The increasing reliance of the United States defense industry on overseas manufacturing poses significant risks that have implications for national security and economic stability. There is a strong incentive for the DOD to regain control over the supply chain, which consists of thousands of unidentified suppliers. By concentrating defense equipment production in the U.S., we eliminate vulnerabilities to security risks and attacks, strengthen the economy, control quality, and leverage future innovation.
Since 1998, U.S. corporations have outsourced millions of jobs and over 90,000 manufacturing plants (Economic Policy Institute). The closing of factories in the U.S. over the past few decades has caused the military to rely on imports for critical materials and equipment, exposing the country to various threats.
In 2018, a study revealed that while no rare earth materials were produced in the U.S., 81% of global mine production occurred in China (U.S. Geological Survey). Rare earth minerals are used in defense systems, including magnets, radars, and other electronic components. In recent years, the COVID-19 pandemic has attracted increasing attention to this issue, demonstrating the vulnerability of outsourcing to frozen supply chains.
Reasons for Outsourcing
The primary reasons for outsourcing in defense manufacturing are that it can reduce costs, bring access to new markets, and reduce requirements for oversight in manufacturing, prioritizing shorter-term benefits. A reduction in defense manufacturing costs can allow the budget to be allocated to other areas, such as research, development, and training. Another appeal of outsourcing is that it can provide the opportunity to leverage external technologies and solutions. Moreover, outsourcing reduces the burden of day-to-day manufacturing oversight, allowing more time and resources to be reallocated elsewhere.
Some causes leading to this shift towards outsourcing include the size of the military and the increased demand for defense technology. Once a major manufacturer outsources, the industry follows suit to keep up with the same cost savings. The shift back towards domestic production is made slower and more complicated by the current structure of the supply chain. Due to the complexity of the supply chain and the thousands of “nodes”(pieces of the network that produce the final product), it is difficult to identify all of the suppliers, and the DOD currently does not have full visibility.
The Consequences of Outsourcing
Outsourcing presents many risks, including lack of quality control, compromised national security, and intellectual property theft. Overseas manufacturing can result in a loss of quality, as ensuring that foreign manufacturers meet requirements and safety standards for defense products can be very difficult. Intelligence sharing regarding the manufacture of defense equipment can increase the risk of theft and competition by foreign entities. As a result of outsourcing, the U.S. is exposed to the risk of vital supplies being cut off, sabotage by faulty equipment, and espionage. Once a product begins to be outsourced, the process, tools, and control over the supply chain are complex to regain. Additionally, though we do not have full visibility over the identity or location of our defense suppliers, they may be clustered in similar geographic regions, making them vulnerable to attack.
Strengthening Domestic Production: The Solution
By increasing onshore manufacturing of critical defense equipment, the risks associated with overseas manufacturing can be mitigated, strengthening American manufacturing and national security. The CHIPS and Science Act passed in 2022, is a step towards this objective, stimulating domestic production within the U.S. Outside of eliminating security risks, this move towards domestic production will eventually deliver cost savings, with a reliance on commercial off-the-shelf technology and a reduction of shipping costs. Additionally, advances in automation and robotics offer another way to reduce manufacturing costs while also reducing human error and increasing opportunities for high-skilled personnel. With the implementation of automation into the workforce, data analysis will also be more readily available.
Cevians: Produced in the U.S.
A pioneer in innovations in lighting and optical technologies since its founding in 1968, Cevians is proudly manufactured in the U.S. Cevians continues to develop breakthrough technologies for the global defense, aerospace, automotive, and medical markets, contributing to the safety and advancement of our country.
