Talking to a friend of mine in the stock market field this morning, and she was saying that one overlooked aspect of the auto industry's troubles is that it could impact our national security: If we are faced with another war, particularly a major one, and we have allowed the automakers to go bankrupt in the meantime, we could find ourselves with a pressing need for materiel and no way to make it.
So I poked around the internet, and found that this argument has indeed been raised, by Sen. Carl Levin (D-MI) among others, but that it's not so clearcut as all that. Follow me below the fold and see what you think.
The argument that the auto industry is essential to our national security rests on its activities before and during WWII:
Long before the United States entered World War II, automobile manufacturers began devoting ever greater amounts of production time to defense work, for export to Britain as well as for the United States. The Chrysler Corporation was one of the car makers most active in defense work.
As early as 7 June 1940, in an article "Chrysler Ready to Make Tanks," the New York Times quoted a "ranking" engineer at Chrysler saying that the corporation could, in a few weeks, produce light tanks as quickly as they made cars....
It is clear that however surprising was the Japanese attack on Pearl Harbor, the United States was not totally unprepared for war. Chrysler was foremost among the car manufacturers involved in the defense program which aimed at the gradual rearmament of the country, and when the United States entered World War II, easily made the transition to full wartime production. Preparing for War: Chrysler 1940-42 (Feb 1985)
Similarly:
The widely acknowledged decline of the manufacturing sector in the U.S. is worrisome to many of us, not least because that sector is essential for our national defense. Our ability to defend ourselves boils down to critical skills across three dimensions -- manufacturing, logistics, and information technology (IT).
History shows that the country's manufacturing, logistics, and engineering prowess helped win World War I and II as much as our economic power did. Our manufacturing infrastructure was especially critical in World War II, when American automotive plants were converted into military factories to support the war effort. Managing Automation March 2006 editorial
Sen. Levin weighed in on this aspect of the auto industry during bailout arguments:
Detroit's research and development of batteries, alternative energy vehicles and lightweight materials all hold promise for the military. "These technologies are being developed primarily for the commercial industry, but can also help our troops in battle," Levin said Tuesday [18 Nov]. AP via Boston Globe 18 Nov
As did other politicians:
While politicians from Gov. Jennifer Granholm to former presidential candidate John McCain paint images of the "arsenal of democracy" and World War II bombers rolling off converted auto assembly lines, the real links between Detroit's Big Three automakers and national security are more subtle, and more debatable. Analysts such as Thompson point to the economic damage from a Big Three bankruptcy, and the need to maintain a strong manufacturing base capable of making planes, tanks and sophisticated electronics.
"We can't let this industry disappear. It would be insane," said Thompson, an analyst with the Lexington Institute, a Washington-area think tank. "Much of what we use to fight and win wars requires assembly lines and skills found only in the automotive and aerospace industries."
"If those things slip away, we could lose a future war." From Detroit News 14 Nov
However, it is not so clear that this is the case any more. For one thing, the Big Three are no longer involved in the manufacture of heavy munitions; that is the job of specialized defense manufacturers such as Boeing and Lockheed.
It's no coincidence that the Army's top research center on ground vehicles and the command that buys its tanks and other vehicles are in Macomb County, close to the research and engineering hubs of the domestic carmakers.
In fact, the Big Three do relatively little business with the Pentagon. Major vehicle contracts are held by companies such as OshKosh Defense (heavy trucks) and American General (the iconic humvee). [Det News article]
When the Pentagon needed MRAPs in a hurry, it turned to traditional defense companies like Force Protection in South Carolina, BAE Systems of Sealy, Texas, and General Dynamics Land Systems in Canada. Similarly, the Army and Marine Corps are buying a vehicle to replace the venerable Humvee and awarded contracts to manufacturers with heavy experience building military trucks.
"The defense sector has become so specialized that much of it is completely separate from the commercial sector," [military analyst Dakota] Wood said. [BostonGlobe]
Nonetheless, there is an issue here, since allowing the Big Three to collapse would also imperil their suppliers and subcontractors, whom the defense industry also relies on.
Sen. Bob Casey, D-Pa., also warned about threats to the U.S. from a collapse by automakers: "Our national security could be at risk in some way or another because of the parts suppliers that supply both automobiles and weapons in defense material," he said. [Boston Globe]
This argument, too, is somewhat murky. Some suggest that the defense industry, in its current phase, cannot by itself provide enough work to keep these side industries going, which means that if and when they go under, they would have to rely on foreign contractors to provide the parts they get from American companies now. Others say that the nature of war has changed so much in the XXI century that we no longer rely on massive armaments that require heavy manufacture.
I am not persuaded by this last argument, at least. The war in Iraq showed that we need armored vehicles - and that we have not been building them as strong as they need to be. And while it's also true that American manufacturers have been sloppy (criminally so) in reinforcing the vehicles our troops need, that is as much the fault of the Bush administration, which allowed them to get away with it. That does not mean we should now allow them to fail.
Perhaps more to the point is a more subtle argument, that the US has become a superpower not just because we provide services to the world, and not just because of our global financial reach, but because we have been innovators of goods as well - our technical prowress translated into manufactured articles. As we lose our manufacturing base, we endanger that standing:
The greater fear for those analysts is a decline of manufacturing that would endanger the United States' technological and industrial edge. Thompson points to defense-related industries such as steel, electronics, chemicals and commercial shipbuilding, all of which have declined steeply in the United States.
"I don't think people really understand the degree to which our superpower status is tied to having the biggest economy in the world, and we can't have that without a robust manufacturing sector," Thompson said. "We have to stop that decline." [Detroit News article]
Our strength, and therefore our security, depends on the export of real things as much as it does on ideas and intangibles. We need to consider that before we write off the auto industry - and with it its dependencies - out of justifiable pique for the way their executives have mishandled their responsibilities.