Category Archives: Beans Boots Bullets

All Things Logistics

NATO Defense Spending, Past and Present: Part 1

October 15, 2014 Guest Author Leave a comment

Discussions and data presentations surrounding the recent NATO summit on member state spending levels on defense and the now-metronomic domestic squabbles over the United States’ own military budget have centered on the percentage of gross domestic product (% of GDP) benchmark. GDP is a hoary and problematic macroeconomic metric in its own right. Further, % of GDP offers no natural rationale for defense or any other budgetary programming, per se. Indeed, because of its fuzziness, GDP is thus dually ambiguous in its role as a primary measure of economic viability and as a stake in the ground for national planning. Is NATO’s goal to get military spending up to 2% of GDP in the coming decade plausible? This question inspired a look at the alliance’s GDP and defense budget history.

The following essay is the first in a three-part series which together provide a macroeconomic overview of the 55 year old defense alliance. This first essay presents the history of NATO member nation defense spending since the alliance was founded in 1949. Eleven of the twelve founding members (Iceland is excluded from the analysis in this series for a lack of defense expenditure data) and four Cold War additions (Germany, Greece, Spain, and Turkey) are plotted individually because their longevity provides substantial history for member and alliance defense spending context. The twelve post-Cold War enlargement members are grouped into a single category in this first essay but are considered individually in the second and third papers.

The second paper will look a little closer at the defense spending history and trends of individual member nations and selected sub-groups. The third will examine the concept of command spending models such as setting a goal for each member to spend “2% of GDP” via a look at several other hypothetical spending models.

The source for NATO member nation defense spending for 1949-2013 is the SIPRI Military Expenditure Database. The SIPRI dataset also has a table containing most—but not all—of the expenditure data computed as a percentage of GDP. In order to fill in some of the missing information, for example for Turkey for the 1953-1959 period, an analytical dataset for member nation population and GDP was created from the Penn World, International Monetary Fund World Economic Outlook (IMF WEO), and Maddison Project datasets, using Bureau of Labor Statistics Consumer Price Index and World Bank Purchasing Power Parity conversion factor for currency conversion to a constant dollar baseline reference. All currency data in this series have been converted into 2014 U.S. dollars (US$2014).

As mentioned at the outset, “GDP” is ambiguous because it can be computed many ways according to the assumptions underlying a given dataset. The Penn World, IMF WEO, and Maddison data sets demonstrate strong correspondence in most cases where their datasets overlap but in some cases they diverge significantly. The Penn World purchasing power parity (PPP) PWT8.0 dataset was supplemented and adjusted with the other datasets and currency conversion sources to provide data for as many years of each member nation’s participation in the alliance as possible. Information on the adjusted dataset assumptions and methodology is available at this link.

The four graphs shown below present NATO member % of GDP spent on defense in direct comparison to, respectively, GDP, per capita GDP, and member share of cumulative NATO defense spending in a scatterplot format. Both horizontal and vertical axis categories are independent and the time-series/chronology is implied in the data rather than explicitly annotated (typically as the independent axis). Thus the entire history of NATO defense spending—who spent how much historically—is available at one glance.

The first graph shows % of GDP verses GDP. Although specific years are not listed, we can infer approximate chronology from the knowledge that constant dollar GDP has generally grown since 1949. Thus, the more recent years are found higher up the vertical logarithmic axis. The basic pattern is a right hook: as a member’s GDP rose, % of GDP spent for defense typically decreased, though, in some cases, there are notable abrupt shifts, as can most noticeably be seen in the last dozen dots for the United Kingdom (dark orange) and the United States (aqua). These shifts to higher % of GDP spending on defense reflect these nations’ budgetary adjustments to the wars of the past decade.

Member defense spending as % of GDP v. member GDP (billions)

The second graph plots % of GDP against per capita GDP. This chart in particular illuminates at least one problematic aspect of a %-of-GDP basis for defense spending when per capita national affluence, rather than aggregate national affluence, is emphasized. One may ask why if %-of-GDP is an admittedly arbitrary but plausible defense spending goal, wouldn’t a progressive per capita defense spending rate be more in line with most modern taxation models? Hypothetically, should those individuals who make more, and presumably benefit more from NATO security, perhaps pay more? This and several similar questions about hypothetical defense spending models are briefly examined in the third essay.

Member defense spending as % of GDP v. member per capita GDP (thousands)

The second graph shows that defense spending has congregated in the low single digits of % of GDP as per capita GDP has risen. However, several long-serving members have remarkably vertical %-of-GDP defense spending trends: Italy (Kelly green), Luxembourg (lavender), Spain (pink), and Turkey (dark grey) have remained within a relatively tight bracket of from 1-4% of GDP for defense spending throughout their history in the alliance.

