Over Army Objections, Industry and Congress Partner to Keep Abrams Tank Production ‘Hot’
The past two budget cycles saw a public debate among the Army, the contractor that runs the tank manufacturing plant and lawmakers as to whether taxpayers should foot the bill for keeping a unique industrial base active, or “hot” in manufacturing parlance, in lean times.
Service leaders have simply said they don’t need any more upgraded M1 tanks until a new version comes along in 2017.
It was assumed that foreign military sales would take up the slack at the plant where they are produced, but concerns grew that this may not be the case.
General Dynamics Land Systems, which runs the Army owned Joint Systems Manufacturing Center in Lima, Ohio, argued that to close the facility for up to four years would cost more than $1 billion when the day came to ramp up production again.
Members of Congress, whether they stated it overtly or not, saw jobs ebbing away in their districts. The Abrams industrial base is spread far and wide, and proponents are found in more than just the Ohio delegation. More than 120 lawmakers sent a letter to Army Secretary John M. McHugh in May expressing their disappointment that the service was once again stating that it didn’t intend to fund any more tank upgrades.
Headlines proclaiming that Congress was “forcing the Army to buy tanks it didn’t need” made it into the mainstream press this summer, and the program became the butt of jokes on the satirical Colbert Report television show.
By the end of the summer, it seemed that the industrial base argument had won the day. Congress had allocated $181 million beyond what the Army was requesting.
By Aug. 16, details emerged on how that money would be spent.
In a letter sent to the chairs of the appropriations and authorizing committees, McHugh, said he was “pleased” to submit the congressionally mandated report.
“Though I must reiterate that the Army has no need for additional M1A 2SEPv2 tanks, the production of these tanks does contribute to the mitigation of risk to our industrial base,” McHugh said in the letter.
Paying for unneeded hardware in order to maintain the industrial base and keep production lines hot is a practice that may be more common in the future, one analyst said. The munitions, spy satellite and submarine industries are also making the same argument as budgets tighten and wars wind down. The Bradley fighting vehicle is facing a similar pause.
“I think it’s very likely that we will hear defense contractors in other sectors of the industrial base making these arguments very soon,” said Eric Lindsey, an analyst at the Center for Strategic and Budgetary Assessments.
Defense spending will be coming down whether the sequester stays in place or not, he said.
“The ground vehicle manufacturers are feeling the pinch especially bad right now because there are so few prospective contracts out there, and the programs they’re pinning their hopes on, like the ground combat vehicle, are on pretty shaky ground. But contractors in other sectors aren’t in much better shape, they’re just slightly behind in the curve,” Lindsey said.
Congress’ shot in the arm for the tank sector includes money for subcontractors as well. Of the $181 million, $114 million will be spent on 12 upgraded tanks, $26 million will go to purchase 48 transmissions and $41 million to buy 86 Block II second-generation forward-looking infrared sensors “to mitigate Abrams FLIR industrial base risks, sustain development and production capability,” an Army report to Congress detailing these outlays said.
“Each vendor brings essential, unique, and in some cases, irreplaceable competencies to the system production process,” the report said.
General Dynamics Land Systems was not subtle in its efforts to convince members of Congress to keep the plant operating uninterrupted.
The Center for Public Integrity in a July 2012 report documented how General Dynamics and its employees donated a steady stream of campaign donations to key lawmakers. The company also hosted the supportabrams.com website with videos of workers and engineers whose jobs would be at risk if a shutdown continued.
Key among the website’s assertions was that a four-year shutdown would cost $1.1 billion to $1.6 billion when the day came to restart the line.
Donald Kotchman, vice president of the armored brigade combat team at General Dynamics Land Systems, said that was the number the company came up with when the Army asked for a report on the state of the industrial base. There are a lot of variables, he said, which is why there is a $500 million spread.
It would depend on the length of the shutdown, and whether the Army would be willing to pay to keep machinery oiled and running periodically, or whether the plant’s components would be completely boxed up and removed.
There would be workers to retrain and hire, and some parts manufacturers may go out of business, he said.
“How would you qualify all of your new suppliers given that you will have lost at least the majority of your suppliers? Not that they would have necessarily gone out of business, but they wouldn’t be producing any Abrams material, and would therefore need to be requalified,” he said.
The Army report listed three key “irreplaceable” subcomponents: Allison transmissions, Honeywell turbine engines and night vision systems for target acquisition produced by DRS Technologies and Raytheon.
Kotchman admitted that these major defense contractors were not at risk of going out of business, but they could still lose their desire and capability to produce these unique systems if there were a prolonged shutdown.
Allison, for example, may no longer see the profit in producing transmissions for vehicles in the 60- to 70-ton class, he said.
The Army has hired an outside consulting firm to study the armored vehicle industrial base, which should let it know which suppliers would be at risk during a turndown in defense spending. That report is due in December.
Lindsey said with major corporations being pressured to maximize profits, they may indeed walk away.
“A point worth emphasizing is that it’s not just about there not being a factory somewhere ready to go,” he said. “The gravest danger might be that we lose the research, engineering and design expertise.”
Although the $1.6 billion restart number was still being touted on the website in September, GDLS spokesman Peter Keating said it is a moot point.
“I don’t think that anybody at this point believes within the [office of the secretary of defense], the Army or Congress that it is wise to do a total U.S. domestic production halt,” he said.
