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The era of great power competition is well and truly upon us and more than this, the global order Australia depends on is under direct assault with no signs of slowing down. As many of our allies have begun to emphasise their own industrial capacity, it is now clear we need to begin focusing on ourselves as well.
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Australia, bro, mate, let’s talk, you’re looking a little flabby, you’ve been hitting the beers a little too often, the dagwood dogs aren’t helping and, let’s be honest, the Sportsbet account is a little concerning.
This sounds like a rather bizarre way of starting an otherwise serious conversation, I’ll agree with that, no argument here. Nevertheless, it’s an important way to begin the conversation in light of mounting great power tensions when many nations are beginning to shift away from the era of unrestricted globalisation towards more national-focused policy approaches.
Not least of these movements is the concept of “reshoring” amid mounting realisation that America’s industrial base, especially its defence industrial base (DIB) requires a period of extensive modernisation and reinvestment to better support not only the US Armed Forces, but to equally continue serving as the “Arsenal for Democracy” at a time when the post-Second World War democratic order is seemingly in retreat at home and abroad.
While this concept has been a favoured policy of US President Donald Trump and his “America First” campaign policy platform, which has seemingly been reinforced by the Biden administration as it has doubled down on supporting critical investments in industrial capacity, there is an element of legitimacy to the concept.
Highlighting this, former US Defense Department official Jerry McGinn, who is now the executive director of the government contracting centre in the School of Business at George Mason University, in a piece for Defense News, unpacks just how the model can be best used by the US and Australia to fast track economic growth, boost employment, and secure national interests.
McGinn explains, “US government officials have called for the ‘reshoring’ of domestic industrial capacity in several areas in recent weeks. Whether it is the production of pharmaceuticals and personal protective equipment, or the development of microelectronics, specialty chemicals and materials, calls for a significant increase in US manufacturing capabilities are coming through loud and clear. This makes complete sense, but how do we do this reshoring?
“The solution is not an autarkic ‘Buy America’-only approach that would be counterproductive to our long-term economic health. Instead, we need to have a laser focus on getting out of the China business with respect to industrial capabilities critical to national security and, in many cases, doing that with a little help from our friends.”
Recognising this background, in the first part of this short series, we took a closer look at the background challenges facing the US defence industrial base and its impact more broadly on the global alliance network which depends heavily on the US for their respective tactical and strategic technological force multipliers, leveraging useful analysis of Georgetown University’s Jennifer Kavanagh.
The US DIB can still meet surge requirements
Importantly, Kavanagh’s central thesis highlighted a growing push by strategic thinkers and policymakers of all persuasions to embrace a similar approach to that of Franklin D Roosevelt’s build-up in the years prior to the US entering the Second World War, with Kavanagh explaining: “Many policymakers and defence experts argue that the best solution to these perceived shortcomings is a rapid and significant increase in DIB capacity aimed at filling US stocks and arming partners ‘to the teeth,’ including a shift to wartime levels of weapons production and a re-creation of the ‘arsenal for democracy’ — the term used by Franklin D Roosevelt to describe the mobilisation of American industry to support European and US involvement in World War II.”
In spite of this, Kavanagh highlights that despite the very real limitations of capacity facing the United States, Kavanagh states that the Ukrainian conflict has demonstrated that there is room for growth in US manufacturing capacity: “Contrary to some narratives, US DIB expansion in response to the war in Ukraine has shown that defence contractors can often reach surge production more quickly than expected. For example, Lockheed Martin was able to rapidly expand the production of HIMARS by 60 per cent using cross-training of personnel and adding a second production shift. Some peacetime surge capacity also exists for advanced munitions. Production of long-range anti-ship missiles, the LRASM and JASSM-ER, is expected to double in 2023, due to modernisation and automation introduced into existing production lines.”
It is, however, important to understand that despite this seemingly impressive “surge capacity” to meet the demand of Ukraine, this is a single conflict, and one where the United States isn’t an active combatant, nor is any other major Western allied nation, the mathematics and reality become DRASTICALLY different when the US and global allies join in the conflict.
This reality becomes only more apparent when you account for the comments made by the US Secretary of State, Antony Blinken, who said in the dying days of 2022, “When it comes to Russia’s war against Ukraine, if we were still in Afghanistan, it would have, I think, made much more complicated the support that we’ve been able to give and that others have been able to give Ukraine to resist and push back against the Russian aggression.”
Accordingly, it is important to understand that while there has been a demonstrated “surge” increase within the current confines and capacity of the US defence industrial base, there are very real limitations on the United States and this has dramatic repercussions for both the US and allies, including Australia.
Let’s avoid an ‘overcorrection’
Despite the uncomfortable reality, which Kavanagh seems to gloss over, her thesis evolves to emphasise the need to avoid what she defines as an “overcorrection” in a return to the “full fat” version of the “Arsenal for Democracy” approach as established in the years leading up to the US entry into the Second World War, rather, Kavanagh advocates for a more streamlined, lean approach better tailored to meet the modern environment and broader economic and societal challenges.
“The US DIB faces some challenges, but the ‘arsenal for democracy’ model would be an overcorrection. Not only would such an approach encourage over-investment in the defence sector, but the move to wartime footing could raise the risk of future conflict. Mobilising US industry to wartime levels of arms production lowers barriers to new conflicts, deepens the militarisation of US foreign policy, and could provoke adversaries to take increasingly escalatory positions,” Kavanagh articulates.
In spite of this oversight, Kavanagh highlights a number of efficiencies and areas for improvement that can help breathe new life into the US defence industrial base and enhance the capacity available to both the United States and allies.
