Here is a look into the events that unfolded in the defense industry over the last four decades that led to the development of the Defense Manufacturing Assistance Program.
Defense Budget: 1980-2019
The below chart shows in constant dollars how the Defense budget expanded and contracted since the 1980s. Even before the Budget Control Act of 2011 went into effect, defense spending was on the downward trend, as is typical when wars end. During the previous draw-down cycle (1986-1998), overall Department of Defense spending dropped 33%, and acquisition (Procurement, Research, Development, Test and Evaluation) fell 51%.
Similar declines have occurred since 2011 in overall defense spending. However, this decline has not been gradual, having occurred in less than half the time. While the lower limit is expected to be higher than that of the previous draw-down cycle, it still means programs are being heavily cut. During this time, many areas of the country have seen loss of contracts and manufacturing jobs across companies that are a part of defense supply chains across various tiers.
Select Programs Cut Since FY13
- Family of Medium and Heavy Tactical Vehicles (Oshkosh Corp)
- High Mobility Multipurpose Wheeled Vehicle (Humvee) Recapitalization (BAE Systems)
- Ground Combat Vehicle (in development by BAE Systems and General Dynamics Land Systems)
Aerospace and Missiles
- C-27 Joint Cargo Aircraft (L3 Communications Integrated Systems)
- C-130 Avionics Modernization (in development)
- Apache New Build (Boeing, Northrop Grumman and Lockheed Martin)
- Patriot Missiles (Lockheed Martin)
- Joint High Speed Vessel (in development)
- Cruiser Modernization Program (BAE Ship Repair)
- Littoral Combat Ship (Lockheed Martin and Austal)
Solution: Defense Manufacturing Assistance
As a consequence of the Department of Defense (DOD) downsizing fiscally and physically over the last few years, there has been a corresponding reduction in the number and size of current and future defense contracts awarded to private sector manufacturing firms.
This, in turn, has impacted communities and local and regional economies, which threatens national security, because decreased or cancelled contracts lead to workforce reduction and instability in companies and communities critical to the defense manufacturing sector. The States of Michigan, Ohio, and Indiana have significant numbers of defense contractors and have been facing challenges to keep those firms in operation.
When defense programs change or are cut, contractors and manufacturers may be faced with budget cuts, staff layoffs or factory closings. The Office of Economic Adjustment supports a wide array of economic adjustment strategies by providing technical and grant assistance to areas that are impacted by defense cuts. These adjustment strategies often focus on regional job creation through business development, attraction and expansion, workforce development, and community economic diversification. One such initiative is the Defense Industry Adjustment program.
The Defense Industry Adjustment (DIA) program assists communities and companies in planning for community adjustments and resiliency required by the cancellation or termination of a Department of Defense (DOD) contract, the failure to proceed with an approved major weapon system program, or by a publicly announced planned major reduction in DOD spending that would directly and adversely affect a community or company. This program’s goal is to find out where defense manufacturers are in order to know if there is even a local problem and map out a supply chain, and then apply adjustment and recovery strategies.
This is the sole purpose behind the development of the Defense Manufacturing Assistance Program (DMAP). Through their respective manufacturing assistance programs, the University of Michigan (UM), Purdue University (PU), and Ohio State University (OSU) have extensive and successful experience working with small and medium sized manufacturing firms. DMAP is a culmination of a program administered by these three institutions and is funded by the Department of Defense, Office of Economic Adjustment.
DMAP’s goal is to address downsizing across the defense supply chain in both manufacturers and communities, especially businesses lower in the supply chain (Tiers I, II, III and below). The program’s plan is to identify projects that address critical needs and areas of improvement for communities and companies through diversification and by leveraging intellectual property and technology residing in research universities.
To learn more about the Defense Industry Adjustment program, read the Local Official’s Guide to Defense Adjustment.