could manage another war effort like World War 2.

God forbid, but if we wound up in a confrontation with China we would need many more supplies than it would ever make sense to have in the warehouses. Even in Iraq, supplies are being depleted faster than they can be replenished. It will take years to rebuild the armed services' inventories of helicopters, trucks, tanks, and equipment great and small. We have been steadily exporting steel mills and factories and even in full mobilization it would take years to rebuild that infrastructure.

Not to mention that the willingness of some Middle Eastern Nations to sell us oil in a conflict might be suspect. Also Iran is strategically located to disrupt oil traffic through the Straits of Hormuz. Having spent substantial effort on learning how to make bunkers that are resistant to air attack (which Israel was kind enough to test for them), removing the garrote from the Gulf could well take a substantial amount of time and effort(the Iranians learned from the Tanker War, and not entirely the lessons we would have wished for them to learn). Then we have to get it from point A to Point B. China is unlikely to be able to launch a substantial Blue Water Naval presence in the near term, but are working to add to their abilities in that area. Even a handful of subs could be a pretty significant annoyance, tying up resources hunting them and escorting maritime transport.

Tying into both of these is our crumbling infrastructure. The Backlog of deferred maintenance on the roads, rails, and canals that vital goods will be traveling on would be another expensive distraction. Also we burn more fuel than we need to moving goods and people around the country. If we need to conserve fuel, rail and water transport win hands down. Rail has been steadily shedding capacity seeking to reduce cost and shift the supply/demand balance in their favor. Locks are aging, and waterways generally only draw attention when the spill over their banks. When these are offline being patched or running below capacity we are going to have to run multitudes of trucks increasing our oil and infrastructure costs.

Oddly enough, all of the "make work" projects during the depression may have improved our readiness for the second World War by reducing the number of urgent infrastructure needs when the war started.

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