Auto Tradeoff


Manufacturing Impact: Readiness



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Manufacturing Impact: Readiness




AUTO INDUSTRY MANUFACTURING KEY TO CONVENTIONAL READINESS.


Gallagher 6 (Paul -- an economic analyst and editor for Executive Intelligence Review -- EIR – June 9th -- http://www.larouchepub.com/eirtoc/2006/eirtoc_3325.html)

Auto production plants which are being idled in the United States this year and next—a total of nearly 80 million square feet of capacity full of very diverse and capable machine tools—are also being rapidly sold off at auctions, and their unmatched machine-tool capabilities lost to the national economy. Rather than simply being "idled" with the possibility of workforces returning and work resuming, these plants are disappearing under auctioneers' hammers almost as fast as they are shut down. A list of 65 major auto plants shutting down, and their capacities which may be lost, was featured in EIR, May 12, 2006 and in the LaRouche PAC pamphlet, Economic Recovery Act of 2006. The pattern of auctions, of which two examples are shown here, makes clear that the automakers and major auto supply producers, seeing at least 65-70 of their plants as unutilized capacity, do not plan or expect that capacity to come back into use for production of automobiles; rather, underutilization will continue to grow by outsourcing under conditions of rampant globalization. The pattern also presents a challenge to Congress to act fast to save this huge unutilized chunk of the auto sectors' machine-tool design and production capability, and use it for missions more urgent to the nation's economy than producing cars and light trucks to fill the ranks of lengthening traffic jams across the country. Lyndon LaRouche has proposed, and his LaRouche PAC is mobilized to get through Congress, a Federal Public Corporation to adopt the capacity the automakers are discarding, and use it to help build a new national infrastructure from high-speed rail lines to electric power. `No Longer Required' EIR's investigation shows that three major auto plants, closed within six months or less, were auctioned off in their entirety in the second half of May; and a fourth auction, in late April, sold off machinery for production of electrical systems from four different plants of Delphi Corporation: in Rochester, New York; Athens, Alabama; and Dayton and Moraine, Ohio. The complete plant contents auctioned were the General Motors transmission plant in Muncie, Indiana, hammered away in a three-day sale May 16-18; the metal stamping and machining plant known as "Chrysler machine," sold off in Toledo, Ohio on May 24-25; and the Delphi electrical systems plant in Irvine, California, auctioned on May 23. The Toledo plant's auction sale notice is shown in the illustration, marked "no longer required" by Chrysler. The featured machines in the sale included some of the largest and most capable metal presses used in the auto industry. The case of Muncie Manual Transmissions LLC, "one of the largest gear manufacturers in North America," is shown here in the auction company's brochure. Its illustrations make clear that most of the machines in this plant are quite new, built and bought since 1995. Virtually all of its machinery was auctioned off from May 16-18. "The building will be empty now," said one person present, and GM's plan is to demolish it immediately. That plant has some 600,000 square feet of production space, and had 300 remaining production workers before being closed. The workforce had recently used about 500 major machine tools in the plant; many had a replacement value of $500,000-1,000,000 each. All sold, according to the auction brochure, and the entire plant full of machinery apparently brought about $30 million. So a rough estimate might be that the machine tools were sold for 15 cents on the dollar of their replacement value for production. It is no secret that the purchasers at these auctions include other U.S. firms, scrap outfits, and foreign firms employing machine tools, including for production for export to the United States. People in the business indicate that the pace of these sales has been brisk for more than a decade; but the size of the auctions has definitely grown in the past two years or so, with large plants like this going under the hammer. "We also see a lot of aerospace tools" from Boeing and other companies, said one. As for the city of Muncie, it has been told to hope that the GM jobs that were lost, will be matched by new jobs gained—from a Sallie Mae "center for debt management"! Machine tools and productive skills will be "no longer required" there. Dissipation of Bankrupt's Assets In Delphi's case, a full 25 out of its 33 auto parts and supply plants in the country are on the management's list to close down or sell; in addition, others, like the Irvine electrical systems plant, have been closed in recent months. The management under CEO Steve Miller, who was brought in last year to declare the company bankrupt, are flouting the principles of bankruptcy by hiding the accounts of the company's outsourced foreign operations (already 75% of its total work!) while bankrupting and trying to liquidate only the U.S. capacity. On May 28, calls to the lawyers for parties contesting Delphi's filing in New York Federal bankruptcy court, found that with the exception of the UAW's lawyer, none of those attorneys was aware that the productive assets of the "bankrupt" company were being auctioned off. Sources say that the UAW has attempted to protest and stop the auctions of Delphi's plant and equipment in the court, but has been unable to do so. The attorney representing Delphi's shareholders said that the actions would not be permitted unless Delphi had sought and received permission from Judge Robert Drain to sell the machines. None of the attorneys knew whether Delphi had gotten Drain's approval, nor could this be learned from the judge's clerk. In any case, it is clear that the intention of Delphi's management is "globalization by bankruptcy," and that critical productive machinery of the "bankrupt" company is being dissipated—a violation of at least the spirit of the law—through auctions to other firms, other divisions, and other countries, because it does not intend to emerge from bankruptcy to produce again in the United States. And vital high-technology productive machine tools and other capacity of the U.S. national economy, essential for producing the infrastructure of productivity, are being lost. Had Congress already acted along the legislative lines LaRouche is calling for, this capacity could have been purchased by a Federal Public Corporation and saved for use in the critical purposes of building a new national economic infrastructure, and creating skilled, semi-skilled, and unskilled employment. Another month's set of U.S. auto sales reports came in on June 2 and showed the urgent need to diversify the "product" of the auto industrial sector in this way, as it will not come back to building more autos for sale. Ford's U.S. sales through May are 3.3% below a year ago; Daimler-Chrysler's, 4.1% down; Ford-Volvo's 6.3% down; GM's, 4.6% down; Nissan's, 8.4% down. Toyota, Hyundai, and Mazda's sales are still up for the year, but the overall national trend is down. Total sales of cars and light trucks fell from a 16.7 million annual rate last May, to a 16.3 million rate this May, and the annual sales rate for January-May 2006 as a whole, is only 16.4 million units, compared to 16.9 million for all of 2005, and 17.1 million in 2004. Use It or Lose It International Association of Machinists president Thomas Buffenbarger charged in a Washington, D.C. speech May 15, "We have lost the ability to manufacture the means of our prosperity," and now Congress has given away "the ability of this country to defend itself" by outsourcing its machine-tool production in aerospace-defense and auto. Every week that Congress delays emergency legislation to save this remaining industrial power, more of it is lost, irretrievably. Auto skilled trades workers, machinists, and others among America's dwindling base of industrial production workers, realize that the loss of machine-tool and other skilled engineering employment in the United States, could end technological progress in our economy, and ruin our national security. In LaRouche PAC's one-hour documentary DVD on retooling and saving the auto industry, "Auto and World Economic Recovery," the auto unionists and Midwest elected officials interviewed all stressed the potential threat: The United States could find itself in a war, needing new munitions and related industrial production, with effectively all of our machine-tool design and production capability exported to other nations. These nations may not be allies, in part because of their exploitation by the very same low-wage outsourcing which made them the repositories of the machine tools now being auctioned off from Rochester, Toledo, and Irvine.

