Hedging Our Bets: Reviving Defense Industrial Surge Capacity


In March 1940, the American defense industry produced about 100 major combat and transport aircraft for the United States Army Air Forces. Within 48 months, shortly before D-Day, American aerospace production reached its wartime peak of over 5,200 aircraft per month for the Army Air Forces. Building on my article on what challenges America’s defense manufacturing base would face in a great power conflict, it’s worth considering the factors that enabled America’s World War II industrial transformation in the first place. Only by understanding both the foundations of that successful surge and how these underlying conditions have changed in the ensuing years can policymakers proactively put the United States on a path to victory in a future great power conflict.

In the early 1940s, American aerospace production for the Army Air Forces grew at a rate of about 9 percent per month. After starting at about 100 aircraft, production quadrupled over the course of 17 months to 400 per month by August 1941. As new factories began to come online, production quadrupled again to 1600 per month by November 1942, continuing to grow dramatically to 3200 per month in June 1943 before ultimately reaching the wartime high of 5252 aircraft in early 1944.

A defense industrial surge of this scale was not pre-ordained. Rather, it took a host of underlying factors and rapid congressional action to enable America’s defense manufacturing surge. First and most importantly, the American economy was considerably larger than that of its World War II adversaries. The American economy of 1941 was 2.7 times larger than Germany’s and 5.6 times as large as Japan’s. The U.S. government was not shy about throwing around its industrial weight in service of the war effort. The United States devoted an astounding 40 percent of its entire economy to the war, outmuscling and outproducing the competition.

Secondly, the United States was able to tap a ready, willing, and expandable labor pool to meet growing wartime demand. Net employment in the United States increased at an annualized rate of 4 percent from January 1939 to December 1945. From the beginning of 1939 to November 1943, employment grew by almost 13 million. Notably, women played a key role in this workforce expansion, increasing the female labor force by 50 percent between 1940 and 1945.

Third, with a few exceptions such as natural rubber, the United States was largely self-sufficient in the key natural resources it needed for the war effort. Industrial production faced few natural resource bottlenecks, and where vulnerabilities did occur, the U.S. government acted quickly to mitigate them. For example, in response to a shortage in natural rubber, the federal government partnered with industry and academia to dramatically expand annual synthetic rubber production from 231 tons in 1941 to 70,000 tons by 1945.

Fourth, civilian industry was able to transform in order to meet wartime demand. The American automotive industry is the best and most famous example of this tectonic industrial shift. In 1941, automobile manufacturers produced more than 3 million cars in the United States. The industry dove into the war effort so completely that through the rest of the war, only 139 more cars were manufactured in the United States. Ford famously converted its Willow Run plant to construct the B-24 Liberator, churning one off the line every 63 minutes. While the B-24 was orders of magnitude more complex than the cars Ford had been producing — clocking in at about 1,550,000 parts compared to the average Ford’s 15,000 — Ford engineers were able to adapt and master the new technology.

Finally, Congress did its part too, passing the First War Powers Act shortly after Pearl Harbor. This often-overlooked legislation allowed the president to award war contracts “without regard to the provisions of law” — thereby bypassing the red tape of the acquisition system. To its credit, Congress realized that the existing laws and regulations that governed military procurement no longer made sense in a total war and accepted increased risk in acquisitions in order to facilitate the mass production of military hardware.

The situation across all five of these fronts is substantially different in the 21st century. Whereas the American economy of World War II was able to outmuscle its competition, the gap today between the United States and its nearest peer rival is substantially closer. As of last year, the American economy was only 1.7 times larger than China’s. Measured in Purchasing Power Parity, the Chinese economy is already larger than that of the United States, and in raw GDP terms, the Chinese economy is expected to overtake America’s before 2030. Even in the most optimistic terms, the United States would be facing a peer economic competitor — if not a superior one.

When it comes to the labor force, American businesses are struggling to find qualified workers. Earlier this year, the Department of Labor reported the highest number of open jobs since it first began tracking the number almost two decades ago. One might note that advances in technology mean that the size of the available workforce is less important to the outcome of a future conflict than the comparative sizes and capabilities of combatants’ robotic workforces. Yet potential future adversaries have or will soon enjoy an advantage in that area as well. China is close to becoming the world’s largest producer of industrial robots, having purchased 67,000 industrial robotic units in 2015 to America’s 27,000. Google parent company CEO Eric Schmidt estimated recently on Capitol Hill that China will catch up to the United States in artificial intelligence by 2020 and overtake America by 2025. In both industrial robotics and artificial intelligence, the United States is falling behind the decisive advantage it needs to ensure it can out-surge potential future adversaries.

Likewise, the United States faces real vulnerabilities when it comes to raw materials that would likely be critical in the event of a war. The American share of global production of key aerospace raw materials required for our military’s continued superiority in critical aerospace and defense systems, including aluminum, titanium, steel, lead, zinc, and nickel is at or near record lows. All the while, our dependence on them is growing, increasing our vulnerability to foreign embargos or even wartime interdiction if raw materials need to be transported from overseas. As recently as 2010, the Chinese leveraged their near-monopoly on rare earths to block exports to Japan over the detention of a Chinese fisherman. In a crisis scenario, the United States should expect to see pressure points like this — and during a major war, it must assume rare earths imports from China will be non-existent.

