FORT LAUDERDALE, Fla. -- The former head of Army logistics tried to assure a nervous audience of defense industry executives Thursday that “it’s not all doom and gloom” for their bottom lines despite the massive budget cuts underway as the nation’s military rebalances after nearly 12 years of war.
“Our budget still has almost $500 billion” at the baseline even when the impact of major automatic defense spending cuts under the “sequestration” process on March 1 is taken into account, said Army Maj. Gen. Lynn A. Collyar, former director of Defense Logistics Agency’s logistics operations.
“That’s a lot of money,” Collyar said of the $500 billion. “We can’t afford to just throw money around,” he said, but “there is still a lot of money out there” for companies that can adapt to the new era of declining defense budgets.
Collyar, now head of the Army’s Aviation and Missile Command, was part of a panel discussion with several industry representatives on “Optimizing the Global Supply Chain” at the Association of the U.S. Army’s Winter Symposium.
The three executives who sat on the panel stressed the “new reality” they faced in reverting from a wartime economy to maintaining the readiness of the supply chain to meet the future needs of the warfighter, even as the troops seek to maintain their own readiness for the next conflict.
“We’re at a moment of time where a brand new reality is facing us,” said Peri A. Widener, vice president for Rotorcraft Support Programs at Boeing. “We’re looking forward to op tempos being reduced and budgets being reduced.”
“We need to use this as an opportunity to rethink how we do this business” of getting the beans and bullets to the troops on the ground, Widener said. “We can be more affordable. This is a seize the moment time in our history.”
The difficulty is in knowing what will be required, said Ray Schaible, vice president of Operational Logisitcs for LMI, the logistics consulting firm. LMI this week was awarded a $28.5 million contract to advise and assist the office of the deputy under secretary of the Army on performance, knowledge and information management.
“We’ve got to take a look at the chain, given the new realities we’re facing,” Schaible said. “As we know, in the near future requirements will decline.” The need will be to focus on “maintaining the supply base in a period of reduced demand,” Schaible said.
The Army’s problem is figuring out “how we keep our manufacturers in business” in a period of austerity while “we execute the missions we have within the budgets we’re given,” Collyar said. “It’s up to us to decide what the requirements will be.”