The third graph compares % of GDP to the share or percentage each member nation has contributed to annual cumulative defense spending. The U.S. (aqua) and Luxembourg (lavender) are the obvious outliers in terms of magnitude. Generally, the NATO members show fairly consistent behavior, contributing approximately the same relative proportion over time. Only the contributions of Greece (blue-grey), and Italy (Kelly green), Luxembourg (lavender), and Turkey (dark grey) have varied by more than 300% over the duration of their participation in the alliance.

Member defense spending as % of GDP v. member per share or percentage contribution to cumulative annual NATO defense spending

The format of the fourth graph sets up the more detailed focus on individual member nation spending patterns which will follow in the next two essays. The fourth graph repeats the same data from the third graph but in a simplified format. In place of the dot scatterplot, the centroid or average of each member nations’ data is represented by a single large dot. The data for 2013 is shown as a smaller dot and the 2013 dot is anchored to the average dot to maintain the relationship. The line connecting the two could be interpreted as a curve but keep in mind the log scale of the vertical axis. The dot-connecting lines are primarily a graphical device.

We see in the fourth graph that, in all cases, 2013 defense spending as a % of GDP is significantly lower than the historical average. This is not to advocate for a return to the arbitrary metric of historical average, merely to account for the present in the context of the alliance’s past.

In 2013, the U.S. spent about 4% of its per capita GDP on defense, everyone else paid less than 3%, and some were in the neighborhood of from 1-2%. One may also note by the relative vertical position of the dot pairs that with the exceptions of Luxembourg (lavender), Norway (dark blue), Portugal (light green), Turkey (dark grey), the U.S. (aqua), and the collective post-Cold War group (plum), the other members’ 2013 contributions were also smaller proportions of the NATO whole than their historical averages (smaller dot lower than large dot).

Member defense spending as % of GDP v. member per share or percentage contribution to cumulative annual NATO defense spending. This is the same information as the third graph simplified.

In sum, any particular member nations’ defense spending in a particular year in terms of historical averages is not necessarily meaningful in the context of the value of the NATO alliance to either the particular member or to the whole. But the history can be useful for framing questions on apportionment, return on investment (in a very broad sense, of course), and the reasonableness (or not) of command spending “requirements” based on gross macroeconomic parameters.

In the next essay, we’ll move from the 30,000′ view and take a more detailed look at the individual members military spending history.

Dave Foster is a civilian analyst for the U.S. Navy. He is a former Marine Corps officer and holds degrees in engineering, history, and management. The views expressed here do not represent those of the Department of Defense or the Department of the Navy.

Beans Boots Bullets, Capability Analysis, Current Operations

TLAMs and ISIS: Insane and Cynical Ways to Blow Things Up

October 9, 2014 Guest Author 1 Comment

Several days ago (Tuesday September 23), I drove to work listening to the report of the United States’ government’s latest military adventure in the area of the Levant at the confluence of northeastern Syria and western Iraq. The National Public Radio (NPR) announcers intoned dryly on the launches, among other things, of 50—yes fifty—tomahawk land attack cruise missiles (TLAM) as part of a major strike against the threat de jour of this season, the brutal Islamic State.[1] At 1.4 million dollars a pop, tomahawks[2] are a very very expensive way to kill people and blow up their sinews of war, the most expensive of which were captured from the Syrian and most recently Iraqi armies—in other words less expensive stuff (like towed artillery and armored personnel carriers) that originated mostly in Russian and US factories.[3]

USS WISCONSIN launches a BGM-109 Tomahawk missile against a target in Iraq during Operation Desert Storm.

23 and a half years ago the US launched its first TLAMS as a part of the opening air campaign of Operation Desert Storm, the combat phase of the US-led coalition’s successful effort to liberate Kuwait from the military forces of Saddam Hussein’s Iraq and to restore stability, of some kind, to the Persian Gulf region.[4] That use was part of an overall suppression of enemy air defense (SEAD) campaign that built on the lessons learned from Vietnam in 1972, the Yom Kippur War in 1973, and finally the Israeli Bekka Valley SEAD campaign in 1982. TLAMS served as a means, along with electronic countermeasures like radar jamming and use of anti-radiation missiles (ARM), to suppress Iraqi air defenses. Their use made sense because they were part of an overall campaign to achieve air superiority before launching the ground war that quickly liberated Kuwait under skies dominated by US and coalition aircraft.