READINESS CHECKS NUCLEAR CONFLICT WITH CHINA AND OTHERS.


Record 95 (JEFFREY prof , Department of Strategy and International Security @ USAF Air War College -- Parameters, Autumn, pp. 20-30. http://www.carlisle.army.mil/USAWC/parameters/1995/record.htm

In terms of training, sustainability, and weaponry, it is always better to be ready and modern than unready and obsolete. What Congress does not look at, because it is constitutionally incapable of doing so in a coherent fashion, is the broader and far more critical question: Ready for what? What exactly should we expect our military to do? Against whom do we modernize? Have we correctly identified future threats to our security and the proper forces for dealing with those threats? Are we breathlessly and blindly pursuing modernization for its own sake, or are we tying it in with the quality and pace of hostile competition? These are the questions I would like to address. Informed line-item judgments on readiness and modernization hinge on informed judgments at the level of strategy, whose formulation is the responsibility of the Executive Branch. Our present strategy portends an excessive readiness for the familiar and comfortable at the expense of preparation for the more likely and less pleasant. Introducing Realism Into Our Assessments The basis of present strategy is the Administration's Bottom-Up Review, a 1993 assessment of US force requirements in the post-Soviet-threat world. The assessment concluded, among other things, that the United States should maintain ground, sea, and air forces sufficient to prevail in two nearly simultaneous major regional contingencies. For planning purposes the assessment postulated another Iraqi invasion of Kuwait (and Saudi Arabia's eastern province) and another North Korean invasion of South Korea--two large and thoroughly conventional wars fought on familiar territory against familiar Soviet-model armies. Congressional and other critics rightly point to disparities between stated requirements for waging two major wars concurrently and the existing and planned forces that would actually be available. Shortfalls are especially pronounced in airlift, sealift, and long-range aerial bombardment. Critics also note that the Bottom-Up Review more or less ignores the impact of Haiti- and Somalia-like operations on our capacity to fight another Korean and another Persian Gulf war at the same time. Few in Congress or elsewhere, however, have questioned the realism of the scenario. How likely is it that we would be drawn into two major wars at the same time? What are the opportunity costs of preparing for such a prospect? The prospect of twin wars has been a bugaboo of US force planners since the eve of World War II--the only conflict in which the US military was in fact called upon to wage simultaneously what amounted to two separate wars. Chances for another world war, however, disappeared with the Soviet Union's demise. Moreover, two points should be kept in mind with respect to World War II. First, the two-front dilemma came about only because of Hitler's utterly gratuitous declaration of war on the United States just after Pearl Harbor--a move that has to go down as one of the most strategically stupid decisions ever undertaken by a head of state. Had Hitler instead declared that Germany had no quarrel with the United States, and therefore would remain at peace with it, President Roosevelt would have been hard put to obtain a congressional declaration of war on Germany, or, with one, to pursue a Germany-first strategy. Second, during World War II the United States was compelled to pursue a win-hold-win strategy against Germany and Japan, respectively, even though we spent 40 percent of the GNP on defense, placed 12 million Americans under arms, and had powerful allies (unlike Germany or Japan). We sought to--and did--defeat Germany first, while initially remaining on the strategic defense in the Pacific. In the decades since 1945, US planners persisted in postulating scenarios involving at least two concurrent conflicts, even though we have never had the resources to wage two big wars at the same time. Recall that the Vietnam conflict was a "half-war" in contemporary US force planning nomenclature. More to the point, our enemies have without exception refused to take advantage of our involvement in one war to start another one with us; not during the three years of the Korean War, the ten years of the Vietnam War, or the eight months of the Persian Gulf crisis of 1990-91. States almost always go to war for specific reasons independent of whether an adversary is already at war with another country. This is especially true for states contemplating potentially war-provoking acts against the world's sole remaining superpower. In none of the three major wars we have fought since 1945 did our enemies, when contemplating aggression, believe that their aggressive acts would prompt war with the United States. If prospects for being drawn into two large-scale conventional conflicts at the same time are remote, prudence dictates maintenance of sufficient military power to deal quickly and effectively with such conflicts one at a time. And for this we are well prepared. Our force structure remains optimized for interstate conventional combat, and it proved devastating in our last conventional war, against Saddam Hussein's large--albeit incompetently led--Soviet-model forces. Though most national military establishments in the Third World, which today includes much of the former Soviet Union, are incapable of waging large-scale conventional warfare, the few that are or have the potential to do so are all authoritarian states with ambitions hostile to US security interests. Among those states are Iran, Iraq, Syria, a radicalized Egypt, and China. Russia can be excluded for probably at least the next decade. Russia's conventional military forces have deteriorated to the point where they have great difficulty suppressing even small insurrections inside Russia's own borders. The humiliating performance of the Russian forces in Chechnya reveals the extent to which draft avoidance, demoralization, disobedience, desertion, political tension, professional incompetence, and the virtual collapse of combat support and combat service support capabilities have wrecked what just a decade ago was an army that awed many NATO force planners. China is included not just as a potential regional threat but as a potential global threat. We need to be wary of today's commonplace notion that the United States is the last superpower, that we will never again face the kind of global and robust threat to our vital security interests once posed by the Soviet Union, and before that, the Axis Powers. The present planning focus on regional conflict should not blind us to the probable emergence over the next decade or two of at least one regional superpower capable of delivering significant numbers of nuclear weapons over intercontinental distances and of projecting conventional forces well beyond their national frontiers. China comes first to mind. China's vast and talented population and spectacular economic performance could provide the foundation for a military challenge in Asia of a magnitude similar to that posed by the growth of Japanese military power in the 1930s. Our capacity for large-scale interstate conventional combat is indispensable to our security. It served us well in Korea and the Persian Gulf, where we continue to have vital interests threatened by adversaries who have amassed or are seeking to amass significant, and in the case of North Korea, vast amounts of conventional military power.

