All of this has saddled Lockheed Martin and other companies with two mandates that are in opposition: If it wanted to dramatically increase its missile output and speed up deliveries, the company would need to invest billions of dollars to boost supply chains and hire workers. But this would cut into free cash flow and could hurt its profits, making the company less attractive to investors. The company might be incentivized to boost production if the Pentagon paid all the upfront costs for expansion. But the Pentagon has not done that, nor has it resorted to using more radical measures like forcing increased production through authorities like the Defense Production Act. This has left companies like Lockheed to work with what they have, trying to satisfy both the Pentagon and its investors at the same time.
Thomas was the division chief of a team at the Joint Chiefs of Staff office that studied the defense industrial base and its potential to mobilize more production. She has a background in logistics, and spent much of her time wading through reports and data collected by other staffers and outside think tanks, including surveys of military branches and defense contractors. The findings were sobering. One major survey showed that even the biggest defense companies could not significantly increase production of certain munitions unless they were given, in some cases, billions of dollars and several years to complete the task. The manufacturing base had stripped down to the point that it was running full tilt, meeting most of the Pentagon’s current needs but with no room to grow.
“They were just comfortable,” Thomas said of many big defense contractors. She stressed that she was sharing her personal opinion, and not that of the Joint Chief’s office. But Thomas felt that when the government potentially needed more output from the prime contractors, those companies seemed risk averse to making the investment. “That hurts their bottom line,” she said.
The fourth pillar was developing a workforce that could actually build the weapons. The strategy report stated the problem bluntly: “The labor market lacks sufficient workers with the right skills to meet domestic production and sustainment demand.” To solve for this problem, the strategy focused on ways to expand the pipeline of trained employees who could apply for jobs at places like Lockheed’s Orlando factory. It recommended investments in job training programs and apprenticeships, along with a $300 million program to connect defense contractors to community training programs that focused on science and manufacturing skills.
While this might increase the number of capable employees in the defense sector, the strategy had very little to say about what might happen to them after they were hired. There was no mention of organized labor, worker pay, benefits, working conditions or other factors that might keep young people in these jobs once they attain them. There was also no mention of the powerful incentives on Wall Street that might dissuade companies from extra hiring, on-the-job-training or major wage increases to attract manufacturing talent.
I like to think I played my own small part in this by being one of the workers who has the right skills, while refusing to work on any defense/war related stuff.
o7