Pentagon Grapples With Post-War Industrial Issues
Pentagon officials in charge of industrial policy still are analyzing the Iraq
war’s repercussion on trans-Atlantic defense programs. “My office
is watching that very carefully,” said Suzanne Patrick, deputy undersecretary
of defense for industrial affairs.
It is not yet clear how much the political tensions within NATO as a result
of the war will affect industrial relations with foreign suppliers, Patrick
told a private meeting of U.S. defense industry executives.
But she stressed that the Pentagon intends to crack down on foreign companies
that interrupt deliveries of critical defense supplies to the United States,
to make a political stand against U.S. policy.
“We’ll be rating companies in terms of whether they interrupt the
security of supply,” she said. The Pentagon takes a hard stance when a
company jeopardizes the supply availability, she added. “It’s a
very serious responsibility to be a supplier to the U.S. Defense Department.”
The good news for the Pentagon, Patrick said, is that “the foreign parts
we needed for the war did not suffer any interruptions, regardless of those
countries’ political postures.”
International cooperation with foreign defense firms in the future, however,
remains a big question, she said. “I think the aftermath of the war will
be the tougher challenge. I don’t see any impetus from the Bush administration
to impede international defense sales. But it’s going to be a tough time.”
High-profile international programs such as the Joint Strike Fighter will be
under tighter scrutiny. Patrick’s boss, Undersecretary of Defense Edward
C. “Pete” Aldridge Jr., held a top-level meeting last month in Fort
Worth, Texas, where he emphasized the “international partners’ responsibility,”
she said. In the JSF program, 35 percent of the components come from foreign
suppliers.
The space industry also is heavily dependent on non-U.S. vendors. Patrick noted
that 18 percent of the “technology enablers” for space will come
from foreign sources.
Patrick’s office released a study in February on the state of the U.S.
industrial base. She said that at least 3,000 people downloaded the study from
the Internet. Despite widespread interest in the study, she said, it is doubtful
that it will lead to any real policy changes. “A study, no matter how
comprehensive and prescient, will never result in policy implementation,”
she said. “But I’m encouraged.”
Influential think-tanks, such as the Center for Strategic and International
Studies and Rand Corp., also will be conducting studies on the defense industrial
base. “Once we have three or four studies, the policymakers will be more
comfortable about making policy changes,” said Patrick. She noted that
even though Aldridge retired in May, he will continue to help Defense Secretary
Donald Rumsfeld strategize on “industrial base transformation and acquisition
reform issues.”
U.S.-Europe Rift Unlikely to Affect Industrial Ties
The falling out between the United States, France and Germany over the war
in Iraq has prompted fears that defense industrial relationships will suffer.
EADS North America—a holding company of the European Aeronautic Defense
& Space Co. EADS—has been the target of numerous questions about how
the rift will affect business in the U.S. defense market. Ralph Crosby, chief
executive officer of EADS North America, said that he has not seen any direct
impact of the political warring on Iraq on the company’s business plan.
“We are very sensitive to the environment, and we have observed very
closely,” he said at a recent media breakfast.
“We are not a French company. That is the first thing that I tell people.
We are a global aerospace company,” he noted. “When you look, we
are in Germany, France, Spain and the United States. We are pretty well dispersed.”
EADS was formed in 2000 by a merger of Aerospatiale Matra of France, Daimler
Chrysler Aerospace of Germany and Construcciones Aeronauticas of Spain. EADS
North America last month, consolidated all its activities into a holding company.
Its most visible footprint in the U.S. right now, apart from its Airbus operations,
is the Coast Guard’s Deepwater program, specifically to provide upgraded
HH-65 Dolphin helicopters and CN-235 aircraft. He said that, by opening a company
in North America, EADS has made a “multi-year commitment to this market
place.”
Crosby mentioned the letter that Pete Aldridge, the undersecretary of defense
for acquisition, technology and logistics wrote to Congress in which he asked
that the U.S. stay committed to its cooperative programs.
“If Pete Aldridge can stand up and say that in the middle of the war,
I am certainly pleased to say that we are going to play our role to support
that,” he said. According to Crosby, the real question is how long the
dispute would last. “My tendency is to believe that the half-life will
be shorter than longer,” he said.
Personnel Shortages Delay USS Reagan Commissioning
A critical personnel shortage at the Newport News shipyard is keeping the nation’s
newest aircraft carrier shore-bound until July 12, according to Tom Schievelbein,
president of Northrop Grumman Newport News, which is building the ship. The
USS Ronald Reagan (CVN 76) was supposed to be commissioned in May.
While some of the delays were caused by faulty circuit breakers, the shipyard
is having trouble recruiting qualified workers, Schievelbein told reporters
at a Washington, D.C., briefing.
The Newport News employs a workforce of 18,000, but filling vacancies is difficult.
It can take a candidate up to two years to get the security clearance required
to work at the yard. Also, he said, three to four years are needed to train
some of the highly skilled workers.
This is a problem now, Schievelbein said, because Newport News is quite busy
these days. At the moment, the firm is building three new carriers, the Reagan,
the USS George H.W. Bush (CVN 77) and the next-generation ship, CVN 21, which
is in the design phase. The personnel shortage, he said, could get worse as
the five carriers that deployed to Iraq return to their homeports badly in need
of maintenance. Newport News, he noted, is the only shipyard that works on nuclear-powered
carriers.