The continued flow of various weapons to the Pentagon during the pandemic will depend to a surprising degree on Mexico, the U.S. neighbor frequently criticized by President Trump.
Many U.S. defense firms, particularly aircraft manufacturers, rely on Mexican suppliers, many of whom have closed or slowed operations during the pandemic, said Ellen Lord, defense undersecretary for acquisition and sustainment.
“I think one of the key things we have found out are some international dependencies,” Lord said Monday during a press conference at the Pentagon. “Mexico right now is somewhat problematical for us but we’re working through our embassy, and then there are pockets in India, as well.”
After discussing the supply problem with Christopher Landau, the U.S. ambassador to Mexico, last week, Lord said she would write Mexican Foreign Secretary Marcelo Ebrard “to ask for help to reopen international suppliers” in Mexico.
“We are seeing impact on the industrial base by several pockets of closure internationally,” she said.
The Pentagon’s supply-chain dependence on Mexico has grown over the past decade as defense firms large and small outsourced production.
“U.S. and foreign aerospace component suppliers have been increasingly locating production facilities in Mexico,” the United States International Trade Commission said in a 2013 report. “Lower manufacturing costs (largely due to a lower wage structure), proximity to original equipment manufacturers (OEMs) in the United States, duty-free access to other important aerospace markets, and a Bilateral Aviation Safety Agreement (BASA) with the United States all contribute to Mexico’s greater appeal compared with other global manufacturing locations.”
The report signaled out Lockheed Martin, Textron, General Dynamics, General Electric, Honeywell, Rockwell Collins (now Raytheon Technologies), as operating subsidiaries in Mexico.
Lockheed uses electrical wiring in its Black Hawk and S-92 helicopters and F-16 fighter jets made by French firm Safran in Chihuahua, Mexico. Safran touts itself as Mexico’s largest aerospace employer, with about 13,000 employees.
In 2012, Boeing held an event encouraging suppliers to do more business in Mexico; today it relies on PCC Aerostructures in Monterrey, Mexico. Textron, on its website, touts manufacturing work in Mexico.
“We are seeing differing regulations and guidance around what businesses may operate and under what conditions,” Todd Blecher, a Boeing spokesman, said in an emailed statement.
“Of most immediate concern is lack of a clear designation of aerospace as essential business,” he said. “As a result, lower tier suppliers based in Mexico are suspending operations, and these suspensions have direct impact on first-tier supplier performance for major defense primes. Boeing supports any effort by the U.S., Canada, and Mexico governments to harmonize these rules to ensure that these essential businesses and supply chains around the world can remain open.”
If Mexican plants remain closed, it could further disrupt U.S. firms’ deliveries of Pentagon orders. While there have been some coronavirus-related disruptions over the past two months, many U.S. defense firms have continued building weapons, albeit at a slower pace.
“Right now, we’re, I think, a little bit living on the benefit of on-hand stock,” James “Hondo” Geurts, the head of Navy acquisition said on a call with reporters last week. “At some point that on-hand stock if the downstream production supply isn’t being generated, that will start running out.”
In March, the Pentagon deemed defense contractors essential to the national security workforce, which helped weapons makers at factories and offices amid local and state-wide work-from-home orders.
In recent weeks, Boeing had been forced to stop military manufacturing in Washington state and Pennsylvania. Seattle-area factories resumed limited work last week while Philadelphia did the same on Monday.
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(c) 2020 By National Journal Group, Inc.
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