In defense of military spending

August 24, 2012
By: Dan Davis

Who do you believe the Mayans or the political pundits?

If the Mayans' ancient beliefs are correct, you shouldn't plan anything after Dec. 21 because that's supposedly the end of the world. For those that have their doubts about the prognostication power of ancient people, all they have to do is look ahead to the end of the year as the U.S. government approaches the dreaded "fiscal cliff," the time when a combination of tax cuts suddenly end and $100 billion in federal government spending cuts are enacted. Pundits believe that'll bring any U.S. economic growth to a complete stop and cause a slump that makes the Great Recession look like spring break.

Will it be the end of the world as we know it by the start of 2013?

Well, change is certain. We all know that. But doomsday toward the end of the year isn't guaranteed—even as more slow growth lies ahead in 2013.

Congress will get its act together right after the November election and start its work to avoid the double whammy of higher taxes and huge spending cuts from hitting the fragile economy all at once. A hurried plan is better than no plan at all. That's just the facts of the situation.

From a metal fabricating perspective, the longer-term spending cuts, particularly as they relate to the U.S. Department of Defense have me more concerned. Those dollars have played an important part in keeping the manufacturing sector vibrant over the past several years. As the military looks to cut almost $500 billion over the next 10 years, you can't avoid the fact that many shops will be losing a large chunk of work in the coming years.

This isn't limited to a specific geographic region either. The shipyards along the Atlantic, Gulf, and Pacific coasts will take a hit. Aerospace parts manufacturers all across the U.S. will lose valuable contracts. The Midwest metal fabricators that supply parts for next-generation military vehicles will wonder if any new projects are on the horizon.

Even if Congress steps in to lessen the financial blow, the defense industry will shrink. That inevitably happens when you wind down two massive military engagements.

After two major recessions during the past decade, the metal fabricators that remain realize that diversification was the reason that they have survived. These fabricating shops have taken steps to ensure that they are not totally aligned with just one or two industries, spreading their risk over several manufacturing segments. They also have invested in people and technology that make them more valuable suppliers, capable of tackling every aspect of part development, from design to packaged delivery.

Hopefully, these fabricators see what's on the horizon and already are looking to supplement their businesses with non-defense-related customers. Even as military contracts are still being handed out, huge cuts loom. In today's uncertain world, that's a certainty.
Dan Davis

Dan Davis

FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-227-8281