Military cuts put JSMC in ‘tenuous’ position

First Posted: 3/4/2014

LIMA — Another possible door of opportunity for the Joint Systems Manufacturing Center is officially slammed shut with the Tuesday release of the Obama administration’s fiscal year 2015 budget proposal.

President Barack Obama’s budget would cancel the Ground Combat Vehicle Program, based on recommendations from uniformed military leadership, saving $51 million in 2015.

The administration said the program is “no longer needed under the current defense strategy.”

That is a “huge new problem” for the JSMC and Task Force LIMA, said Mayor David Berger, who chairs the task force.

“That is a huge new problem for us, that had not been anticipated,” Berger said. “No one has a solution for how to maintain the capacity that is present, and that includes not just installation here, but the system, including the supply chain.”

The task force advocates for the JSMC and the Abrams tank program.

The industrial base is in a “tenuous” position, retired Army Lt. Gen. Jeffrey Sorenson, a partner at A.T. Kearney Aerospace & Defense practice, said in a National Defense Magazine story.

A.T. Kearney recently completed an Army-requested sweeping study of the Army’s combat vehicle and tactical support vehicle supplier base.

General Dynamics Land Systems, which operates the federal government-owned JSMC, was competing against defense contractor BAE Systems for the Ground Combat Vehicle contract.

BAE Systems already has slashed its workforce at its Bradley plant in York, Pa. General Dynamics could face similar decisions at the JSMC, according to the National Defense story.

“The situation in Lima has become more tenuous since the time we delivered the study,” Sorenson said.

The Army had been interested in improving the “survivability” of a new armored vehicle, with increased resistance against roadside bombs while still reducing the weight of a vehicle to be faster and more flexible.

Today, the Defense Department is planning to make significant cuts in multiple ways, including canceling new programs, eliminating existing aircraft and shrinking the Army to its lowest level since before World War II. Ending sustained wars in Iraq and Afghanistan and responding to cuts sequestration required, the Army faces broad budget cuts and must wait on modernization efforts.

What a new-look Army would do to the industrial base — highly skilled workers who design, make and refurbish vehicles, ships, planes and equipment — is unclear.

While the Army’s five maintenance depots and three manufacturing arsenals would be kept busy doing repair and upgrade work on existing vehicles, prime contractors would suffer without new programs, Sorenson told National Defense. “As you look at the future, a real effort will be needed by the Defense Department to keep some of these prime contractors healthy,” he said.

General Dynamics spokesman Peter Keating said it will be a challenge to keep the company’s current 300 engineers employed.

“No one has cracked the code yet on how you maintain the industrial base in lean times,” Keating told National Defense. “Government policy and law have a major effect on the industrial base. It’s not a free market per se.”

The National Defense article points to the last time the military went through lean times.

The work needs to be shared among government depots and private contractors, to maintain the industrial base, Berger said.

“The depots under the law have first dibs on work that could be shared and ultimately the last time the military went through this sort of scrunch, the precedent was that the work was shared,” Berger said. “That requires legislators to be involved in a helpful way. That’s a discussion that’s not happening but needs to.”

The last time Lima’s facility felt such a squeeze was during BRAC, when the Pentagon and Congress prioritize military bases and order some closed. Berger said he believes the new military cuts will mean another BRAC-like process, except that the Pentagon alone will make the decisions.

“What we’re seeing is the inevitable result of sequestration and inability of Congress to pass an affirmative budget,” Berger said. “In effect, they’ve cut themselves out of the decision-making process.”

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