OM in the News: Military Supply Chain Struggles

A Norwegian factory, Kongsberg, produces a missile-defense system that can shoot down drones, helicopters and other airborne threats from 25 miles away.  Capable of launching 72 missiles into the sky at once, the Nasams system is what protects the airspace over the White House. Kongsberg, which in addition to Nasams also makes ship-based missiles and parts of F-35 fighter jets, has ramped up production to 24-hour, 7-day shifts. That still may not be enough. With the West confronting a rising number of potential threats, including Russia, Iran, and China, orders are piling up for the Nasams.  It takes two years to make one Nasams, and there is already a multiyear backlog.

Israel’s Iron Dome antimissile system intercepted rockets launched recently from the Gaza Strip

Modern weapons are hugely complex, often requiring thousands of parts, reports The Wall Street Journal (Jan. 4, 2024). Kongsberg, like most Western defense firms, designs and assembles its weapons systems but doesn’t manufacture most of the components. Over 1,500 suppliers contribute to the products. The Nasams supply chain alone consists of 1,000 companies and is built across two continents. Kongsberg states: “We are supplied by companies with their own supply chains, which in turn have their own supply chains, which have their supply chains, till it gets right down to the mine that digs up the basic resources.”

In a 2023 wargame simulation of how the U.S. would respond to a Chinese invasion of Taiwan, it was estimated America would run out of all-important long-range antiship missiles within the first week. The U.S. wouldn’t be able to replenish its stock quickly: As with the Nasams, each missile takes about two years to make.

Other missile categories have similar issues.  Lockheed Martin said it will take four years to double production of Javelin and Stinger surface-to-air missiles, twice as long as expected, as supply-chain challenges continue. Pentagon officials said the problems were widespread, with everything from chips to springs and ball bearings running short. The U.S. tried to track the global supply chains for the two missiles with the goal of finding workarounds for bottlenecks, said a pentagon leader. His conclusion was sobering: “We do not have that ability.”

The Pentagon aims to map global supply chains for 100 weapons systems in production, down to part number and country of origin. The move is intended to identify pinch points early, and mitigate them by finding alternative suppliers.

Classroom discussion questions:

  1. What is causing the supply chain problems in the defense industry?
  2. How can they be addressed?

OM in the News: America’s Hottest Export is Weapons

If we worry about America’s loss of manufacturing, the Fortune (Feb.28,2011) cover story today will bring some comfort. The magazine cover pictures a US-made missile for sale –and the article begins thus: “This time last year, Boeing’s F-15 production line, which is housed in a beige, dreary building on the outskirts of Lambert- St. Louis Int’l Airport, was on the verge of shutting down”.

This really caught my attention as I had earlier worked in that very same dreary building on the F-4 design team!  The really good engineers were in a locked room I could never enter, as they were working on the F-15 in total secrecy. The F-15 was a true power in its heyday. But the US stopped buying the plane a decade ago and production was down to one F-15 a month and due to close. This would have cost 100’s of manufacturing  jobs during an already bad economy.

Then up stepped Saudi Arabia, with a $60 billion arms package a few months ago that included 84 F-15s. The deal means the production line stays open til at least 2018. DOD’s plan to sell $103 billion in weapons overseas this year is a staggering rise from an average of $13 billion between 1995 and 2005….and is rescuing American manufacturing and exports in a big way.

Also in the news: a $4 billion plane deal with India in 2011 (in addition to $2.1 billion in 2009) and a shot at a $10 billion sale of 126 jet fighters. Egypt bought $2 billion in weapons in 2009 and Jordan $431 million. (You might be wondering what happens to those arms when regimes are overthrown–the State Dept. certainly does). WikiLeaks just confirmed what most already know: American diplomats are pitchmen for the US-made arms industry, a major source of  high-paying, highly skilled manufacturing jobs.

Discussion questions:

1. Why is the arms industry so important  and who are our major competitors?

2. What do companies typically have to do to get major contracts abroad?

3. Is it fair to say,”As Boeing goes, so goes the country”?