Reflecting on One Year of War: Is America the Arsenal of Democracy?​

By Mackenzie Eaglen

Tank production in the United States provides a telling example for the state of the country’s depleted aerospace, shipbuilding, and defense manufacturing and technology base. During an 11-month span in 1942, over 8,000 of the United States’ standard tank during World War II, the M4A3 Sherman, were built — a monthly average of 729. Today, American tank production looks quite different. The sole plant operating in the United States, which produces the Abrams main battle tank, turns out 15 per month, according to the Army’s acquisition chief. While the circumstances and tanks themselves have certainly changed, it is a clear reminder that if you don’t build it, they – the companies and workers – won’t come.

Beset by challenges ranging from a shrinking number of contractors to fewer suppliers and too many single sourced vendors to sluggish production rates, the United States’ brittle industrial base has called into question the country’s ability to be an “Arsenal of Democracy.” America’s robust military support to Ukraine, totaling over $26 billion as of mid-January 2023, has served as a stress test for the defense industrial base, exposing long-present flaws, and creating doubt over whether it could support a high-end, protracted war.

The strength, depth, and resilience of the aerospace, shipbuilding, and defense manufacturing and technology base hinges on the number, composition, and variety of companies willing and able to do business with the Pentagon. Having a large number of businesses, both small and large, prime and subcontractor, builds redundancy into the system, strengthens supply chains, attracts new recruits for interesting work, and provides a wide array of technologies and weapon systems for the military to employ and win.

But the current volume of companies able and interested to support the military is too low. Part of the reason for that is the Defense Department buys far fewer ships and other capital assets and much more services, labor, and IT, similar to the wider U.S. economy. The result as stated by the Pentagon’s 2022 State of Competition within the Defense Industrial Base report is an industry that has been allowed to shrink from 51 prime aerospace and defense contractors in the 1990s to just 5 today. Small business participation in the industrial base has also declined in recent years, with the number of small businesses dropping by over 40 percent in the last decade.

The missiles and munitions sector of the defense industrial base has been particularly hit hard by this consolidation. The Defense Department’s 2022 State of Competition report notes that the nation’s missile manufacturers have declined to such an extent that 90 percent of our military’s missiles are derived from just three sources. And, as a whole, the number of prime contractors in the sector has fallen from 13 in 1990 to today’s 3. Even the suppliers for the energetic material used to produce the explosive materials in these missiles are in short supply, with the Pentagon’s Critical Energetic Materials Working Group finding that the chemical industrial base was “vulnerable to supply chain disruptions, [and] dependent on foreign nations for a significant number of sole-source chemicals used in the majority of DoD’s munitions.”

Examples of sole and single source companies are widespread throughout the defense industrial base. Again, just ask the Army. Soldiers are losing mini-Tabasco® bottles in their MRE’s next year since the single small business producing them has shut down. No one is happy about it.

On a larger scale, a recent report by the Center for Strategic and International Studies notes there is just one manufacturer of the turbofans used to power some of our nation’s most advanced cruise missiles, like the Joint Air-to-Surface Standoff Missile. As of 2018, the military had a single supplier of non-rechargeable military batteries, a foreign manufacturer with one domestic facility. Foreign suppliers are an additional complicating factor for the industrial base’s ability to support a protracted war, especially when those suppliers are Chinese. Lithium batteries, found in most of the Defense Department’s weapon systems, offer a case in point. China is dominant over the supply chains for the component parts used in these batteries, forcing manufacturers –even those that are domestic – to be reliant on China. War would obviously pose significant challenges for access to such raw materials, preventing the manufacture of batteries critical for the weapons that our military uses daily.

The Pentagon’s failure to purchase, even at low rates, needed weapons and platforms is another complicating factor in the ability to ramp up production quickly if needed – it is. While actions have been taken by leaders to start replenishing stocks, the industrial base cannot turn on quickly after being left to wither for decades. Prior to the start of the war in Ukraine, the last time that the Pentagon bought Stinger shoulder-fired surface-to-air missiles was in 2004. Nearly 20 years later and efforts to replenish the more than 1,600 Stingers sent to Ukraine have been hampered thanks to parts no longer being commercially available. That has required a redesign of the electronics housed in the Stinger’s seeker head, dragging out an initial delivery of the replacement missile to 2026.

The ability of the industrial base to support any long war where thousands of missiles could be exhausted within weeks is far from assured. But there are actions that can be taken now to build up capacity so that if deterrence were to fail, the U.S. would be more prepared than it is today.

First, we need to look back at the experience of the United States prior to World War II and remember that preparing for conflict requires priming the industrial base well before any conflict begins. In fact, one of the reasons that the U.S. was able to meet high rates of weapons production during World War II were the orders placed by European allies. These orders, specifically for aircraft, stimulated manufacturing and readied the industrial base for when the United States needed it most. Congress did its part by readying the industrial base too by enacting legislation that grew military capacity in terms of airplanes and ships.

Turning to today, our experience in sending arms to Ukraine and backfilling those weapons can serve as another “greasing” of the industrial base, priming it for potential conflict. And, one of the best ways to backfill what we’ve provided to Ukraine and make more for ourselves is through signing multiyear procurement contracts. These provide a steady demand signal to the industrial base, incentivizing them to build and hold excess capacity, spend company money on research and development, recruit and retain skilled workers and second source vendors. Using authorities provided by Congress in the latest defense authorization and appropriations legislation, the Army is taking the lead in signing such contracts for needed munitions, but the Air Force and the Navy should do so as well.

The Defense Department should also relentlessly identify foreign suppliers within the defense industrial base, and pursue on-shoring when possible. This will allow for some level of insulation from supply chain shocks and disruptions during conflict.

Finally, the most important and impactful way to build capacity in the industrial base is through buying a lot more needed equipment, faster to equip the force with cutting-edge weapons. Endless research and laboratory projects are no substitute for fielding capability at economic orders of quantity. The military acquisition system has a baseline timeline ranging from nine to 26 years to deliver capabilities to the warfighter, shutting out new entrants and keeping the industrial base concentrated in only the largest and most compliant companies. Thankfully, Congress is taking some action to reform the system, with a recent example being the Planning, Programming, Budgeting, and Execution (PPBE) Commission. Admiring the problem will not be enough; a bias for action is needed along with a willingness to attack head-on political third rails.

With the possibility of war breaking out at really any time, America’s military does not have the luxury of time to wait and do more later. Industry and the Pentagon should be pursuing the above recommendations and using the country’s experience in supplying Ukraine as a way to identify and resolve issues within industry now to avoid all these shortfalls next time around. Should conflict with China break out, it would simply be too late.

Mackenzie Eaglen is a senior fellow at the American Enterprise Institute. She has worked on Capitol Hill, at the Pentagon and on the Joint Staff.

The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.