For more than 80 years, Buy-American statutes have protected U.S. jobs and were specifically created so that any given product with more than 50% of U.S. labor and parts manufactured in America is considered “Made in USA”. Today, this act applies directly to U.S. Navy ships, which are required to be built in U.S. shipyards but does not extend to procurement of critical components of each vessel. This not only compromises supply-chain security and intellectual property considerations, but also threatens American job growth and poses a serious risk to U.S. national security.
As the 116th Congress reconvenes this week, the U.S. House of Representatives’ version of the Defense Appropriations Bill (H.R. 2740), which passed the House last June, currently awaits action by the Senate and House-Senate conferees. This bill contains critical legislation that must be passed to safeguard the future health of the U.S. shipbuilding supplier industrial base. In addition, this legislation will fund the Navy’s fast frigate program, known as FFG(X), and requires that any auxiliary equipment, such as pumps, or propulsion equipment or shipboard cranes for these ships must be manufactured in the United States. In other words, the measure specifically prohibits the use of U.S. funds to buy critical shipboard components for the FFG-Frigate program that are not manufactured in U.S. plants. The bill reported out by the Senate Appropriations Committee does not include this important requirement.
Currently, the Navy has plans to order 20 FFG-Frigate ships over the next decade, and if the measure is not included in the House-Senate conference, it would represent a critical missed opportunity for our U.S. shipbuilding supplier industrial base. Without this provision, these components are at risk to be procured from foreign manufacturers.
The House position is clear that U.S. funds should not be used for critical components on American warships at the expense of U.S. manufacturing capability and U.S. jobs. New programs for U.S. shipbuilding suppliers to compete for are limited, and the Senate has the opportunity to not give foreign manufacturing companies an advantage over U.S. companies that are already hurt by the decline of the U.S. maritime industry.
The Trump Administration early on recognized the hardship being experienced by manufacturing suppliers and issued an Executive Order 13806 that called for an assessment of the defense industrial base and supply chain resiliency of the United States. This Executive Order states:
The loss of more than 60,000 American factories, key companies, and almost 5 million manufacturing jobs since 2000 threatens to undermine the capacity and capabilities of United States manufacturers to meet national defense requirements and raises concerns about the health of the manufacturing and defense industrial base. The loss of additional companies, factories, or elements of supply chains could impair domestic capacity to create, maintain, protect, expand, or restore capabilities essential for national security.
Although U.S. shipyards can still build hulls, decks and superstructures thanks to Buy-American requirements in Federal law that protect them, that alone does not make a warship. Without a U.S. capability to build and maintain the critical components that enable shipboard operations, the U.S. becomes critically dependent on foreign entities. As the U.S. Government and shipyards continue to buy foreign-made components, U.S. suppliers dependent on defense programs are increasingly shutting down operations. According to the U.S. Department of Defense’s 2018 Annual Industrial Capabilities Report to Congress, published in May 2019, industries involved in the manufacturing of shipbuilding components were among the hardest hit by the global shift in the industrial base over the last 20 years. Of the top ten highest grossing industries in Navy shipbuilding, six are in the manufacturing sector. Since 2000, these industries experienced a combined decline of over 20,500 establishments in the United States. Thus, contraction of the industrial base has limited competition among U.S. suppliers of Navy components and in many cases, competition has altogether vanished, forcing the Navy to rely on single and sole source suppliers for critical components.
The only way to preserve the U.S. capability to build critical systems for our warships, vital to the vessels that comprise our country’s sea power, is for the U.S. to source components from within the U.S., in the same way it sources ships from U.S. shipbuilders. Given the lack of significant commercial shipbuilding in the U.S., the market is too small to sustain a supplier base if that base is not also used by the military. In order to turn stem this trend, Congress must mandate that domestic manufacture is required for these components.
Aside from the obvious benefit of maintaining critical manufacturing capabilities there are the additional benefits including supply-chain security, cyber-security protection of equipment, preservation of workforce skillsets, and intellectual property considerations. U.S. shipbuilding suppliers, who have been supporting the U.S. Navy for decades additionally have intimate knowledge and experience with the robust requirements of U.S. military specifications that foreign manufacturers traditionally struggle with.
Our elected members of Congress should not turn a blind eye when given the opportunity to finance the fabric of our nation and maintain its pledge to protect U.S. citizens from losing jobs abroad. The U.S. Navy fleet should proudly claim that every component of each vessel is “Made in USA.”
A strong domestic industrial base is essential for our national security, a healthy and thriving economy and a diversified industrial workforce. It’s now time for the Senate to recede to the House position to protect critical U.S. jobs and take a stand to stop the outsourcing of critical components for our warships before America becomes totally dependent on components, parts and service technicians from foreign manufacturers.
FOR MORE INFORMATION, CONTACT: George Williams, CEO, ASSA, 228-861-3548 georgewilliams.assa@gmail.com