Since then, TLAMs have been used in a similar fashion in Bosnia (Deliberate Force, 1995), Kosovo (Allied Force, 1999), Iraq again (Desert Fox, 1998, and Iraqi Freedom, 2003), and most recently in Libya (Odyssey Dawn, 2011).[5] One sees a trend here, with the exception of Iraq in 2003, of using these weapons as a means to show resolve without risking the lives of US service personnel on the ground. Arguments can be made to support this use, although similar arguments can be made against their use, especially in the air-only campaigns. Today, they are again supposedly a part of a larger air campaign against the thug-regime of the Islamic State (for our purposes here ISIS). One supposes that they were being used because of the air defense capabilities of ISIS, especially captured surface-to-air missile (SAM) equipment, anti-aircraft artillery, and radars. Some of this concern for both manned and unmanned aircraft attacking ISIS is also directed at the Syrian regime, which has not guaranteed that its air defense system will remain silent during this expansion of the air war into Syria to attack the “capital” of the ISIS caliphate at Raqqa. However, ISIS’s air defenses have been assessed by some as being “relatively limited.”[6]

One must ask the question, why expand the war, both geographically and in terms of means, for the purposes of this essay, the means equating to TLAM use? Has anyone done a cost benefit analysis (CBA) of this usage or is their use more an informational tactic meant to show sexy pictures of TLAM use to convey the seriousness of the intent by the Obama Administration? A CBA notwithstanding, these other things may all be true to varying degrees, but it points to a more troubling suggestion. Is the use of TLAMs, like the use aircraft carriers to deliver the air power to these land-locked regions, simply a reflection of the strategic poverty of American thinking?

There are very few positive benefits in all these results. Strategic poverty? Or cynical public relations campaign? Or wasteful expenditure of high technology smart ordnance against a very weak target (the ISIS air defense “system”)? None of these choices offers much in the way of reassurance to this writer.

Further, the criteria for the use of these expensive “kamikaze drones”—my characterization for TLAMS—seems to be lower and lower. More and more, in the 1990s and since, when the US government wanted to blow up some meaningless bit of sand or dirt to display US resolve it sent these weapons in to do the job—or not do the job in most cases. We think we are sending a signal of resolve but our enemies, like the North Vietnamese during the ineffectual Rolling Thunder campaign, “hear” us sending a message of weakness, lack of resolve, and even cowardice.[7] A friend of mine, who shall remain anonymous, refers to the TLAM as: “the 20th Century equivalent of a diplomatic note, meant to convey disapproval without really doing anything.”

Alcoholics Anonymous—among others—has a saying: “doing the same thing over and over again and expecting a different result is the definition of insanity.” This latest gross expenditure of US tax dollars by the US Navy at the behest of its strategic masters to blow things up in a remote corner of the globe provides more evidence that US policy is either insane, impoverished, cynical, or all of the above. Let us hope it is impoverished, because that we can change; one day, and one election, at a time. But first the US must quit its knee jerk reactions to these sorts of events, like an alcoholic going on another binge.

John T. Kuehn’s views are his own and do not reflect the official policy or position of the Department of the Army, Department of Defense, or the U.S. Government.

[1] http://news.usni.org/2014/09/23/implications-expanding-isis-airstrikes-syria, (accessed 9/23/2014).

[2] http://fas.org/man/dod-101/sys/smart/bgm-109.htm, (accessed 9/23/2014).

[3] http://www.infowars.com/isis-is-taking-over-iraq-using-captured-american-weapons/, (accessed 9/23/2014).

[4] Ed Marolda and Robert Schneller, Jr., Shield and Sword: The United States Navy and the Persian Gulf War (Annapolis, MD: Naval Institute Press), 167-183.

[5] http://www.navy.mil/submit/display.asp?story_id=59476, (accessed 9/23/2014); and http://fas.org/man/dod-101/sys/smart/bgm-109.htm, (accessed 9/23/2014).

[6] http://news.usni.org/2014/09/23/implications-expanding-isis-airstrikes-syria, (accessed 9/23/2014).

[7] LCDR Douglas M. White, USN, “ROLLING THUNDER TO LINEBACKER: U.S. FIXED WING

SURVIVABILITY OVER NORTH VIETNAM,” 2014, unpublished masters thesis (Fort Leavenworth, KS: Combined Arms Research Library, 2014), passim.

Beans Boots Bullets, Capability Analysis, Future Tech, Future War

Print, Plug, and Play Robotics

June 10, 2014 Guest Author Leave a comment

William Selby is a Marine Officer who previously completed studies at the US Naval Academy and MIT researching robotics. The views and opinions expressed in this article are his own.

