Update on Industrial Base
Concerns/Issues
Presented to
ICAP
12 February 2002
Alan R. Beuster
Chief, Industrial Base
Assessment Division
AMSOS-PBI
(309) 782-2434
E-mail beustera@osc.army.mil
OSC – On the Line
What is the Ammunition Industrial Base?
1991
Government-owned Facilities
28
- Acres
526K
- Equipment
483K
- Production Lines
270
- Production Personnel
19K
Contractor Facilities
163
Contractor Facilities with
36
Government-owned Equipment
Combination of Government-owned
and private sector facilities required supports production demands for all
Services
2001
13
351K
302K
73
7K
69
11
Significant
downsizing has
occurred
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Purpose of Production Base
PEACETIME
Components will program to
sustain...production facilities...to
support the U.S. Defense Strategy.
REPLENISHMENT
DOD components will provide the
capability to replace in kind or with
reasonable substitutes, the
projected consumption, damage or
destruction (for one major theater
war) , troop support items, spares,
components, and assemblies
generally within 3 years.
US Defense Strategy
Fight
from
Stocks
1st MTW
2nd MTW
Replenish
1 MTW
Following
Conflict
The Ammunition Industrial Base must:
1) Satisfy peacetime demands
2) Be ready to support next generation technology/items
3) Be responsive when called upon to meet replenishment demands
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Supports all Services
BREAKOUT BY SERVICE
15
45
11
36
64
171
Unique to AIR FORCE
Unique to NAVY
Unique to MARINE CORP
Unique to ARMY
Common to Multiple Services
TOTAL ITEMS
ARMY
21%
MC
6%
COMMON
38%
AF
9%
NAVY
26%
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The Fragility of the
Ammunition Industrial Base
 Production base capacity down 68% last ten years.
 Single source exists for 71 of 302 critical components
 Peacetime buys drive the base…yet POM buys exist for only 76
of 171 critical items – lost critical skills, increased start-up costs,
and minimal incentive for capital investment/new technology
 Industrial base is under-utilized. Base is estimated to be
operating at 26 percent of capacity.
 No U.S./Canada source for certain critical components
and…others at high risk
 Surge capability virtually non-existent…can only affect 10% of
the “go-to-war” shortfalls
 Marginal capability for preferred and precision munitions.
Affordability an issue. Requirements for legacy items will
continue well into the future.
 Enduring Freedom Homeland Defense, and small scale
contingencies will increase production base demands
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The Ammunition Industrial Base is at a Critical
Juncture – How did we get here?
 Inadequate funding, fluctuations in buys, and lack of
long term commitment has not sustained the base or
fostered investment.
 Competition can have unintended consequence –
must include consideration/preservation of unique/
critical capabilities, i.e., nurture the base.
 Policies driven by affordability vs. warfighter needs.
 Policy changes diminish capabilities, e.g.,
mobilization
surge
resupply
replenish in
24 months
replenish in 36 months
1 versus 2
MTW’s
 Push to divest of the organic base
 Focus on price versus price and readiness
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The Ammunition Industrial Base is at a Critical
Juncture – What are we doing about it?
 Focus on continual support to our primary customer – the warfighter
(Allow risk versus policy and budget to drive decisions)
 Attempt to preserve critical core capabilities in the Government-owned
base
 Continue to perform industrial preparedness planning and maintain
plans/provisions for production demands
 Increase level of focus to second and third tier producers
 Market surveys
 Capability assessments
 Financial viability analysis
 Intense management of certain critical items
 Predict next items at risk/avoid “next crisis”
 Looking towards additional programs to help such as AMC Diminishing
Manufacturing Sources Material Shortages Info System
 Acquisition strategies tied to industrial base
 Structure acquisition plans considering industrial preparedness planning
provisions and TDP risk advisories
 Use of best value contracts – consider readiness in awards made
 Use of multi-year contracts – stability and longer term commitment to
contractors
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Summary
A mix of Government-owned and private
sector facilities must continue to exist to meet
ammunition demands.
The ammunition production base is at risk and
requires attention/nurturing.
HQ OSC will continue to intensely manage the
ammunition industrial base to maximize
responsiveness to warfighter needs.
As we look to
the future …..
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Throughout The Army Transformation
Transformation must include a
holistic munitions strategy.
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Relook at 2025
 Studies such as PBD 407 shaping/influencing the base
 Meetings with HQ AMC on strategic industrial base
plan
 Challenged by GEN Kern to “forward think” and “draw
a new box”
 Within HQ OSC future base reemphasized to include
once again holding periodic meetings with
commercial producers for their involvement/input.
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