(Optional) That causes extinction


Straits Times -2K 6-25-00.

Conflict on such a scale would embroil other countries far and near and -- horror of horrors -- raise the possibility of a nuclear war. Beijing has already told the US and Japan privately that it considers any country providing bases and logistics support to any US forces attacking China as belligerent parties open to its retaliation. In the region, this means South Korea, Japan, the Philippines and, to a lesser extent, Singapore. If China were to retaliate, east Asia will be set on fire. And the conflagration may not end there as opportunistic powers elsewhere may try to overturn the existing world order. With the US distracted, Russia may seek to redefine Europe's political landscape. The balance of power in the Middle East may be similarly upset by the likes of Iraq. In south Asia, hostilities between India and Pakistan, each armed with its own nuclear arsenal, could enter a new and dangerous phase. Will a full-scale Sino-US war lead to a nuclear war? According to General Matthew Ridgeway, commander of the US Eighth Army which fought against the Chinese in the Korean War, the US had at the time thought of using nuclear weapons against China to save the US from military defeat. In his book The Korean War, a personal account of the military and political aspects of the conflict and its implications on future US foreign policy, Gen Ridgeway said that US was confronted with two choices in Korea -- truce or a broadened war, which could have led to the use of nuclear weapons. If the US had to resort to nuclear weaponry to defeat China long before the latter acquired a similar capability, there is little hope of winning a war against China 50 years later, short of using nuclear weapons. The US estimates that China possesses about 20 nuclear warheads that can destroy major American cities. Beijing also seems prepared to go for the nuclear option. A Chinese military officer disclosed recently that Beijing was considering a review of its "non first use" principle regarding nuclear weapons. Major-General Pan Zhangqiang, president of the military-funded Institute for Strategic Studies, told a gathering at the Woodrow Wilson International Centre for Scholars in Washington that although the government still abided by that principle, there were strong pressures from the military to drop it. He said military leaders considered the use of nuclear weapons mandatory if the country risked dismemberment as a result of foreign intervention. Gen Ridgeway said that should that come to pass, we would see the destruction of civilisation.


Manufacturing Impact: Heg

MANUFACTURING IS KEY TO HEG – innovation, leadership, readiness.


VARGO 3. [Franklin, National Association of Manufacturers, “CHINA'S EXCHANGE RATE REGIME AND ITS EFFECTS ON THE U.S. ECONOMY” Federal News Service, 10-1, Lexis]

I would like to begin my statement with a review of why manufacturing is vital to the U.S. economy. Since manufacturing only represents about 16 percent of the nation's output, who cares? Isn't the United States a post-manufacturing services economy? Who needs manufacturing? The answer in brief is that the United States economy would collapse without manufacturing, as would our national security and our role in the world. That is because manufacturing is really the foundation of our economy, both in terms of innovation and production and in terms of supporting the rest of the economy. For example, many individuals point out that only about 3 percent of the U.S. workforce is on the farm, but they manage to feed the nation and export to the rest of the world. But how did this agricultural productivity come to be? It is because of the tractors and combines and satellite systems and fertilizers and advanced seeds, etc. that came from the genius and productivity of the manufacturing sector. Similarly, in services -- can you envision an airline without airplanes? Fast food outlets without griddles and freezers? Insurance companies or banks without computers? Certainly not. The manufacturing industry is truly the innovation industry, without which the rest of the economy could not prosper. Manufacturing performs over 60 percent of the nation's research and development. Additionally, it also underlies the technological ability of the United States to maintain its national security and its global leadership. Manufacturing makes a disproportionately large contribution to productivity, more than twice the rate of the overall economy, and pays wages that are about 20 percent higher than in other sectors. But its most fundamental importance lies in the fact that a healthy manufacturing sector truly underlies the entire U.S. standard of living -because it is the principal way by which the United States pays its way in the world.



GLOBAL NUCLEAR WAR.


KHALILZAD 95. [ZALMAY, Zalmay, Rand Corporation, The Washington Quarterly]

Under the third option, the United States would seek to retain global leadership and to preclude the rise of a global rival or a return to multipolarity for the indefinite future. On balance, this is the best long-term guiding principle and vision. Such a vision is desirable not as an end in itself, but because a world in which the United States exercises leadership would have tremendous advantages. First, the global environment would be more open and more receptive to American values -- democracy, free markets, and the rule of law. Second, such a world would have a better chance of dealing cooperatively with the world's major problems, such as nuclear proliferation, threats of regional hegemony by renegade states, and low-level conflicts. Finally, U.S. leadership would help preclude the rise of another hostile global rival, enabling the United States and the world to avoid another global cold or hot war and all the attendant dangers, including a global nuclear exchange. U.S. leadership would therefore be more conducive to global stability than a bipolar or a multipolar balance of power system.



