The Big Three/National Security Risk Myth



There's been a lot of talk about the impending collapse of "the big three" automakers over the last two weeks -- of course, what people really are talking about is GM...but panic sells better, right?

One angle we've explored at is the effect a collapse of one or more of the American automakers would have on the defense industry...specifically military vehicles like Humvees, Medium trucks, Strykers, tanks and Bradleys.

The answer from our sources: "not much."

Now, I have a lot of respect for Sen. Karl Levin, the Democratic icon and chairman of the Senate Armed Services Committee. But his pandering to the panic and his Michigan constituents about how GM's failure would put American national security at risk just isn't supported by the facts.

Former NATO commander Wes Clark tried to tie the two together the other day with an oped in the New York Times where he said stuff like this:

In a little more than a year, the Army has procured and fielded in Iraq more than a thousand so-called mine-resistant ambush-protected vehicles. The lives of hundreds of soldiers and marines have been saved, and their tasks made more achievable, by the efforts of the American automotive industry. And unlike in World War II, America didnt have to divert much civilian capacity to meet these military needs. Without a vigorous automotive sector, those needs could not have been quickly met.

Huh? AM General makes the Humvee and isn't part of the big three domestic market except for its "Hummer" line of vehicles. The armor innovations didn't come at all from GM, Ford or Chrysler. MRAPS aren't made by them either. Where does Clark come up with this?

And even the $3,000 watch-wearing, private jet flyin' CEOs are claiming the Pentagon will suffer if there are no more Suburbans made.

Chrysler's chief executive, Robert Nardelli, told the Senate Banking Committee on Tuesday that a crippled auto industry "would undermine our nation's ability to respond to military challenges and would threaten our national security."

My sources are telling me -- and others -- that the Big Three pulled out of the defense market a long time ago, not seeing it as a profitable, stable market for their goods. In fact, none of the JLTV downselectees have any ties to the domestic auto business -- how's that for innovation Wes?

Levin has spread his fear dust all over the country, claiming: This is a national security issue as well as an economy issue, Levin said. But first and foremost, its a jobs issue," according to a report on Crains Detroit Business.

Surely, there could be some downside to the crisis for suppliers to the defense industry. But another source of mine said he's done some preliminary searches of DoD contracts and couldn't find a single instance where "this just jumps out at you." He mentioned that "you need to go way down the supply chain for some widget to find a connection"...but that is very preliminary.

Yes, a collapse of one of the Big Three would suck. But a "national security issue?" That's a stretch...

-- Christian

Show Full Article

Related Topics