Nicole Ball - The Structure of the Defense Industry: An International Survey

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ROUTLEDGE LIBRARY EDITIONS:
INTERNATIONAL SECURITY STUDIES

Volume 19

THE STRUCTURE OF THE DEFENSE
INDUSTRY

THE STRUCTURE OF THE DEFENSE
INDUSTRY

An International Survey

Edited by
NICOLE BALL AND MILTON LEITENBERG

First published in 1983 by Croom Helm Ltd

This edition first published in 2021

by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

and by Routledge

52 Vanderbilt Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

1983 Nicole Ball and Milton Leitenberg

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-0-367-68499-0 (Set)

ISBN: 978-1-00-316169-1 (Set) (ebk)

ISBN: 978-0-367-70121-5 (Volume 19) (hbk)

ISBN: 978-0-367-70125-3 (Volume 19) (pbk)

ISBN: 978-1-00-314467-0 (Volume 19) (ebk)

Publishers Note

The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent.

Disclaimer

The publisher has made every effort to trace copyright holders and would welcome correspondence from those they have been unable to trace.

The Structure of the Defense Industry

An International Survey

Edited by Nicole Ball and Milton Leitenberg

1983 Nicole Ball and Milton Leitenberg

Croom Helm Ltd, Provident House, Burrell Row,

Beckenham, Kent BR3 1 AT

British Library Cataloguing in Publication Data

The structure of the defense industry.

1. Munitions

I. Ball, Nicole II. Leitenberg, Milton

382456234 HD9743.A2

ISBN 0-7099-1611-6

Printed and bound in Great Britain by

Biddies Ltd, Guildford and Kings Lynn

Judith Reppy

Introduction

Billions of dollars are spent each year by the US on the development and production of weapons, making the defence industry clearly an important sector of the economy. Yet, even though military hardware has been produced in the United States since the earliest days of the republic, the emergence of a full-scale defence industry in the private sector of the economy did not occur until World War II. Throughout the nineteenth century the manufacture of guns and ships for the government was shared between government arsenals and private firms, but only during actual war fighting was there a significant level of arms production. Indeed, the dominant feature of arms procurement up to World War II was its episodic quality. Typically, the start of a war found the US military unprepared, and US industry engaged in the manufacture of civilian goods. During the fighting there would be a strenuous effort to increase production of war material followed by sharp cutbacks in defence spending and production when the war ended.

Thus, during World War I the United States sent two million men to Europe, but they had to fight mostly with French and British-made weapons: only a small number of US weapons were shipped to Europe before the war ended. The exception was the US When the war ended most of the firms that had converted from civilian to wartime production either went out of business or returned to production for the civilian market.

Nor was private industry heavily involved in developing new military

Recognition that this system might not be adequate, even in peacetime, came with the increasing importance of new technology and new weapons, particularly the introduction of aircraft. By the 1920s and 1930s, the Army Air Force was contracting with private firms to develop a succession of aircraft prototypes. These designs advanced the state of the art, even though none of them was procured in large numbers, and this military support was important for the very survival of the industry during the Depression.major defence contractors of the postwar period. The groundwork was laid for major governmental funding and close relationships between private contractors and military services in developing new weapons, characteristics that became dominant features of the defence industry in the United States after 1945.

World War II was a watershed in the history of the US defence industry. From the early build-up in production for European needs to the high point of wartime production, spending for defence jumped from less than 2 per cent of gross national product (GNP) to nearly 40 per cent. Hundreds of firms were mobilized to produce for the war effort; new governmental bodies for organizing and controlling the production and distribution of war material were instituted; and new institutional arrangements for performing military-related research and development were devised.

At the end of the war there was a short period during which it seemed that the traditional pattern of cutbacks in spending to low peacetime levels would be repeated. But two major influences intervened to alter the historical pattern. Peace gave way to the Cold War, as the United States and the Soviet Union confronted each other in Europe and elsewhere. The Soviet threat to US interests was seemingly confirmed by the Berlin Blockade of 1948 and the first Russian atomic bomb tests in the following year. The start of the Korean War in 1950 unleashed a surge of defence spending by the United States that was only partially related to the war itself. Defence budgets jumped to over $40 billion, establishing a level for peacetime military spending that in real terms (that is, corrected for inflation) has been nearly constant, except for the bulge caused by the Vietnam War, until the current upward trend beginning in 1976. This high and relatively steady level of spending formed the basis for the establishment of a permanent defence industry.

The second major influence on the evolution of a defence industry in the private sector was the significant increase in the rate of technological change in weapons and associated systems during and after World War II. The new technologies associated with nuclear weapons, jet aircraft, missiles, radar, satellites and nuclear-powered submarines, to name just a few examples, did not have a well-established base in the existing arsenal system. Indeed, there was a general perception that the in-house laboratories of the military services were not well suited to advance technology in these rapidly changing areas because of their limited flexibility in terms of such things as salary levels and hiring practices under the civil service regulations. Technology and a political preference for private enterprise combined to shift resources from the in-house establishments to outside contractors.

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