Offshoring Defense Equipment Production: Potential Drawbacks and Decision Factors
The surge in American defense industry's reliance on foreign manufacturing has raised concerns about national security and economic stability. With thousands of unidentified suppliers in the supply chain, it's crucial for the DOD to take control of this chain to eliminate security vulnerabilities, boost the economy, and maintain quality.
Since 1998, U.S. corporations have shipped millions of jobs and 90,000 manufacturing plants overseas (Economic Policy Institute). The closing of domestic factories and increasing reliance on imports for critical materials and equipment has exposed the country to numerous threats.
In 2018, a study by the U.S. Geological Survey revealed that no rare earth minerals were produced in the U.S., with 81% of global production taking place in China. Rare earth minerals are vital components of defense systems, serving in magnets, radars, and other electronic components. The COVID-19 pandemic has highlighted the dangers of relying on outsourcing, with frozen supply chains exposed.
Outsourcing offers short-term benefits, such as reduced costs, access to new markets, and a decreased need for oversight, but it comes with risks like diminished quality control, compromised national security, and intellectual property theft. Overseas manufacturing can lead to a loss of quality control, making it challenging to ensure foreign manufacturers adhere to defense product requirements and safety standards. Intelligence sharing concerning defense equipment manufacturing can lead to theft and competition by foreign entities.
The shift to domestic production can address these risks, bolster American manufacturing, and strengthen national security. The CHIPS and Science Act, passed in 2022, paves the way for increased domestic production. This transition results in cost savings, as it allows for a reliance on commercial off-the-shelf technology and eliminates shipping costs. It also allows for the adoption of automation and robotics, reducing manufacturing costs, minimizing human error, and increasing opportunities for highly-skilled workers.
Cevians, a company focused on lighting and optical technologies since 1968, is a proudly American-made success story, continuously innovating for the defense, aerospace, automotive, and medical markets.
In response to these challenges, the U.S. is actively pursuing several initiatives to enhance domestic production, mitigate security risks, and protect intellectual property. These efforts include reauthorizing the Defense Production Act, improving coordination between the U.S. government and allies to enhance their industrial capabilities, investing in advanced technologies, and supporting foreign military sales to maintain a robust order book and strengthen alliances.
The increased reliance on foreign manufacturing in the defense industry has exacerbated concerns over national security and economic stability. To mitigate these risks, the U.S. government is keen on transitioning to domestic production, which not only strengthens American manufacturing but also aids in maintaining high-quality standards, reducing costs, and safeguarding intellectual property.