In September 1999, NASA lost a $125 million Mars orbiter because a contracted engineering team used English units of measurement while NASA’s team used the metric system for a key spacecraft operation.[i] In everyday life we are forced to choose between differing formats with the same function. What was once VHS vs. Betamax became Blu-ray vs. HD DVD. A lack of component standardization can reduce the operational effectiveness of a system as shown by the NASA orbiter. More commonly, the end user may waste resources purchasing multiple components that serve the same purpose, as was the case for DVD players in the late 2000s. These same issues are occurring in the development, procurement, and operation of our unmanned systems. Over the last decade, the US military has amassed large numbers of unmanned systems composed of highly proprietary hardware and software components. However, future unmanned systems designed with interoperable hardware and software and constructed utilizing advanced manufacturing techniques will operate more effectively and efficiently than today’s platforms.

Advances in manufacturing techniques as well as efforts to standardize software and hardware development are being pursued in order to diminish the negative effects caused by proprietary components in unmanned systems. These new technologies focus on speed and customization, creating a new and evolving research, development, and production methodology. Modular designs increase the rate of production and upgrades while new manufacturing techniques enable rapid prototyping and fabrication on the front lines. Replacement parts can be stored digitally, produced on demand, and swapped between unmanned systems, reducing the system’s logistical footprint. This organic production capability will enable units to tailor manufacturing needs to match operational requirements. The resulting unmanned systems will operate with interchangeable payloads making them quick to adapt to a dynamic environment while common software will enable easier control of the vehicles and wider data dissemination.

Complementary Technologies

The concept of interoperable hardware and software is more formally referred to as open architecture (OA). DOD Directive 5000.1, “The Defense Acquisition System,” outlines the DOD’s goal to acquire systems that can be easily swapped between unmanned systems similar to the way different types of USB devices can be swapped out on a personal computer.^{^[ii]} This ranges from swapping sensor payloads between platforms to entire unmanned systems between services and countries.[iii] Establishing standards and creating policy for OA are the responsibilities of multiple organizations. For unmanned aerial systems (UASs), the Interoperability Integrated Product Team (I-IPT) drafts UAS System Interoperability Profiles (USIPs). Similarly, the Robotic Systems Joint Program Office (RS JPO) creates Interoperability Profiles (IOPs) to identify and define interoperability standards for unmanned ground systems. Several of the IOP standards have been adopted for unmanned maritime systems by the Naval Undersea Warfare Center.[iv]

Advances in manufacturing techniques complement and leverage the OA concept. In general, these techniques focus on converting a digital blueprint of a component into its physical form. The advantages of additive manufacturing, commonly known as 3D printing, have been recently publicized as well as potential military applications.^{^[v]}^{,[vi],[vii],[viii]} 3D printing creates the desired object in metal or plastic by converting liquid or powdered raw materials into a thin solid layer, forming a single layer at a time until the piece is completed. Less mature technologies include Printed Circuit Microelectromechanical Systems (PC-MEMS) uses 3D printing to create a flat object of rigid and flexible materials with special joints that are later activated turning the flat object into a three-dimensional object much like a children’s pop up book. [ix],[x] A final technique inspired by origami involves etching crease patterns into flat sheets of metal allowing them to be quickly folded and assembled into complex components. [xi]

Lifecycle Impacts

Production of future unmanned systems will be altered by these technologies beginning with the initial system requirements.[xii] Standard capability descriptors minimize the need for a single, large business to create and entire unmanned system. This will allow small businesses to focus research and development on a single capability that can be integrated into multiple platforms requiring that capability thereby increasing competition and innovation while reducing initial procurement costs.[xiii]^,[xiv] These unmanned systems will be easily upgradeable since payloads, sensors, and software are anticipated to evolve much faster than the base platforms.[xv] Open hardware and software ensures that upgrades can be designed knowing the component will function successfully across multiple platforms. Advanced manufacturing techniques will enhance the development of these upgrades by allowing companies to rapidly prototype system components for immediate testing and modification. Companies can digitally simulate their component to verify their design before mass producing a final version with more cost effective traditional manufacturing techniques. The final version can then be digitally distributed enabling the end user to quickly load the most recent version before production.

These technologies also have the potential to significantly impact supply chain management and maintenance procedures required for unmanned systems. Since components can be swapped across multiple platforms, it will no longer be necessary to maintain independent stocks of proprietary components unique to each platform. If a component can be created using organic advanced manufacturing techniques, only the digital blueprint and raw materials need to be available. While the strength of components created using additive manufacturing may not be enough for a permanent replacement, temporary spare parts can be created in a remote area without quick access to supplies or depot repair facilities while permanent replacements are delivered. This reduces the logistical footprint and maintenance costs by limiting the number of parts and raw materials required to be physically stored for each system.

