Signs of Progress on Industrial Base Issues.

Author:Pederson-Giles, Jens

* For decades, defense policymakers have focused attention on the U.S. manufacturing sector as an area of strategic concern for the United States. Issues such as production outsourcing, skilled personnel deficits, insufficient investment in new technologies and equipment and worrisome supply chain resiliency have plagued the manufacturing sector in recent years, encouraging doubts about its ability to meet the military's need for secure and reliable industrial supply.

An interagency task force assessment of the state of the defense industrial base, initiated by President Donald Trump's Executive Order 13806, identified multiple systemic risks and recommended policy initiatives to address them. Recent actions by the Trump administration have been promising, but strengthening America's industrial vulnerabilities will be a long process, requiring patience and dedication by policymakers and the contracting community.

Released in September 2018, the interagency task force report titled, "Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States," established an important benchmark for understanding the risks to the defense industrial base's performance. The report identified macro focuses and risk archetypes shaping the industrial base--including uncertainty of government spending, sole source manufacturing and diminishing STEM skills--and specified roughly 300 impacts felt across 16 sectors in a classified appendix.

To address the risks and negative trends raised by the report, the agencies involved provided a lengthy list of recommendations including expanding direct investment in the industrial base, growing workforce development efforts and improving research efforts into next generation technologies.

The Trump administration has taken perhaps its most aggressive policy action to enhance domestic sourcing of rare earth materials. Many advanced defense technologies rely on rare earth materials as ingredients in critical high-performance components. In July 2019, Trump signed five presidential determinations designating light rare earth elements, heavy rare earth elements, rare earth metals and alloys--neodymium iron boron rare earth sintered material permanent magnets, and samarium cobalt rare earth permanent magnets--as critical to national defense under Section 303 of the Defense Production Act of 1950. This act gives the president broad economic policy authorities to create...

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