A host of changes in both the modern economy and weapons systems also complicate the ability for America’s civilian manufacturing industry to leap into military production the way it did during WWII. Most obviously, defense systems are exponentially more complex than they were 75 years ago. Between sensitive and networked electronics, advanced technologies such as stealth, and electronic warfare suites, defense production has become far too specialized for most civilian manufacturers. Unlike in World War II, Ford would not be able to start mass producing high-end bombers. The United States would also run into challenges when it comes to classification and cyber security standards. Non-traditional defense contractors may have robust cyber security protocols that in some cases surpass those of the federal government — but due to regulations governing classified material, could face logistical difficulties in attaining or sharing data with the government.

Perhaps surprisingly, there is some room for optimism on the congressional front. While acquisition reform is a perennial area of concern on Capitol Hill, there is recent evidence that Congress can act in a bipartisan manner to circumvent the Pentagon’s burdensome acquisition system in a true crisis. In response to urgent battlefield requirements in Iraq and Afghanistan, the Pentagon leveraged post-9/11 rapid acquisition authorities to bypass the existing acquisition system and push Mine-Resistant Ambush Protected vehicles into the field as quickly as possible. In the event of a future great power conflict, the Pentagon would likely have to employ a similar approach across the board.

Unfortunately, it’s clear that a host of differences with the American economy of the 1940s mean that we will not simply be able to enter the next great power conflict on autopilot and dust off the World War II playbook. A production surge will not materialize overnight, and efforts to dramatically ramp up production are likely to run into real challenges. Given that in a future major war, the key to victory will be the ability to surge more rapidly than a peer competitor, the challenges standing in the way of an industrial surge are national security problems of the highest order.

Not all of these challenges are directly under the control of lawmakers. But policymakers in Congress and the Pentagon have a real opportunity to address many of these issues proactively so that our defense industrial base is has the foundation it needs to win the war on the home front.

The best and most overarching way to lay the groundwork for a future industrial surge is to focus on exploiting America’s many competitive advantages rather than focusing on mitigating all vulnerabilities. The greatest American advantage of all is the innovative spirit of our economy. American technological breakthroughs have led the way on most of the essential components of the modern economy, from iPhones to the internet.

The American private sector drives innovation, and it’s no surprise the Pentagon has in recent years increased avenues for engagement between the Department for Defense and non-traditional defense contractors, especially in Silicon Valley. As the Pentagon and Congress continue to work together to bring commercial off-the-shelf technologies to the U.S. military, an important result will be easier integration of private firms into the defense supply chain during a surge scenario. Congress should build upon these efforts and assist the Pentagon in increasingly shifting towards more commercial practices so that both the Department of Defense and non-traditional contractors are better socialized with one another.

The Pentagon also needs closer collaboration with traditional defense industry to build latent surge production capacity into the defense industrial base. This could take a number of forms, from building in excess capacity in production facilities, to proactively standing up integrated additive manufacturing lines that could one day focus on mass producing rapidly deployable systems such as autonomous vehicles or long-range munitions.

Going hand in hand with an innovative culture, policymakers need to consider solutions to bypass potential production bottlenecks arising from scarce raw materials. Just as the Pentagon partnered with industry on synthetic rubber during World War II, today, defense leaders need to think through potential options, from stockpiling key raw materials or better yet, innovating to develop technological solutions that circumvent the need for scarce natural resources.

Lawmakers should also proactively work to create a legal framework, not unlike what Congress passed in the First War Powers Act, which would allow the Pentagon to go outside the normal acquisition process in a national emergency to buy weapons in mass quantities. In a great power conflict, the Pentagon cannot be caught up litigating bid protests. The 2016 National Defense Authorization Act is a good start. It contains a provision providing the secretary of defense with additional rapid acquisition authorities for up to $200 million each year to meet deficiencies that are likely to result in combat casualties.

None of this will be easy. The United States has no shortage of pressing problems, both international and domestic. Preparing for a future major conflict that few can imagine is not likely to be at the top of anyone’s agenda. Yet the stakes could not be higher. America — and our values — triumphed over fascism in the Second World War in large part due to the engine of our defense industrial base. Our industrial surge did not come out of thin air. It was the result of favorable conditions, critical policy choices, and the labors of a society fully mobilized for war.

While a future great power conflict may seem like a low probability event, the stakes are too high to not make small but important investments that could forestall disaster, especially during unanticipated contingencies. We need to set the stage for a successful industrial production surge now, before it is too late.


Congressman Mike Gallagher (R) represents Wisconsin’s 8th district in Congress. He is a member of the House Armed Services Subcommittees on Seapower and Projection Forces and Readiness. You can follow him on Twitter: @RepGallagher

Image: Defense Department via US Census Bureau