Most importantly, these technologies will produce unmanned systems with the operational flexibility necessary for the unknown conflicts of the future. Components ranging from power systems to sensor payloads can be quickly and easily swapped between platforms of varying vendors, selected to fit the mission requirements and replaced as the situation develops.[xvi]Standardizing the sensor’s data transmission format and metadata will generate timely and accurate data that is more easily accessed and navigated by all interested parties.[xvii] An early example of these advancements, the Army’s One System Remote Video Terminal, allows the user to receive real time video footage from multiple platform types as well as control the sensor payload.[xviii]^,[xix] Digital libraries will close the gap between developer and user ensuring the most recent component design is manufactured or the latest software capability is downloaded and transferred across platforms.[xx] Standardized communications protocols between the platform and the controller will enable a single controller to operate different platforms, as recently demonstrated by the Office of Naval Research.^{^[xxi]} Further into the future, the operator may be able to control multiple unmanned systems across various domain simultaneously.^{^[xxii]}^,[xxiii] The ability to create heterogeneous “swarms” of unmanned systems with varying sensor suites in different physical operating environments will give the commander the flexibility to quickly configure and re-configure the unmanned system support throughout the duration of the operation.

New Technologies Create New Vulnerabilities

As these technologies are implemented, it is important to keep in mind their unique limitations and vulnerabilities. The stringent qualification process for military components, especially those with the potential to harm someone, is often described a key limitation to the implementation of modular components.[xxiv] However, without people on board, unmanned systems have lower safety standards making it easier to implement modular components in final designs. Compared to traditional methods, additive manufacturing is slow and produces parts limited in size. The materials have limited strength and can be 50 to 100 times more expensive than materials used in traditional methods.[xxv] While future development will decrease prices and increase material strength, traditional manufacturing techniques will remain more cost effective means of producing high volume items into the near future. Additionally, open designs and digital storage can create vulnerabilities that may be exploited if not properly secured. Militants in Iraq purportedly viewed live video feeds from UASs using cheap commercial software while Chinese cyberspies allegedly gained access to many of the US’s advanced weapons systems designs.^{^[xxvi]}^{,^[xxvii]} Further, digital blueprints of parts have the potential to be modified by nefarious actors to create counterfeit or falsified parts.^{^[xxviii]} As the price of manufacturing equipment quickly drops, anyone can create the products when given access to the digital copies.^{^[xxix]}

Future technological innovations have the ability to modify traditional supply methodologies allowing the end user to manufacture parts on demand for use in a variety of unmanned systems. Proprietary hardware and software can be minimized, resulting in unmanned systems with smaller logistical footprints condensing vulnerable supply chains while reducing overall system cost. These benefits are tempered by the unique vulnerabilities that arise when standardizing and digitizing unmanned system designs. Despite these potential vulnerabilities, the ability to equip a force with increased capability while reducing costs and logistical requirements is indispensable. While the locations of the next conflicts will remain hard to predict, unmanned systems able to complete a variety of missions in remote areas with limited logistical support will become an operational necessity.

[i] Lloyd, Robin, Metric mishap caused loss of NASA orbiter, accessed athttp://www.cnn.com/TECH/space/9909/30/mars.metric.02/index.html?_s=PM:TECH, 30 September 1999.

[ii] U.S. Department of Defense, DOD Directive 5000.1 – The Defense Acquisition System, Washington D.C., 12 May 2003.

[iii] U.S. Department of Defense, Unmanned Systems Integrated Roadmap FY2013-2038, Washington D.C., 2013.

[iv] U.S. Department of Defense, Unmanned Systems Integrated Roadmap FY2013-2038, Washington D.C., 2013.

[v] Llenza, Michael, “Print when ready, Gridley,” Armed Forces Journal, May 2013.

[vi] Beckhusen, Robert, Need Ships? Try a 3-D Printed Navy, accessed at http://www.wired.com/dangerroom/2013/04/3d-printed-navy/, 04 May 2013.

[vii] Cheney-Peters, Scott and Matthew Hipple, “Print Me a Cruiser!” USNI Proceedings, vol. 139, April 2013.

[viii] Beckhusen, Robert, In Tomorrow’s Wars, Battles Will Be Fought With a 3-D Printer, accessed at http://www.wired.com/dangerroom/2013/05/military-3d-printers/, 17 May 2013.

[ix] Leung, Isaac, All abuzz over small pop-up machines with Printed Circuit MEMS, accessed at http://www.electronicsnews.com.au/news/all-abuzz-over-small-pop-up-machines-with-printed-, 22 February 2012.

[x] Wood, R.J., “The First Takeoff of a Biologically Inspired At-Scale Robotic Insect,” Robotics, IEEE Transactions on , vol.24, no.2, pp.341,347, April 2008.

[xi] Soltero, D.E.; Julian, B.J.; Onal, C.D.; Rus, D., “A lightweight modular 12-DOF print-and-fold hexapod,” Intelligent Robots and Systems (IROS), 2013 IEEE/RSJ International Conference on , vol., no., pp.1465,1471, 3-7 Nov. 2013.