Steel

Key to steel industry


Agence France Presse 09 (“Global steel industry awaits China, US auto turnaround”, April 12, Lexis)

Steel is on edge and the global industry is cutting back hard, hanging on for either a budget blast from China, new credit for vast Middle Eastern building schemes or resurrection of the US auto industry. Demand has dwindled and steelmakers, notably the giant of them all, ArcelorMittal, are damping down surplus furnace capacity while waiting for credit to flow, construction cranes to turn and factories to roll. A decision by ArcelorMittal last week to pursue temporary production cutbacks, slashing European output by more than half from the end of April according to a union source, dramatises the extraordinary ride and role of steel in the last few years. In just months the global industry has gone from a boom driven largely by China, emerging markets and a property extravaganza in the Middle East to a narrow line between excess capacity and the costs of waiting for recovery. "Over the past six months, demand for steel has dropped dramatically and, as a result, producers have been cutting production," analysts at Barclays Capital said in a study last week. In another report, Morgan Stanley predicted "the current demand shock to lead to excess steel capacity." Consequently, the bank said, steel plants should operate at rates below 75 percent of capacity until 2012. "The steel market is not very different from base metals as a whole, but steel has reacted more rapidly and dramatically since September," said commodities analyst Perrine Faye of London-based FastMarkets. She said the future of the steel industry depended on three factors — the impact of Chinese economic stimulus efforts, a pick-up in the Middle East construction sector and a revival of the once mighty US auto industry. "Chinese imports and exports are at a standstill. Everyone is waiting for the Chinese stimulus package to see if it will revive demand. Thomas Albanese, chief executive at steel maker Rio Tinto, said earlier this year that the company foresaw "a short, sharp slowdown in China, with demand rebounding over the course of 2009, as the fundamentals of Chinese economic growth remain sound." In the Middle East, according to Faye, the big problem is a shortage of credit, notably for real estate developers and builders. Construction planners had "counted on a higher price for oil and on credit to finance their huge projects." In addition, demand for such facilities, especially in the Gulf, has died. "They were hoping that Americans and Europeans would buy apartments. But property prices have collapsed in the Middle East as well." In the United Arab Emirates more than half the building projects, worth 582 billion dollars or 45 per cent of the total value of the construction sector, have been put on hold, a study by Dubai-based market research group Proleads found in February. In Dubai, one of the states of the UAE, prices in the real estate sector have slumped by an average of 25 percent from their peak in September after rallying 79 percent in the 18 months to July 2008, according to Morgan Stanley. Faye said the fate of the steel sector was in addition tied to that of the struggling US auto industry, once a thriving steel market but one in which two of its giant players, General Motors and Chrysler, are staring at bankruptcy. The two companies are currently limping along thanks to billions of dollars in government aid. "We are waiting to see if the auto sector in the US will get out of the crisis intact," she said.

Steel Impact: Heg




STEEL INDUSTRY KEY TO MILITARY READINESS AND HEG.


AISI 8. [7/1 American Iron and Steel Institute, U.S. STEEL INDUSTRY CRITICAL TO KEEPING US FREE, 2008, http://www.steel.org/AM/Template.cfm?Section=2008&TEMPLATE=/CM/HTMLDisplay.cfm&CONTENTID=24325]

WASHINGTON, D.C. -- As we reflect on our country’s independence this Fourth of July, we should pause to recognize those who fought for our freedom more than 230 years ago. But we should also recognize those who continue to keep our country free today: the men and women in uniform who offer their noble service in order to preserve America’s national security. “Members of the United States Navy, Marine Corps, Army, Air Force and Coast Guard, both at home and overseas, risk their lives everyday to ensure that Americans continue to have the freedoms that our country is founded upon. It is their commitment to our country that has made America what it is today – a beacon for freedom and democracy, “Andrew G. Sharkey, III, president and CEO, American Iron and Steel Institute (AISI), said. “Our veterans represent the very best of America and the U.S. steel industry is continuously working to serve the military in their efforts to defend our nation.” Sharkey said domestically-produced steel is important to “improve our military platforms, strengthen the nation’s industrial base and harden our vital homeland security infrastructure.” Congressman Peter J. Visclosky (D-IN), Chairman of the Congressional Steel Caucus, has noted that “to ensure that our national defense needs will be met, it is crucial that we have a robust and vibrant domestic steel industry. It is poor policy to rely on foreign steel for our national security – instead, we need a long-term investment in domestically-produced, high-quality and reliable steel that will serve and strengthen our national security interests.” Protecting the nation’s vast infrastructure is essential to our homeland security. This became an issue in recent times when it was discovered that substandard steel imported from China was being used by the U.S. Department of Homeland Security to construct the border fence between the United States and Mexico. Members of the Congressional Steel Caucus, including Congressman Visclosky (D-IN), have worked to introduce legislation that will help strengthen the domestic steel industry in order to address issues of substandard steel imports. “AISI and its members greatly appreciate the Congressional Steel Caucus’ support for the steel industry and their vigilance on behalf of America’s national security,” Sharkey said. In addition, thousands of skilled men and women of the U.S. steel industry work to produce high quality, cost-competitive products that are used by the military in various applications ranging from aircraft carriers and nuclear submarines to Patriot and Stinger missiles, Sharkey said. Land based vehicles, such as the Bradley Fighting Vehicle, Abrams Tank and the family of Light Armored Vehicles, also utilize significant tonnage of steel plate per vehicle. The up-armored Humvee, in use by the U.S. Army, includes steel plating around the cab of the vehicle, offering improved protection against small arms fire and shrapnel. In fact, the steel plating underneath the cab is designed to survive up to eight pounds of explosives beneath the engine to four pounds in the cargo area. These critical applications require consistent, high quality domestic sources of supply. “We as a country need to make sure that our national defense needs will be met, making it critical for the United States to have a robust and vibrant domestic steel industry that will serve to strengthen our national security interests,” Sharkey noted. Historically, American-made steel and specialty metals have been integral components of U.S. military strength and they continue in this role today. The Department of Defense’s (DOD’s) primary use of steel in weapons systems is for shipbuilding, but steel is also an important component in ammunition, aircraft parts, and aircraft engines. DOD’s steel requirements are satisfied by both integrated steel mills and EAF producer mills. “With the desire never to be dependent on foreign nations for the steel used in military applications, it is critical that U.S. trade laws be defended, strengthened and enforced so that American-made steel can continue to play a vital role in our nation’s security,” Sharkey said. “On this Independence Day, let’s pledge to work to uphold that ideal.” AISI serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the preferred material of choice. AISI also plays a lead role in the development and application of new steels and steelmaking technology. AISI is comprised of 29 member companies, including integrated and electric furnace steelmakers, and 138 associate and affiliate members who are suppliers to or customers of the steel industry. AISI's member companies represent approximately 75 percent of both U.S. and North American steel capacity. For more information on safety tips for consumers, visit AISI’s Web site at www.steel.org.

