Although nothing is official yet, southeast Michigan stands to be heavily impacted by an upcoming wave of cuts in the federal defense budget.
This was the warning from Secretary of the Army John McHugh recently as he toured the facilities at the Army’s Tank Automotive Command (TACOM) in Warren. TACOM conducts research for many of the large land vehicles used by the military, including Humvees, armored personal carriers and tanks.
The soon to be announced reductions are the result of two primary factors: the federally mandated budget sequestration and the changing nature of warfare.
The former became embedded in law last year during negotiations between the Republican controlled House of Representatives and the Obama While House over extending the federal debt ceiling. Since the parties failed to come to an agreement on spending cuts tailored to evenly offset projected increases, automatic cuts are slated to kick in on January 2. Under the current law, the Department of Defense must slice some $52 billion by that date.
Another reason for the expected cutbacks is the changing tactical nature of modern warfare. Newer methods of combat place greater emphasis on work done by Special Forces which rely on the ability to maintain a low, or “stealthy” profile. Therefore, budgets will be prioritized to emphasize drones and submarines at the expense of traditional land vehicles.
Combined, these factors are expected to forced reductions in orders for land vehicles by some 40 percent.
This is expected to have a major impact on some of the major defense contractors, many of which have a significant presence here in SE Michigan.
This can, however, represent an opportunity, according to Gavin Brown, Executive Director of the Michigan Aerospace Manufacturers Association (MAMA). Brown explains that the sudden impact of these changes will force said companies to solicit new capital, diversify their products to fit civilian uses, or some combination of the two.
“The more south east Michigan creatively and proactively adjusts to this coming new reality, the less jarring it will be overall to the region. It’s important that the defense industry learns from the experiences of the auto industry from 2008 and 2009. The transition does not have to be so traumatic,” said Brown.
Author: Paul Vachon – Reporter/Automotive, Historian, representing GreeningDetroit.com