[xii] U.S. Department of Defense, Unmanned Systems Integrated Roadmap FY2011-2036, Washington D.C., 18 September 2012.

[xiii] Real-Time Innovations, Interoperable Open Architecture, accessed at

http://www.rti.com/industries/open-architecture.html, 2012.

[xiv] U.S. Department of Defense, Unmanned Systems Integrated Roadmap FY2013-2038, Washington D.C., 2013.

[xv] U.S. Department of Defense, Unmanned Systems Integrated Roadmap FY2013-2038, Washington D.C., 2013.

[xvi] Real-Time Innovations, Interoperable Open Architecture, accessed at

http://www.rti.com/industries/open-architecture.html, 2012.

[xvii] Crawford, Katherine, ONR Provides Blueprint for Controlling All Military Unmanned Systems, accessed at http://www.onr.navy.mil/Media-Center/Press-Releases/2013/ONR-Provides-Blueprint-for-Controlling-UAVs.aspx, 01 May 2013.

[xviii] Shelton, Marty, Manned Unmanned Systems Integration: Mission accomplished, accessed at http://www.army.mil/article/67838, 24 October 2011.

[xix] AAI Corporation, One System Remote Video Terminal, accessed at https://www.aaicorp.com/sites/default/files/datasheets/OSRVT_07-14-11u.pdf, 14 July 2011.

[xx] Lundquist, Edward, DoD’s Systems Control Services (UAS) developing standards, common control systems for UAVs, accessed at GSNMagazine.com, 06 January 2014.

[xxi] Crawford, Katherine, ONR Provides Blueprint for Controlling All Military Unmanned Systems, accessed at http://www.onr.navy.mil/Media-Center/Press-Releases/2013/ONR-Provides-Blueprint-for-Controlling-UAVs.aspx, 01 May 2013.

[xxii] DreamHammer goes Ballista for multi-vehicle control software, Unmanned Daily News, 15 August 2013.

[xxiii] SPAWAR Systems Center San Diego, Multi-robot Operator Control Unit (MOCU), accessed at http://www.public.navy.mil/spawar/Pacific/Robotics/Pages/MOCU.aspx.

[xxiv] Freedberg, Sydney J., Navy Warship Is Taking 3D Printer To Sea; Don’t Expect A Revolution, accessed at http://breakingdefense.com, April 2014.

[xxv] McKinsey Global Institute, Disruptive technologies: Advances that will transform life, business, and the global economy, accessed at http://www.mckinsey.com/insights/business_technology/disruptive_technologies, May 2013.

[xxvi] Gorman, Siobhan, Yochi Dreazen, and August Cole, Insurgents Hack U.S. Drones, The Wall Street Journal, 17 December 2009.

[xxvii] Nakashima, Ellen, Confidential report lists U.S. weapons system designs compromised by Chinese cyberspies, The Washington Post, 27 May 2013.

[xxviii] NexTech, Project Summary, NOETICGROUP.COM, April 2012.

[xxix] Llenza, Michael, “Print when ready, Grindley”, Armed Forces Journal, May 2013.

Beans Boots Bullets, Strategic Outlook, Theory

Defense Industrial Base: A Personal Theory of Power

May 27, 2014 Guest Author Leave a comment

This essay is the third in the Personal Theories of Power series, a joint Bridge-CIMSEC project which asked a group of national security professionals to provide their theory of power and its application. We hope this launches a long and insightful debate that may one day shape policy.

Defense industrial base [hereafter “industrial base” or “defense industry”] issues are almost always discussed in a contextual vacuum — as if their history begins with World War II factories or with President Eisenhower’s 1961 warning of a growing industrial complex. But manufacturing materiel is as ancient as war itself. This essay attempts to first set a historical narrative for the defense industry and then to propose a theory of its power.

Marching through history

In 1528, Charles V of Spain hired a Genoese firm to supply and operate a fleet of galleys to help control the Italian coast. Due to their increased size and sophistication, the price of galleys grew. By 1570, this led his son Philip II to experiment with having court administrators operate seventy percent of Spain’s fleet. They failed to recruit experienced oarsmen or to provision equipment efficiently. The price of operating galleys doubled without any vessel improvements before the policy was reversed to private enterprise.[i]

In 1603, Charles’s grandson, Philip III paid 6.3 million ducats to Gonzalo Vaz Countinho, a private merchant, for 40 ships and 6,392 men. This eight year contract supplied Spain with its entire Atlantic fleet. Twenty-five years later, Philip IV contracted a Liège company to build cast-iron cannon and shot. By 1640, 1,171 canons and 250,000 shot were built. Until the end of the eighteenth century Spain was self-sufficient in iron guns.[ii]

