Another Reason It’s Hard to Increase Production

I thought you might find this observation by Sam Skove at Defense One interesting:

Lower-tier manufacturers are layered throughout the weapons production process, even if the branding on the end-product bears the name of a well-known, multi-billion dollar company. Boeing relies on 55,737 suppliers, Lockheed on 17,722 suppliers, and General Dynamics on 17,701 suppliers, according to an investigation by the Financial Times.

Many of these smaller suppliers are “tier five, six, and seven,” in the defense supply chain, said Jerry McGinn, a former senior career official in the Defense Department’s Office of Manufacturing and Industrial Base Policy. “We’re talking wiring, harnesses, fasteners, those kinds of things.”

The Defense Department also works directly with over 39,000 small businesses, not including subcontractors working for bigger firms, according to a 2020 U.S. Government Accountability Office report.

So if Lockheed wants to boost production for its missiles, those small machine shops must also increase production. “You can’t just go to a hardware store and buy a nut and bolt, it has to meet certain specs,” said Berardino Baratta, the CEO of MxD.

Meanwhile, the number of those firms is shrinking. The number of small businesses working in the defense industry between 2010 and 2020 fell by 40 percent, and an estimated 15,000 firms will go out of business in the next decade if trends continue, according to a Defense Department study.

In the past I’ve known small defense contractors like this that consisted of a guy wiring cables on his kitchen table.

In other words increasing production of munitions is more than a matter of ordering more. A lot more. The capacity might not be there, the management of such a supply chain is daunting, and some of the suppliers are reluctant to modernize their operations without a dependable stream of orders.