2 April 2014 – The Defense Science Board says Offshoring Of U.S. Manufacturing Has Created National Security Vulnerabilities
By Richard A. McCormack
For the first time perhaps ever, a U.S.-government report has stated that the shift of American manufacturing overseas is causing a decline in Americans’ standard of living.
Most government economic and trade officials have argued that the movement of manufacturing offshore has allowed low-income Americans to buy cheaper products, saving them thousands of dollars a year and improving their standard of living. Jason Furman, Chairman of the Council of Economic Advisors, stated in a paper he authored shortly before joining the Obama administration that “there is little dispute that Walmart’s price reductions have benefited the 120 million American workers employed outside the retail sector.”
According to the Pentagon’s Defense Science Board, that assertion is in dispute. And the situation of offshore outsourcing of manufacturing is leading to much greater strategic consequences for the U.S. economy and its military.
“Offshoring of manufacturing capabilities resulted from capital inducements such as wage structures, tax rates, weaker environmental regulations or enforcement or available resources,” notes the DSB. “These shifts are causing lower standards of living as a result of the loss of fabrication facilities, and are further exacerbated by subsequent losses in underlying technology, such as the migration of supporting design and testing capabilities. Recent financial, political and economic crises have created significant uncertainty regarding continued sustainability of the current innovation system that feeds the defense technology base.”
The shift of manufacturing from the United States to China and
India is a leading threat to the U.S. military advantage, according to
the Defense Science Board in its “Technology and Innovation Enablers for
Superiority in 2030” report recently posted on the web for public
viewing. “Movement of critical manufacturing capability offshore may
pose significant challenges,” states the DSB.
The shift of manufacturing to foreign nations “also affects U.S.
technology leadership by enabling new players to learn a technology and
then gain the capability to improve on it. An additional threat to
defense capabilities from offshore manufacturing is the potential for
compromise of the supply chain for key weapons systems components.”
The United States is not guaranteed economic benefit from the
increased production of natural gas, notes the DSB. “Being resource-rich
will certainly contribute to economic vigor in the United States, but
capitalizing on this new resource will depend on the ability to
distribute the goods produced as a result of relative energy price
advantages. Selling agricultural, energy and manufactured products
requires ready access to the global common, and all global distribution
mechanisms are ready targets for adversaries of the United States
seeking to gain competitive advantage.”
The rise of technically and economically strong foreign
adversaries will challenge U.S. superiority in speed, stealth and the
precision of weapons systems. Other countries “are likely to develop
counters to some or all of the foundation technologies on which the U.S.
has come to rely,” states the DSB. “The advantages provided by
capabilities such as GPS, Internet-based network communications,
satellite reconnaissance and stealth aircraft will be diminished and, in
many cases, eliminated. To maintain superiority, it will be necessary
for the military to develop new capabilities or tactics, techniques and
procedures to continue to be effective when capabilities on which it has
relied over the past two decades are degraded or denied.”
The United States can no longer “plan to rely on unquestioned
technical leadership in all fields,” states the Defense Science Board.
In Iraq and Afghanistan, the U.S. military has exposed its capabilities,
tactics and vulnerabilities. “Military actions requiring expensive
platforms and equipment with long logistical support tails generate
vulnerabilities ripe for exploitation, as the use of improvised
explosive devices in Iraq and Afghanistan demonstrated, where a
technologically unsophisticated adversary created damage that was
disproportionate to the technological and financial investment. By 2030,
the increasing distribution and linkages available for technology
development will likely enable creation of similar destructive
asymmetries on a global scale.”
The DSB report is located at: http://www.acq.osd.mil/dsb/reports/DSB2030.pdf.
