Defense and Advanced Manufacturing in the Post Recession Era

On Tuesday, July 2, The Brookings Institution hosted a presentation and panel discussion on advanced manufacturing and the defense industry in the post-recession era of sequestration and reduced government spending. The objective of the event was to discuss ways to boost production and economic prosperity when the government is investing less in the sector.

Bruce Katz, Vice President of the Metropolitan Policy Program, presented data on the reduced public spending on infrastructure and manufacturing. He attributed the decline to a national trend away from manufacturing in recent decades , combined withsequestration and reduced government spending in recent years. He added that the trend away from manufacturing has recently morphed into an increased belief that advanced manufacturing is the cornerstone of an advanced economy and could be a reliable sector, fueling recover and continued prosperity. He also noted that because of reduced federal spending in the sector, local government and private funds have been leading the charge to reinvest in advanced manufacturing and infrastructure. He believes that cities can move quickly, especially when coordinating multiple contributors, and act as a role model and leader for national progress. He closed by saying that the defense industry was an example of the squeeze put on federal programs during the time of reduced spending.

The panel turned the discussion towards the defense sector with Richard Bush, Director of the Center for Northeast Asian Policy Studies, discussing the American defense industry in comparison to those of our Asian counterparts. He pointed out that China implements changes and policies much more quickly than the US, where control of supply chains is less integrated.  Jay DeFrank, Vice President of Communications and Government Relations at Connecticut-based Pratt & Whitney, added insight from a defense manufacturing organization. He explained how changing demand and uncertainty leads to struggles throughout the supply chain. He said an efficient supply chain is vital to the sector’s health. Mackenzie Eaglen, Resident Fellow at the American Enterprise Institute, and Nelson Ford, President of LMI Government Consulting, discussed the Defense Department and how politics slows changes in US military expenditures. They said that areas the Pentagon identifies as being best for cuts often do not satisfy the political needs of Congress, causing the Defense Department to continue programs it may find inefficient. Ultimately, the panelists agreed that the health of the sector, like advanced manufacturing, would benefit from creating and maintaining partnerships throughout the supply chain and with both federal and local governments. They also agreed that manufacturing companies should be encouraging to continue to diversify their products, as has been seen since the recession, in order to be less susceptible to decreased investment in any one product.

You can find more information on the discussion, including an audio recording, on the Brookings Institution website.

Click here to learn more about the NEC’s work on defense issues.

Click here to read the NEC’s report on the advanced manufacruting sector in New England.

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