Contracting was not limited to the House of Habsburg. Governments have always relied on industry to provide materiel. It is not surprising then that in Michael Howard’s classic War in European History private enterprise plays a prominent role. Knights, mercenaries, merchants, and technologists shaped the history of Europe and thus its wars.[iii]

An industry is born

For centuries supply caravans traveled with armies and small, decentralized, enterprises such as blacksmiths were ubiquitous. To profit, merchants repurposed equipment on commercial markets. Other proprietors assumed financial loss for military titles or, when victorious, profited from the spoils of war.[iv]

The Thirty Years’ War (1618-1648) changed the scale of conflict and the materiel required to conduct it. At last there were “large-scale profits to be made” from the “business of war”.[v] In Genoa, Hamburg, and Amsterdam centers comprised of weapons manufacturers emerged alongside merchants that specialized in capital, financing, and market access. A multinational arms industry was born that “cut across not just national, but confessional, and indeed military boundaries.”[vi]

Berlin based Splitgerber & Daum was one firm born from this system. Formed in 1712, its two proprietors began as commissioned agents. They raised capital to supply munitions first to local arsenals in Saxony and eventually the Prussian army itself. Their growth can be attributed to an early observation: that success in their business “could be achieved only within the framework of a strictly organized mercantilist economy.”[vii] Patriotism became a marketing tool.

By 1722, Splitgerber & Daum was manufacturing “gun barrels, swords, daggers, and bayonets” at Spandau and assembling guns at Potsdam.[viii] By mid-century it was a conglomerate. Frederick the Great, unlike his grandfather the “mercenary king,” was not an admirer of contractors. But after the Seven Years’ War ended in 1763 he guaranteed the company a “regular flow of government orders” as long as it remained loyal to Prussian interests.[ix] He understood that in order to “raise Prussia to the status of great power required the services of merchants, manufacturers, and bankers.”[x]

Pouvoirs régaliens

Twenty-six years later, the French Revolution would change Europe. Until then, states were the property of absolute sovereigns; after they became “instruments of powerful forces dedicated to such abstract concepts as Liberty, Nationality, or Revolution.”[xi] As the nature of the State changed, so did its wars. French armies were now comprised of conscripts. In 1794, France attempted a planned economy. It reasoned that if people could be conscripted so could resources. The experiment failed due to inefficiency; manufacturing reverted back to private enterprise before the year’s end.

Industry would flourish during the Napoleonic Wars. From 1783 to 1815 two thirds of Britain’s naval tonnage was produced by private shipyards. And the Royal Navy began to experiment with managing industry. It sacrificed deals with large lower-cost providers to bolster small contractors that it considered to be more flexible. In the nineteenth century, the birth of nations launched state industries: private, but British shipyards; private, but German steelmakers.

Krupp would embody this development. Founded in 1811 in Essen (by then Prussia), it would first develop steel. By 1851 it became the primary provider of Prussian arms and, after German unification, the country’s preeminent defense firm. By 1902, Krupp managed the shipyards in Kiel, produced Nassau-class dreadnought armor, and employed 40,000 people.[xii]

Defense Industrial Base Power

Defense industries evolved from distributed providers, to unaligned enterprises, and finally to state-managed industries. They became consortiums of private or government-owned entities that translate the natural, economic, and human capital resources of a state into materiel.[xiii]

Krupp’s steel plant in Essen as captured during The Great War

World War II stretched this logic to its absolute; all state resources were translated into the machinery of war. In 1940 the US only built 2,900 bombers and fighters; by 1944 it built 74,000 on the back of industry. From 1941 until the war’s end 2,711 Liberty ships were built; welded together from 250,000 parts, which were manufactured all over the country. And from 1942 to 1946, 49,324 Sherman tanks were built by 11 separate companies such as Ford and American Locomotive — built by the “arsenal of democracy.”[xiv]

After the war, all countries began to balance national security objectives with resources via defense industrial base policies. A country’s industrial base capability could be measured as a combination of its scope (how many different cross-domain technologies it could develop), scale (at what quantity), and quality (battlefield performance).

The path to independence

National resources limit capability. Less capable countries are more dependent on allies than more capable ones (see Figure 1). As countries develop an industrial base their level of dependence decreases, but never goes away. This can be best understood through industry itself. Prime contractors rely on their supply chains. But a widget supplier is more dependent on its customer, than its customer is on it.

Figure 1: Interdependence in the International System

Reflects a manufacturing view of the defense industrial base. Information technology capabilities (i.e., data PED or cyber) have made industrial base capabilities more accessible to smaller countries with less national resources. How this impacts the curve or a nation’s independence is worth further exploration.

