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Political Monday: Dealing with Cuts in Defense

May 28, 2012

As the United States looks to reduce its overall budget deficit, it is natural for conservatives and liberals to push for cuts in areas outside their own interests. Generally speaking, for conservatives, it’s social programs.  For liberals, it’s defense spending.  Over the next few weeks, I will be writing about various areas of cuts and try to step beyond the “politics as usual” and look for what is really going on.  To that end, a look at a small sliver of proposed defense spending cuts sheds some light on the subject.

Andrea Shalal-Esa of Reuters reported on the effects of proposed cuts at the Joint Systems Manufacturing Center, Lima Tank Plant, in Lima Ohio[i], on the local Lima economy.  It is well worth your time to read her article as it takes spending cuts down to a personal level.  While Andrea’s article is politically neutral, I think stories like this will be the fodder for the current political season.  Unfortunately, both political camps will miss the point of her story; budget cuts have real impact on individuals.

Upon reflection though, I think the real culprit in this situation is the company running the Lima facility – General Dynamics.  In the spirit of full disclosure, I am very fond of General Dynamics.  I served in the US Navy’s Submarine Service and General Dynamics’ Electric Boat Division plays a large role in construction of safe and capable submarines.  That is not to blame them for budget cuts but more in how they react to budget cuts.  We must remember, our military is their customer.  By extension, that makes our government and ultimately, “We The People” their customers.

In business, management has the responsibility to return to investors the maximum amount of profit.  In the Lima case, they entered into a contract to run the facility for the government and produce tanks.  With the winding down of two wars, we have a surplus of tanks.  It is silly to spend over $6 million per tank on new ones, regardless of its impact on the Lima community.  In business, you must make the products the customer needs, not the product you want them to buy.  The question is not what can we do to keep the military buying unneeded tanks but what can we do to manufacture equipment at the facility until the military needs more tanks.  Companies supplying our military have for far too long depended on increased sales to maintain their profitability.  It is time that changes.

General Dynamics knows this.  Their latest acquisition of IPWireless Inc. shows they understand the need to diversify.  So how do we help them keep the Lima plant operational in the near-term?  This is the question our politicians need to answer; this is where their rhetoric fails.  The plant needs to remain operational in regards to manufacturing but idol in regards to building tanks.

The point is, it is not a political question as much as it is a one of practicality.  We need the ability to manufacture tanks but we cannot afford to pay for tanks just to keep the plant working.  Just off the top of my head, one obvious task the plant can take on is refitting and refurbishing tanks for overhaul.  As the number return from our combat zones, they will overwhelm the depot-level repair facilities.  Another task might be the recycling of tanks that reach the end of their planned life cycle.  It is up to General Dynamics to find useful work to keep their employees working, not the federal government.  Of course, it is in the government’s best interest to assist them in finding such tasking.

Another point to keep in mind when you hear a politician blast the opposing party for their lack of leadership on this particular issue, neither party shows any leadership.  The conservatives simply want to keep buying new weapons, the budget be damned, and the liberals want to slash production without thinking about the long-term effect on our national security.  Of course, I generalize but you get the point.

Today is Memorial Day.  Perhaps it is fitting to take on this subject on a day we honor the brave men and women that have kept our nation safe since before we were even an independent country.  We owe it to them, and the current men and women keeping us safe to spend each penny wisely.  We must give them the equipment they need.  We need to be frugal so we can afford to do just that.  Wasteful spending is just as unpatriotic as not spending at all.  We need companies like General Dynamics to do their part and keep the Lima plant open and working so, they can respond quickly when the demand for tanks returns.  We need their creativity to find ways to keep it operational.  This will make General Dynamics a true partner to our freedom and not just the beneficiary of unbridled defense spending.

 

 


[i] Shalal-Esa, Andrea. “U.S. Defense Cuts Hit Home at Ohio Tank Plant.” Reuters. Thomson Reuters, 24 May 2012. Web. 28 May 2012.
<http://www.reuters.com/article/2012/05/24/us-usa-defense-ohio-idUSBRE84N1DW20120524>.

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