Erosion of U.S. industrial base is troubling; growing dependence on foreign suppliers should concern policy makers.

• Author: Ronis, Sheila R.

The U.S. industrial base is eroding, and this situation has enormous national security implications. It has made the United States so dependent on foreign countries for critical components and systems that it may have lost its ability to control its supply chains.

The United States is becoming dependent on countries such as China, India, Russia, France and Germany for critical weapons technology. It's conceivable that one of these governments could tell its local suppliers not to sell critical components to the United States because they do not agree with U.S. foreign policy.

The federal government, and in particular, the Department of Defense, does not manage the country's industrial base as a "system."

U.S. government agencies are fiefdoms that rarely compare notes to see how their collective policies might affect a company or an industry. Interagency cooperation is an essential element of what needs to change in the future.

A Defense Department report entitled "Transforming the Defense Industrial Base: A Roadmap," recommended the department consider "viewing the industrial base as being composed of operational effects-based sectors that support transformational war-fighting. ... Organizing its decision processes to optimize operational effects--not programs, platforms or weapons systems."

This report makes sensible arguments, but more needs to be done.

U.S. corporations increasingly act as large social systems with a global focus. But ask the CEOs of the Fortune 500 to describe the issues on their minds and, more than likely, national security or the disintegration of the U.S. industrial base would not be among them. Many global corporations do not believe they owe allegiance to any stakeholder except their stockholders, and sometimes, their customers.

This attitude has not changed since the end of the Cold War--not even since 9/11. A new vision of national security is needed that includes cooperation between government and industry.

National security requires a healthy market-based economy, with a strong industrial base of globally competitive industries continuously improving quality and productivity.

The United States cannot sustain the kind of growth it has enjoyed for the last several decades if the industrial base steadily erodes. Increasingly, a number of U.S. companies in specific industries find it impossible to compete in world markets. This is of particular concern for the industrial base that supplies the U.S. military.

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