Industry developed a science for managing the inherent risk of dependence — supply chain management. However, corporate practices do not translate to international politics. Country A may find new allies; Country B may seek to act on its own. And all countries shift along the curve depending on their level of investment.

For example, Saudi Arabia and the United Arab Emirates have invested into defense since the first Gulf War. They are now capable of “manufacturing and modernizing military vehicles, communication systems, aerial drones, and more.”[xv] Through offset agreements and foreign partnerships they have acquired “advanced defense industrial knowledge and technology” and are expected to rely on their “own manpower and arms production capabilities to address national security needs” by 2030.[xvi]

To borrow from Henry John Temple — Britain’s Prime Minister from 1859 to 1865 — in the international system, states have temporary friends, but permanent interests.[xvii] Over time, it is thus in the interest of each country to increase its independence by investing into defense capabilities (see Figure 2).

Figure 2: Ability to Achieve Political Objectives Over Time

Without such investment, Country Z capabilities erode. Country Y may attempt to sustain its capabilities, but as other countries develop new technologies, sustainment also leads to capability erosion. Only countries that invest into industrial bases over time are able to achieve political objectives independently.

One more supper

The United States has never shown, over a sustained period of time, “a coherent long-term strategy for maintaining a healthy domestic defense industry.”[xviii] American defense budgets are cyclical; they have contracted after every war. Every time, the Pentagon intervened with reactionary strategies to manage industry. And each time, as one former Deputy Assistant Secretary of Defense noted, the Pentagon got it wrong.[xix]

This was most evident in 1993 when the Pentagon held a dinner, known as the “Last Supper,” with top defense executives. It told them that after the Cold War, America no longer needed nor could it afford the same volume of materiel. But it left it up to industry to decide its overcapacity problem. Industry began to consolidate, based on rational business sense, but not a national strategy.

The 1990s were focused on consolidation, commercialization, and dual-use technology. Today, as budgets are again tightened, new strategies such as increased competition and international expansion have emerged. This may help save some companies, but how will it impact our ability to act independently over time?

In 2003, after decades of following a similar industrial base approach, the UK realized that it no longer had the design expertise to complete development of its Astute-class nuclear submarine.[xx] And in 2010 the UK’s Strategic Defence and Security Review, by listing the capabilities it will have, spelled out what it can no longer accomplish independently. Although the UK received American support for its submarine, what would happen if it did not?

As the US argues over budgets or program cuts, a theory of defense industrial base power could help set priorities. Commercial diversification or international expansion are tactics by which defense firms gain new revenues to save themselves in a downturn. We need a national defense industrial base strategy to maintain our capability for independent action.

[i] Parrott, David. The Business of War: Military Enterprise and Military Revolution in Early Modern Europe. New York: Cambridge University Press. 2012.

[ii] Ibid.

[iii] Howard, Michael. War in European History. New York: Oxford University Press. 1976.

[iv] Parker, Geoffrey. The Military Revolution: Military Innovation and the Rise of the West, 1500-1800 (2nd Edition). Cambridge. Cambridge University Press. 1996.

[v] Parrot, The Business of War.

[vi] Howard, War in European History.

[vii] Henderson, W.O. Studies in the Economic Policy of Frederick the Great. Oxon: Routledge. 1963.

[viii] Ibid.

[ix] Clark, Christopher. Iron Kingdom: The Rise and Downfall of Prussia, 1600-1947. Cambridge. Harvard University Press. 2006.

[x] Henderson, Studies in the Economic Policy.

[xi] Howard, War in European History.

[xii] James, Harold. Krupp: A History of the Legendary German Firm. Princeton: Princeton University Press. 2012.

[xiii] Peck, Merton J. and Frederic Scherer M. The Weapons Acquisition Process: An Economic Analysis. Boston. Harvard University. 1962.

[xiv] Gansler, Jacques S. Democracy’s Arsenal: Creating a Twenty-First-Century Defense Industry. Cambridge. The MIT Press. 2011.

[xv] Saab, Bilal Y. “Arms and Influence in the Gulf: Riyadh and Abu Dhabi Get to Work.” Foreign Affairs, accessed May 5, 2014.

[xvi] Ibid.

[xvii] Gartzke, Erik and Alex Weisiger. “Permanent Friends? Dynamic Difference and the Democratic Peace.” International Studies Quarterly (2012): 1-15

[xviii] Harrison, Todd and Barry Watts D. “Sustaining Critical Sectors of the U.S. Defense Industrial Base.” Center for Strategic and Budgetary Assessments. 2011.

[xix] Marshall C. Tyrone Jr. “Pentagon Revamps Approach to Industrial Base, Official Says.” American Forces Press Service. February, 20 2013, accessed May 16, 2013.

[xx] Harrison, Sustaining Critical Sectors.

Center for International Maritime Security