However, there are still risks of production gaps.
The $181 million takes production to the end of 2015. The Army wants to begin new Abrams upgrades in 2017. Kotchman said it is possible with the budget pressures that this could be pushed to 2019.
International sales are expected to fill the gap, but those are not certain.
Ashley Givens, spokesperson for the Program Executive Office for Ground Combat Systems, said “the fleet age for the Abrams tank is low and the Army has determined recapitalization is not required until FY17 in conjunction with the M1A2 SEPv3 production effort,” she said in an email. The Army still believes that foreign military sales will keep the line running until 2017, she added.
GDLS was waiting to hear about an upgrade contract to Saudi Arabia at the end of September. Decisions on other sales to Morocco, Iraq and Egypt were expected in 2012 or 2013, but have been pushed back. According to an Army schedule GDLS provided, the timing of two block buys to Morocco are now listed as “unknown.” A 175 tank buy for Iraq is not expected until July 2015. A contract for 125 upgrade kits for the Egyptian military is an even greater “unknown” with all the turmoil taking place there.
“We just don’t know what the Army and the department’s intentions are on that one,” Kotchman said. His impression is that the Egypt contract isn’t currently being discussed.
There is also a potential contract from Israel to continue the current production of Merkava armored personnel carriers. The Army isn’t expecting an award on that until “beyond 2016.”
The APC contract points out the fact that the plant can do a lot more than tanks, and not all of its eggs are in the Abrams basket.
The facility has done work on Stryker armored combat vehicles, the Cougar mine resistant ambush protected vehicle and turrets for other military combatants, Kotchman said. It is the only plant capable of producing ground combat vehicle structures without further investment, he said.
However, that Army program is still in its infancy, and also faces budget pressures.
“We continue to work with the [Army] to find opportunities to offset the need for set production, through foreign military sales, direct international sales or additional work through other Army programs,” Kotchman said.
The misrepresentation in the press and comedy shows is that Congress is forcing the Army to buy more tanks, Kotchman said.
“We are not adding to the quantity of the tanks that the Army has. We are just changing the configuration of those tanks to make them the most capable and most current,” said Kotchman.
He pointed out that the plant has already laid off two-thirds of its workforce since 2010 because of the defense spending downturn. It now employs about 400 workers.
Aside from the “keeping the industrial base alive” argument, lawmakers and others are refuting the Army’s assertion that it doesn’t need more upgraded tanks by citing the need for a “pure force.” In other words, National Guard troops are using older Abrams while active duty units have the latest version.
“When they say they have enough, they have enough based on the Army acquisition objective of M1A2s in the active Army,” Kotchman said. “But you can convert the Army acquisition objective for the National Guard to M1A2s and continue to do that production.”
The National Guard Association of the United States has made tank upgrades one of its top acquisition priorities. Most units operate the early M1A1 version.
Maj. Gen. Wesley Craig, adjutant general of Pennsylvania and commander of the state’s National Guard, said at the association’s annual convention that the Guard should have the same tanks as the rest of the active duty force.
“How can the Army not equip these units with the same tank as the rest of the force? It is imperative that we avoid the tiered readiness of the past and avoid deploying forces to combat with whatever equipment they have on hand rather than the best available,” he said, according to a story in the Army Times.
Only two Guard units have the upgraded tanks, said Kotchman.
At least one state will have this wish fulfilled. Language in the bill authorizing the $181 million justified the unwanted expenditure as bringing the programs closer to a “pure fleet.” The Army’s report to Congress said the 12 upgraded tanks that it is being forced to purchase will go to the Army National Guard.
Winslow Wheeler, director of the Straus military reform project at congressional watchdog the Project on Government Oversight, said, “We are in a period where the defense budget is beginning to level off … and Congress keeps on adding this kind of stuff that makes all the funding problems worse.”
Tanks have all kinds of uses in conflicts like Afghanistan and Iraq, and remain relevant to modern combat, but the Army doesn’t need any more of them, he said.
“It’s spectacular how willfully recalcitrant Congress is being on this and several other issues. … I don’t see any prospect that it’s going to change.”
These are upgraded old tanks, he noted. “They keep on saying we have got to preserve the industrial base. This is the tank upgrade industrial base, not the production industrial base.”
“We spend money on national security not to create jobs or give engineers job security, but for security,” he said.
“You can pile up the reasons not to do this, and Congress happily goes ahead.” It’s not just the Ohio delegation or whatever “porkers” are directly involved, Wheeler said. Congressional leadership on the appropriations committees and armed services committees comply so they can protect their own pet projects.
Lindsey, however, said protecting the industrial base is a concern.
“I think there is a real risk that if procurement falls drastically, certain design and manufacturing capabilities won’t be there in the future when we need them,” he said. The United Kingdom shut down production of nuclear submarines and had a hard time restarting its program. Those boats are more complex than fighting vehicles, but making modern tanks is also a unique process that requires specialized knowledge and equipment that can’t be readily found in commercial production, he said.
“I do think DoD would be wise to keep certain sectors hot,” he added. But some strategic choices are going to have to be made about which of them must be kept in business and which ones can be permitted to fade away.
“That’s not a call that a member of Congress with a certain facility in his district should be making,” he added.