GLOBAL NUCLEAR WAR.


KHALILZAD 95. [ZALMAY, Zalmay, Rand Corporation, The Washington Quarterly]

Under the third option, the United States would seek to retain global leadership and to preclude the rise of a global rival or a return to multipolarity for the indefinite future. On balance, this is the best long-term guiding principle and vision. Such a vision is desirable not as an end in itself, but because a world in which the United States exercises leadership would have tremendous advantages. First, the global environment would be more open and more receptive to American values -- democracy, free markets, and the rule of law. Second, such a world would have a better chance of dealing cooperatively with the world's major problems, such as nuclear proliferation, threats of regional hegemony by renegade states, and low-level conflicts. Finally, U.S. leadership would help preclude the rise of another hostile global rival, enabling the United States and the world to avoid another global cold or hot war and all the attendant dangers, including a global nuclear exchange. U.S. leadership would therefore be more conducive to global stability than a bipolar or a multipolar balance of power system.


(Optional) STRONG MILITARY READINESS DETERS ALL CONFLICT.


Spencer 00. [Jack, MA from Limerick, Policy Analyst @ Heritage Foundation, The Facts About Military Readiness, 9-15, http://www.heritage.org/Research/MissileDefense/BG1394.cfm]

The evidence indicates that the U.S. armed forces are not ready to support America's national security requirements. Moreover, regarding the broader capability to defeat groups of enemies, military readiness has been declining. The National Security Strategy, the U.S. official statement of national security objectives, 3 concludes that the United States "must have the capability to deter and, if deterrence fails, defeat large-scale, cross-border aggression in two distant theaters in overlapping time frames." 4 According to some of the military's highest-ranking officials, however, the United States cannot achieve this goal. Commandant of the Marine Corps General James Jones, former Chief of Naval Operations Admiral Jay Johnson, and Air Force Chief of Staff General Michael Ryan have all expressed serious concerns about their respective services' ability to carry out a two major theater war strategy. 5 Recently retired Generals Anthony Zinni of the U.S. Marine Corps and George Joulwan of the U.S. Army have even questioned America's ability to conduct one major theater war the size of the 1991 Gulf War. 6 Military readiness is vital because declines in America's military readiness signal to the rest of the world that the United States is not prepared to defend its interests. Therefore, potentially hostile nations will be more likely to lash out against American allies and interests, inevitably leading to U.S. involvement in combat. A high state of military readiness is more likely to deter potentially hostile nations from acting aggressively in regions of vital national interest, thereby preserving peace.


US steel key to national defense


Price et al 10 (Alan H., lawyer at Wiley Rein and head of the firm’s international trade practice, *and Timothy C. Brightbill, JD, Adjunct Professor of Law at Georgetown University and a partner at Wiley Rein LLP, *and Christopher B. Weld, lawyer at Wiley Rein, *and Tessa V. Capeloto, lawyer at Wiley Rein, October 2010, “The Reform Myth: How China is Using State Power to Create the World’s Dominant Steel Industry,” http://www.steel.org/~/media/Files/AISI/General%20Docs/reform%20myth.ashx)

Investments like the Anshan investment also raise national security concerns. The U.S. steel sector plays a critical role in our national defense, and in building and maintaining the nation's critical infrastructure. The Anshan transaction could provide the Chinese government with direct access to, and information concerning, current and future U.S. infrastructure, energy and defense projects that may be critical to national defense. Moreover, as Anshan itself has acknowledged, the investment could provide the Chinese government with potential new technologies in the steel production industry.



Steel Impact: Econ

Weak steel industry collapses the U.S. economy and military readiness


Shaiken 2. [Harley, Prof of Global Economy, Cal-Berkeley, Detroit News, 3-22, http://www.detnews.com/2002/editorial/0203/25/a11-446451.htm]

But because an advanced industrial economy needs a vibrant steel industry, not just a source of steel products, the U.S. steel industry needs some temporary resuscitation and long-term structural support to survive. More than 30 firms have gone bankrupt since 1998 -- and far more would likely have fallen over the edge without President George W. Bush's recent modest measures. The hard lesson of this debacle might well have been that it's easier to see an industry like steel implode than to rebuild it when it's needed. Why does America need a steel industry? Steel executives want to keep their companies afloat and the steelworkers union wants to preserve members' jobs. But beyond their immediate concerns, an important, long-term public interest is involved. First, steel provides critical linkages throughout manufacturing. A healthy steel industry can spur innovations in downstream industries such as autos. These industries would enjoy earlier access to new processes and products. U.S. steel firms, for example, are spearheading an international consortium on advanced vehicle concepts. It doesn't help that three of the largest U.S. firms involved are in bankruptcy. Second, steel remains an important source of well-paid, middle-class jobs. While more than 70,000 jobs are threatened at bankrupt steel producers, an additional 250,000 jobs at suppliers and firms dependent on steelworker spending are impacted, according to Professor Robert Blecker at American University. A collapsing steel industry cuts a wide swath of destruction through communities. Finally, a domestic industry provides more stable sources of supply, which is pivotal in a national security crisis. Steel is genuinely a strategic industry unless we are thinking about aluminum aircraft carriers and mahogany tanks.



Economic decline increases the risk of war—strong statistical support.