In particular, Kavanagh states, “First, investments in modernising the DIB: including upgrading production equipment and making greater use of automation and artificial intelligence can increase speed and capacity on existing production lines. The United States should concentrate efforts on systems in highest demand in Ukraine and most essential to a US-China contingency, including Stingers and Javelins, ammunition, artillery systems, and PGMs at all ranges.”
This first point is highly accurate and common sense, there is no point in trying to manufacture any form of modern civilian consumer good, let alone a modern piece of military equipment, even as simple as a radio with manufacturing processes and technology from the late 1980s, let alone the 1930s or 1940s, rather modernising the manufacturing processes and leveraging the increasing power of autonomy is a mechanism for increasing the capacity for the defence industrial base.
Expanding on this further, Kavanagh states, ”Second, defence contractors should seek ways to increase flexibility across production lines to further expand surge capacity; like by building multi-use production facilities that can shift between systems as needed. Such facilities would have a standard set of manufacturing capabilities that can be easily modified for the needs of specific platforms. Cross-training of employees can support this type of agility.
“Third, any additional investments in expanding capacity should be focused on vulnerabilities in the supply chains of high demand systems rather than spread across the DIB. The government should look into increasing the number of suppliers for some inputs, stockpiling key components, or building specialised teams to anticipate obsolescence issues,” each of these two points are increasingly relevant and important, however the question becomes how?
Meanwhile, Kavanagh’s final point is centred around not only expanding the access of the US defence industrial base, and seemingly spreading the love among “like minded” partner nations across Europe and parts of the Indo-Pacific, with Australia clearly left out of the list, but also, making “difficult choices” when it comes to supplying partners.
“Finally, Washington should develop mechanisms that prioritise existing DIB bandwidth based on national security goals. This will mean making trade-offs between potential buyers based on need, for example between Taiwan and Middle Eastern partners. Relying on arms exporting partners like South Korea, India, and France to meet some global demand could be helpful. The United States should also encourage greater DIB investment from Europe, for its own defence and to increase contributions to Ukraine,” this position presents significant and concerning challenges for Australia.
Success leaves clues
Since the end of the Second World War, Australia has positioned itself as not only a reliable strategic ally, but a stable, robust, and competitive economic partner, albeit one sometimes hindered by internal economic factors and a lack of long-term industry development and economic policy beyond dependence on resources and agriculture.
As Australia and the globe enter what could be the single greatest economic depression since the Great Depression of the 1930s, Australia has two choices: be defined by the global shocks and continue to limp along as our regional neighbours surge ahead or grasp the reins and drive our own future.
There are some models to follow, ranging from the New Deal of US president and wartime leader Franklin Delano Roosevelt or looking more closely to our regional neighbours, South Korea’s recently announced “Korean New Deal”, which leverages the length and breadth of state power to develop an economic transformation strategy for the 21st century.
In order to achieve this, Australia must not only embrace the very real potential of becoming the “poor white trash of Asia” as so eloquently established by Lee Kuan Yew.
But Australia should also use such an outcome as a rallying call, a wall against our back to unify and pull the nation in a common direction, shaking off one of the very apt criticisms of Australian policy making: the fact that public policy-making decisions are based on the comparatively short election cycles and further impacted by conflicting jurisdictional interests and actions.
In light of this, it is time for Australia to plan for the next 15 to 20 years, not the next term of state, territory or federal government, providing policy consistency, vision for the public and surety in a period of global and regional turmoil.
Each of these contribute to the nation’s sovereignty and security at a time when many of the principles that Australia’s post-Second World War public and strategic policy is based upon coming under threat — serving to make Australia a more reliable economic, political, and strategic partner amid a period of great power competition.
Supporting the next stage of industry development requires a unique policy approach as well as combining the existing elements of Australia’s existing innovation and science agenda with a suite of grant allocation and targeted, contractual tax incentives (signed between the Commonwealth and the company as a memorandum of understanding) linked to a combination of long-term, local job creation, foreign contract success, local industry content, and research and development programs — in specialised export orientated industry clusters.
Developing centres of excellence supporting export growth in partnership with Australian and international primes can leverage the policy levers used to develop other national facilities and integration within global supply chain and programs to support the development and rehabilitation of local naval shipbuilding capabilities with a focus on capitalising on the growing demand for warships in the Indo-Pacific and Middle East in particular.
Furthermore, it serves to make Australia more resilient to man-made and natural shocks, resistant to coercion, economically competitive and robust at a time when the Australian public are calling for leadership, forward planning, and vision.
Final thoughts
It is clear now that Australia needs bold, ambitious, and exciting leaders who can present an engaging, visionary, and optimistic future direction for the nation. We need our leaders to pull at the heartstrings of all Australians and their hopes and dreams, while providing for a clearly communicated path to achieving this vision.
Equally, the Australian public needs to be educated on the challenges we face in our region and more broadly, the post-Second World War order upon which our wealth and stability is built, because without it, many Australians will blindly simply go with the flow and watch as we fade into the pages of history.
Enhancing Australia’s capacity to act as an independent power, incorporating great power-style strategic economic, diplomatic, and military capability serves as a powerful symbol of Australia’s sovereignty and evolving responsibilities in supporting and enhancing the security and prosperity of Indo-Pacific Asia.
Australia is consistently told that as a nation, we are torn between our economic relationship with China and the longstanding strategic partnership with the US, placing the country at the epicentre of a great power rivalry — but what if it didn’t have to be that way?
Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch
Stephen Kuper
Steve has an extensive career across government, defence industry and advocacy, having previously worked for cabinet ministers at both Federal and State levels.
