They stressed the need for predictability and stability to members of the House Armed Services Committee on Wednesday as lawmakers worried about multiple stressors on the industry, including inflation, workforce shortages and supply-chain disruptions.
“The condition of the industry today is not the result of Russia’s invasion of Ukraine but successive decisions made over many years,” said Eric Fanning, president of the Aerospace Industries Association. “Federal policy and investment in our national defense can be summed up in two words: unpredictable and inconsistent.”
Congress’ reliance on continuing resolutions to fund the government — more than 120 in the past 25 years — have caused the industry to constantly hit the accelerator and then the brakes, said David Norquist, president of the National Defense Industrial Association. The industry in the meantime has shrunk, he said.
“These trends are not consistent with creating the defense industrial base required for great-power competition,” he said.
Matthew Paxton, president of the Shipbuilders Council of America, said unpredictable budgets create a volatile acquisition environment in which production lines are stopped and started.
“We need a consistent upward and adequately funded demand signal,” he said.
The Navy should lay out a 10-year shipbuilding plan to help shippers make critical investments in facilities and its workforce, Paxton said. A new shipbuilding plan every year sends a confusing message to the industry, he said.
Rep. John Garamendi, D- Calif., countered that he wanted to see 1- or 5-year plans, dismissing the Navy’s ongoing 20-year effort to modernize its four public shipyards as “absolute baloney not worth anything.”
He expressed frustration with the tendency of lawmakers and the defense industrial base to focus on acquiring “bright, new, shiny things” for the Pentagon without a plan for maintaining them.
“We find ourselves with ships, maybe we can keep 50% of them at sea,” Garamendi said. “Oh we’re going to have 350 ships? Really? And we can’t even keep half of them at sea?”
A government watchdog report released last week showed the Navy’s warships have been spending less time at sea and more time under costly repairs since 2011. Congress approved an unofficial goal in 2017 to grow the Navy’s fleet size to 355 ships. The service currently fields 293 vessels.
Paxton argued the shipbuilding industry can meet the Navy’s demands, as long as the demand signal is clear. Several lawmakers pointed out that the Pentagon has at times scaled down its requests because it does not believe the defense industrial base can deliver all of them.
“I think private industry disagrees with assertions about capacity,” Paxton said. “I think there is capacity for new shipbuilding and ship repair.”
But industry representatives acknowledged continuing struggles to maintain a healthy workforce due to the lingering effects of the coronavirus pandemic and longstanding hiring challenges. The lack of work from home options and a growing divide between compensation in the defense industry compared to the commercial industry has hurt recruitment efforts, Fanning said.
A burdensome security clearance process has also played a role in hiring hurdles, he said.
“I suspect it’s a problem we’re going to be focused on for the duration of our lifetimes,” Fanning said.
In 1985, the U.S. had 3 million workers in the defense industry, but by 2021 the employee base had decreased to about one million, according to Norquist. About 17,000 companies left the industrial base during the last five years, he said.
Rep. Chris Deluzio, D- Pa., said company consolidations that began in the 1990s led to a reduction in the number of aerospace and defense prime contractors from 51 to five, citing a 2022 Defense Department report.
Suppliers have disappeared during the same time, he said. Tactical missile suppliers dwindled from 13 to three, suppliers of fixed-wing aircraft decreased from eight to three and satellite suppliers fell by half, from eight to four.
“A weak or frankly, nonexistent, antitrust enforcement, in my view, allowed this to happen,” said Deluzio, a former Navy officer. “This lack of competition is leaving us, I fear, ill-prepared and harming national security and readiness.”
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