Royal 10 — Jedidiah Royal, Director of Cooperative Threat Reduction at the U.S. Department of Defense, M.Phil. Candidate at the University of New South Wales, 2010 (“Economic Integration, Economic Signalling and the Problem of Economic Crises,” Economics of War and Peace: Economic, Legal and Political Perspectives, Edited by Ben Goldsmith and Jurgen Brauer, Published by Emerald Group Publishing, ISBN 0857240048, p. 213-215)

Less intuitive is how periods of economic decline may increase the likelihood of external conflict. Political science literature has contributed a moderate degree of attention to the impact of economic decline and the security and defence behaviour of interdependent states. Research in this vein has been considered at systemic, dyadic and national levels. Several notable contributions follow.

First, on the systemic level, Pollins (2008) advances Modelski and Thompson's (1996) work on leadership cycle theory, finding that rhythms in the global economy are associated with the rise and fall of a pre-eminent power and the often bloody transition from one pre-eminent leader to the next. As such, exogenous shocks such as economic crises could usher in a redistribution of relative power (see also Gilpin. 1981) that leads to uncertainty about power balances, increasing the risk of miscalculation (Feaver, 1995). Alternatively, even a relatively certain redistribution of power could lead to a permissive environment for conflict as a rising power may seek to challenge a declining power (Werner. 1999). Separately, Pollins (1996) also shows that global economic cycles combined with parallel leadership cycles impact the likelihood of conflict among major, medium and small powers, although he suggests that the causes and connections between global economic conditions and security conditions remain unknown.

Second, on a dyadic level, Copeland's (1996, 2000) theory of trade expectations suggests that 'future expectation of trade' is a significant variable in understanding economic conditions and security behaviour of states. He argues that interdependent states are likely to gain pacific benefits from trade so long as they have an optimistic view of future trade relations. However, if the expectations of future trade decline, particularly for difficult [end page 213] to replace items such as energy resources, the likelihood for conflict increases, as states will be inclined to use force to gain access to those resources. Crises could potentially be the trigger for decreased trade expectations either on its own or because it triggers protectionist moves by interdependent states.4

Third, others have considered the link between economic decline and external armed conflict at a national level. Blomberg and Hess (2002) find a strong correlation between internal conflict and external conflict, particularly during periods of economic downturn. They write,

The linkages between internal and external conflict and prosperity are strong and mutually reinforcing. Economic conflict tends to spawn internal conflict, which in turn returns the favour. Moreover, the presence of a recession tends to amplify the extent to which international and external conflicts self-reinforce each other. (Blomberg & Hess, 2002. p. 89)



Economic decline has also been linked with an increase in the likelihood of terrorism (Blomberg, Hess, & Weerapana, 2004), which has the capacity to spill across borders and lead to external tensions.

Furthermore, crises generally reduce the popularity of a sitting government. “Diversionary theory" suggests that, when facing unpopularity arising from economic decline, sitting governments have increased incentives to fabricate external military conflicts to create a 'rally around the flag' effect. Wang (1996), DeRouen (1995). and Blomberg, Hess, and Thacker (2006) find supporting evidence showing that economic decline and use of force are at least indirectly correlated. Gelpi (1997), Miller (1999), and Kisangani and Pickering (2009) suggest that the tendency towards diversionary tactics are greater for democratic states than autocratic states, due to the fact that democratic leaders are generally more susceptible to being removed from office due to lack of domestic support. DeRouen (2000) has provided evidence showing that periods of weak economic performance in the United States, and thus weak Presidential popularity, are statistically linked to an increase in the use of force.

In summary, recent economic scholarship positively correlates economic integration with an increase in the frequency of economic crises, whereas political science scholarship links economic decline with external conflict at systemic, dyadic and national levels.5 This implied connection between integration, crises and armed conflict has not featured prominently in the economic-security debate and deserves more attention.

This observation is not contradictory to other perspectives that link economic interdependence with a decrease in the likelihood of external conflict, such as those mentioned in the first paragraph of this chapter. [end page 214] Those studies tend to focus on dyadic interdependence instead of global interdependence and do not specifically consider the occurrence of and conditions created by economic crises. As such, the view presented here should be considered ancillary to those views.

Aerospace




Key to aerospace-- industrial base


Ronis 06 (Prepared Statement of Dr. Sheila Ronis, Director, MBA/MS Programs, Walsh College; Vice President, National Defense University Foundation, Troy, Michigan CHINA’S IMPACT ON THE U.S. AUTO AND AUTO PARTS INDUSTRIES HEARING BEFORE THE U.S.­CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED NINTH CONGRESS SECOND SESSION, July 17, 2006 http://www.uscc.gov/hearings/2006hearings/transcripts/july_17/06_07_17_trans.pdf)
The very ability of the United States to remain a superpower is at stake. Offshoring the auto industry could make the U.S. military industrial base in the United States completely unable to comply with American preference legislation because the erosion of the auto industrial base also erodes defense. General Motors, Ford, Delphi, Northrop­Grumman, Boeing, Lockheed Martin – they all share the bottom of the industrial base. The United States cannot sustain the kind of growth it has enjoyed for the last several decades if the industrial base continues to steadily erode. Increasingly, a number of U.S. companies in specific industries find it impossible to compete in world markets. This is of particular concern for the industrial base that supplies the U.S. military, automotive and aerospace

Aerospace vital to the economy


Hernnstadt 8 – Director of Trade and Globalization @ IAMAW

Owen, director of the Trade and Globalization Department, International Association of Machinists and Aerospace Workers, “Offsets and the lack of a comprehensive U.S. policy,” Economic Policy Institute, http://www.sharedprosperity.org/bp201.html



