Rebuilding US Arms Production - Can a new Strategy Restore the Arsenal of Democracy?

During many major conflicts of the 20th century, the ability of the USA to pump out enormous amounts of defence materiel was a critical factor. In the lead up to WW2 the US would declare itself the 'arsenal of democracy'

But with the end of the Cold War came reductions and consolidation - and after the events of early 2022 the US, like many other nations, found itself eager to re-expand its defence industries to meet the demands of the war in Ukraine and changing global security environment.

That provided the context for the release of a defence industry strategy this year -- and today, we're going to talk about it.

Patreon:

Caveats, Comments and Corrections:

All normal caveats and disclaimers apply

In particular – I would like to note as always that this material has been created for entertainment purposes and is not intended to be a complete or comprehensive examination of the topic in question and should not be relied upon to inform financial or other similar decisions, judgements or evaluations.

This is obviously very much not financial advice.

Many images on slides are included only for illustrative, comedic or aesthetic purposes and should not be assumed to be related to the corresponding text or audio.

Readings and Sources:

2023 National Defense Industrial Strategy:

Annual Industrial Capabilities Reports 2021-2016

Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency (2018)

CRS on the US Defense Industrial Base:

US DoD Small Business Strategy

Defense News reporting on Patriot PAC-3 production figures

Reporting source on production rate of 12 Patriot fire units per year

Reporting on call for a third US nuclear shipyard

US missile production - Arkansas

Mentioned Xinhua article

US arms hitting record high in 2023

Source for featured shipyard worker image

US Navy Secretary on ROK shipbuilding capacity

FRCSW Apprenticeship program

Reporting on US manufacturing jobs

Timestamps:

00:00:00 — Opening Words
00:01:04 — What Am I Talking About?
00:02:21 — The Peace Dividend
00:06:58 — Towards Strategy
00:10:12 — Resilient Supply Chains
00:26:17 — Workforce Readiness
00:36:25 — Flexible Acquisition
00:46:09 — Signs Of Progress
00:51:05 — Geopolitical Significance
01:03:19 — Channel Update

[PerunAU]

Thank you very much to the Patrons who voted decisively for this topic.

One reflection after making this episode is how both new all of this is - and also the extent to which it isn't. The US has long published Industrial Capability Reports for example (linked in the description and worth reading for their more detailed look at particular capability areas like castings and forgings) which included recommendations. What does feel new is the amount of money and focus being directed at the issue - just as surging foreign orders and a changing demand picture are also putting upward pressure on investment and output.

As with any strategy, a great deal of the impact will likely come down to sustained execution - but for a lot of systems, the rise in output is already fairly apparent.

[ianmilbrodt]

Guys, he's talking about it. The US needs more weapons.

[revswagger]

We must construct additional Democracy

[elijahsnow]

“And then Vladimir Putin decided to launch his special defense stimulus operation…”

Tex would be proud of that one. Because it is that best of truths. Horrible and terrible . And also hilariously true.

[The_ZeroLine]

31:06 - I love your idea of “rounding up finance bros and telling them ‘you’re learning to weld now’.”

[Ben.....]

"but in the interest of time, and because even my audience starts to hit its limit when you begin discussing things like contract authorities"

Perun dont threaten us with a goodtime mate.

[dallastaylor]

As one who works in the US military industrial complex, here's what I see. We moved to a 70% base of commercial accounts after Cold War. Though we did still do 30% military, the commercial kept us sustained. We do have a go plan for a robust reboot for the military if needed. I even know how my job would change. Recently, the 70-30 has morphed to 60-40. This is far from war footing but was easily done. For my particular little corner of the MIC, we're good to go if needed.

[philipmaxwell]

I just listen for the little gems such as “ cheaper to fire Aston Martins at the enemy “ . Another superb analysis .

[DeTiro]

Perun, if you let two marines guard the design documents you'll just end up with beer fridges in APCs, Mameluke sword sheaths in F-35 B cockpits and bayonets on tanks with all edits drawn in crayon.

[jakelilevjen]

Basic economics would tell us that a shortage of skilled workers, coupled with a strong demand for their services, would lead to rising wages.

I have a coworker who recently left Electric Boat, and I asked him why they couldn’t find enough welders. He pointed out that a welder couldn’t afford to live near the shipyard, and would face a serious commute each day.

Who knew that affordable housing and paying a decent wage would be national defense issues?

[CruelandCold]

Ah yes, the glorious Sunday PowerPoint. My weekend is now complete.

[catsfrommars]

Perun out of context, “The first problem […] people tend to want to exercise free will.”

[wardaddyindustries]

Can confirm that a lot of these machine shops are relying on an older workforce. And their knowledge base is HUGE. I never considered myself lazy always working manual jobs, but I now work with a guy that needs his hip replaced and another that's blind and one eye. But they can troubleshoot and get a machine up so much faster.

40 years of experience will do that.

[drksideofthewal]

Speaking to the five people who will get this reference, the US is like a dormant “Fallen Empire” in Stellaris right now.

[michaelsnyder]

The Yom Kippur War in 1973 generated an understanding of how attritional modern warfare can be. The Russian "SMO" is just the latest event that teaches "He who wants peace, prepares for war".

[major__kong]

If you think the defense workforce is getting old, during COVID financial institutions and governments went scrambling for COBOL programmers to update software from the 60s to deal with the change in benefits and new government programs. I remember seeing one story about someone in their 80s being in demand. He also happened to work with Grace Hopper, who invented COBOL.

[romanbellic]

Sir, this is a Wendy's.

Alright I'll have 6 billion burgers then.

[Syndr]

Perun is packing his bags for his upcoming Middle East special.

[michaelhellwinkle]

As a reservist in a DLA unit, thanks for the shout out Perun. Not many people know we exist, but like many things in the world, its the background logistics that keep things going.

[BAGELMENSK]

I heard "Arsenal of Democracy" and *came* as fast as I could.