Aerospace is an especially important industry for a nation's economic and physical security, and perhaps no other country has benefited more from the aerospace industry than the United States.9 The Final Report of the Commission on the Future of the United States Aerospace Industry states that the industry "contributes over 15 percent to our Gross Domestic Product and supports over 15 million high quality American jobs" (Aerospace Industry Commission 2002, 1-2). U.S. aerospace has been identified as a major source of "technical innovation with substantial spillovers to other industrial and commercial sectors" and "high-wage employment, which spreads the benefits of rising productivity throughout the U.S. economy.…" The Aerospace Commission also noted the industry's contribution to the nation's "economic growth, quality of life, and scientific achievements…." (Aerospace Industry Commission 2002, 1-2). Despite the importance of aerospace, the deterioration of the industry at home has continued at a dramatic rate. Nearly 500,000 jobs have been lost in the U.S. aerospace industry since 1990 (Aerospace Industry Commission 2002, 8-12; see also AIA 2007), and several hundred thousand more workers have lost their jobs in related industries. Sadly, the fact of these enormous job losses comes as no surprise. More than 10 years ago, in Jobs on the Wing, authors Randy Barber and Robert Scott predicted that "up to 469,000" jobs in the aerospace and related industries "could be eliminated by 2013 because of offset policies and increased foreign competition" (Barber and Scott 1995, 2). In a later study, Scott predicted that by 2013 the industry would suffer a loss of over 25% "of the total jobs in aircraft production in 1995" (Scott 1998). These gloomy predictions are apparently reinforced by U.S. government reports. According to the Department of Labor, the outlook for employment in the U.S. aerospace industry is not rosy: between 2002 and 2012 aerospace employment in the United States will "decrease by 18 percent" (U.S. Department of Labor 2004). The future health of the industry depends in large part on its ability to attract new workers, but the crisis in employment and the prediction that the crisis will deepen does not bode well for attracting new workers. In its final report, the Aerospace Commission summarized this concern: The U.S. aerospace sector, once the employer of choice for the "best and brightest" technically trained workers, now finds it presents a negative image to potential employees. Surveys indicate a feeling of disillusionment about the aerospace industry among its personnel, whether they are production/technical workers, scientists or engineers. The majority of newly dislocated workers say they will not return to aerospace. In a recent survey of nearly 500 U.S. aerospace engineers, managers, production workers, and technical specialists, 80 percent of respondents said they would not recommend aerospace careers to their children. (Aerospace Industries Commission 2002, 8-5) While the Aerospace Commission found that "U.S. policy toward domestic aerospace employment must reaffirm the goal of stabilizing and increasing the number of good and decent jobs in the industry," this policy has yet to be embraced, let alone implemented (Aerospace Industries Commission 2002, 8-12). Far from embracing any sort of effective industrial policy when it comes to aerospace, the U.S. government continues to relegate policy development in this area to private parties, just as it does with offsets in general. The inherent weakness to this approach is obvious—private U.S. companies must compete with foreign companies that have the full support of their governments. If a sale means transferring production and/or technology, private companies are in a difficult position. Given that their interests do not always align with the national interest, they can be expected to maximize corporate returns, even though the use of offsets, which can deeply affect an industry as essential to the nation's economy and security as aerospace, can be detrimental to U.S. national interests. Should there be any doubt about the seriousness of the competition from foreign entities and governments, one has only to look at the success of companies like EADS. What were once fledgling industries are now U.S. competitors who benefit from a sophisticated approach to offsets that moves jobs and technology their way.10 As succinctly stated by the Aerospace Commission, "…foreign nations clearly recognize the potential benefits from aerospace and are attempting to wrest global leadership away from us" (Aerospace Industries Commission 2002, 1-2). A country that truly understands the importance of adopting a comprehensive aerospace policy based on offsets is China. As reported in the 2005 Report to Congress of the of U.S.-China Economic and Security Review Commission, "…Chinese firms have used their leverage to extract offsets—agreements to transfer some of the aircraft production along with related expertise and technology—as part of the deals"; the report further concludes, "China nurtures its domestic aviation and aerospace industry by exploiting the international competition already in the industry" (U.S.-China Review Commission 2005, 30). Indeed, as summarized in one U.S. government report: China is likely to be the largest customer—and possibly an emerging competitor—of the U.S. aerospace industry in the future.

Economic decline causes global war


Royal 10 [Jedediah, Director of Cooperative Threat Reduction – U.S. Department of Defense, “Economic Integration, Economic Signaling and the Problem of Economic Crises”, Economics of War and Peace: Economic, Legal and Political Perspectives, Ed. Goldsmith and Brauer, p. 213-215]
Less intuitive is how periods of economic decline may increase the likelihood of external conflict. Political science literature has contributed a moderate degree of attention to the impact of economic decline and the security and defence behaviour of interdependent states. Research in this vein has been considered at systemic, dyadic and national levels. Several notable contributions follow. First, on the systemic level, Pollins (2008) advances Modelski and Thompson's (1996) work on leadership cycle theory, finding that rhythms in the global economy are associated with the rise and fall of a pre-eminent power and the often bloody transition from one pre-eminent leader to the next. As such, exogenous shocks such as economic crises could usher in a redistribution of relative power (see also Gilpin. 1981) that leads to uncertainty about power balances, increasing the risk of miscalculation (Feaver, 1995). Alternatively, even a relatively certain redistribution of power could lead to a permissive environment for conflict as a rising power may seek to challenge a declining power (Werner. 1999). Separately, Pollins (1996) also shows that global economic cycles combined with parallel leadership cycles impact the likelihood of conflict among major, medium and small powers, although he suggests that the causes and connections between global economic conditions and security conditions remain unknown. Second, on a dyadic level, Copeland's (1996, 2000) theory of trade expectations suggests that 'future expectation of trade' is a significant variable in understanding economic conditions and security behaviour of states. He argues that interdependent states are likely to gain pacific benefits from trade so long as they have an optimistic view of future trade relations. However, if the expectations of future trade decline, particularly for difficult to replace items such as energy resources, the likelihood for conflict increases, as states will be inclined to use force to gain access to those resources. Crises could potentially be the trigger for decreased trade expectations either on its own or because it triggers protectionist moves by interdependent states.4 Third, others have considered the link between economic decline and external armed conflict at a national level. Blomberg and Hess (2002) find a strong correlation between internal conflict and external conflict, particularly during periods of economic downturn. They write: The linkages between internal and external conflict and prosperity are strong and mutually reinforcing. Economic conflict tends to spawn internal conflict, which in turn returns the favour. Moreover, the presence of a recession tends to amplify the extent to which international and external conflicts self-reinforce each other. (Blomberg & Hess, 2002. p. 89) Economic decline has also been linked with an increase in the likelihood of terrorism (Blomberg, Hess, & Weerapana, 2004), which has the capacity to spill across borders and lead to external tensions. Furthermore, crises generally reduce the popularity of a sitting government. "Diversionary theory" suggests that, when facing unpopularity arising from economic decline, sitting governments have increased incentives to fabricate external military conflicts to create a 'rally around the flag' effect. Wang (1996), DeRouen (1995). and Blomberg, Hess, and Thacker (2006) find supporting evidence showing that economic decline and use of force are at least indirectly correlated. Gelpi (1997), Miller (1999), and Kisangani and Pickering (2009) suggest that the tendency towards diversionary tactics are greater for democratic states than autocratic states, due to the fact that democratic leaders are generally more susceptible to being removed from office due to lack of domestic support. DeRouen (2000) has provided evidence showing that periods of weak economic performance in the United States, and thus weak Presidential popularity, are statistically linked to an increase in the use of force. In summary, recent economic scholarship positively correlates economic integration with an increase in the frequency of economic crises, whereas political science scholarship links economic decline with external conflict at systemic, dyadic and national levels.5 This implied connection between integration, crises and armed conflict has not featured prominently in the economic-security debate and deserves more attention.

Aerospace K2 Econ Ext.



Aerospace is the backbone of the manufacturing base


Platzer 09 [Michaela Platzer, Specialist in Industrial Organization and Business “U.S. Aerospace Manufacturing: Industry Overview and Prospects”, 12/3/09, http://www.dtic.mil/cgibin/GetTRDoc?AD=ADA511133&Location=U2&doc=GetTRDoc.pdf, accessed 6/18/2012]

Aircraft and automobile manufacturing are considered by many to be the technological backbones of the U.S. manufacturing base. As the Obama Administration and Congress debate how to strengthen American manufacturing, aerospace is likely to receive considerable attention. Defense and commercial sides of the industry facing difficult business conditions for the near and medium term. This report primarily provides a snapshot of the U.S. commercial (non-defense, non-space) aerospace manufacturing industry and a discussion of major trends affecting the future of this industry. The large commercial jet aviation market is a duopoly shared by the U.S. aircraft manufacturer Boeing and the European aircraft maker Airbus, with fierce competition between these two companies. The regional jet market is dominated by two non-U.S. headquartered manufacturers, Brazil's Embraer and Canada's Bombardier, both of which utilize a high level of U.S.-produced content in their products. The general aviation market includes companies such as Cessna and Gulfstream. Aerospace manufacturing is an important part of the U.S. manufacturing base. It comprised 2.8% of the nation’s manufacturing workforce in 2008 and employed over 500,000 Americans in highskilled and high-wage jobs. More than half (61%) of the nation’s aerospace industry jobs are located in six states: Washington state, California, Texas, Kansas, Connecticut, and Arizona. Several smaller aerospace manufacturing clusters are found in states such as Florida, Georgia, Ohio, Missouri, and Alabama. Other aerospace centers are beginning to emerge in southern states, such as South Carolina, where Boeing is now building a second production line to produce the 787 Dreamliner. Aerospace manufacturing contributes significantly to the U.S. economy, with total sales by aerospace manufacturers (including defense and space) comprising 1.4% of the U.S. gross domestic product in 2008.

Aerospace innovation spills over and is key to the global economy


Bugos 10 [Glenn E Bugos, former Cal Institute Professor, president of the NASA Ames Research Center, “The History of the Aerospace Industry” 2010, http://eh.net/encyclopedia/article/bugos.aerospace.industry.history, accessed 6/18/12]

The aerospace industry ranks among the world's largest manufacturing industries in terms of people employed and value of output. Yet even beyond its sheer size, the aerospace industry was one of the defining industries of the twentieth century. As a socio-political phenomenon, aerospace has inflamed the imaginations of youth around the world, inspired new schools of industrial design, decisively bolstered both the self-image and power of the nation state, and shrunk the effective size of the globe. As an economic phenomenon, aerospace has consumed the major amount of research and development funds across many fields, subsidized innovation in a vast array of component technologies, evoked new forms of production, spurred construction of enormous manufacturing complexes, inspired technology-sensitive managerial techniques, supported dependent regional economies, and justified the deeper incursion of national governments into their economies. No other industry has so persistently and intimately interacted with the bureaucratic apparatus of the nation state. Aerospace technology permeates many other industries -- travel and tourism, logistics, telecommunications, electronics and computing, advanced materials, civil construction, capital goods manufacture, and defense supply. Here, the aerospace industry is defined by those firms that design and build vehicles that fly through our atmosphere and outer space.

Aerospace is key to the American economy – jobs, innovation, and exports


AIAA 10 (Aerospace Industries Association of America, September 18, 2010, “Aerospace and Defense: Second to None,” National Aerospace Week, http://www.nationalaerospaceweek.org/wp-content/uploads/2010/04/whitepaper.pdf)

As the U.S. economy continues to move through uncertain times and the nation grapples with a growing debt, America’s aerospace industry remains a powerful, reliable engine of employment, innovation and export income. Aerospace contributed $77.5 billion in export sales to America’s economy last year. 1 Conservatively, U.S. aerospace sales alone account for three to five percent of our country’s gross domestic product, and every aerospace dollar yields an extra $1.50 to $3 in further economic activity. 2 Aerospace products and services are the bedrock of our nation’s security and competitiveness. We strongly believe that keeping this economic workhorse on track is in America’s best interest. To accomplish this, government policies must support robust funding of defense priorities, research and development, a 21st century air traffic control system, a level playing field abroad and a robust industrial base. Additionally policies that promote science, technology engineering and mathematics (STEM) will help reenergize an aging aerospace workforce with an infusion of younger employees. This paper explains what’s at stake and how to ensure that the economic and national security benefits of our industry are bolstered and broadened. It’s particularly important this year. With sixty percent of aerospace sales dependent on federal contracts, ill-considered budget cuts could jeopardize our national security, civil and space transportation infrastructure and economy.






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