Manufacturing for the Security of the United States: Reviving Competitiveness and Reducing Deficits

An important contribution to the literature of business and international security, this volume takes a two-pronged approach to the study of U.S. manufacturing. McGarrah first provides an in-depth examination of the internal and external factors that have contributed to the decline of U.S. manufacturing capabilities in recent decades, focusing particular attention on U.S. arms procurement and export contracting, the widespread emphasis on short-term profits and cash-flows at the expense of long-term gains, product quality and productivity. McGarrah then proposes a series of internal and government-led reforms that, he argues, would not only contribute to a revival of the competitive position of U.S. manufacturing within the world economy, but also release budget dollars for such projects as rebuilding the U.S. infrastructures for transportation, education, water resources and funding plans for a Marshall Plan revival with Third World nations.

McGarrah begins by demonstrating the importance of manufacturing firms as the pivotal institutions providing for military, economic, political and social security and progress for industrialized and developing societies; also as providers of highly paid, highly skilled jobs not generated by the service industries. He then identifies the internal causes of U.S. manufacturers' decline: the ascendancy of financial and accounting executives over engineering, production and marketing executives; the dominance of a strategy for corporate growth via financial conglomeration and divestiture (making more money for fewer people), instead of making better products, just-in-time, for more people; concentrating more on controlling flows of cash than flows of materials, products and information to serve customers' needs for improvements. Turning to a discussion of external influences, McGarrah argues that the Pentagon's arms procurement and export policies for U.S. military-industrial independence, vis-a-vis other Western democratic allied nations have exacerbated problems of indolence, lost competitiveness and export markets for American manufacturers. Reform from within, McGarrah asserts, can be accomplished if companies spend less time on balance sheet ledger and paper entrepreneurship and pay more attention to democratic-participatory management (less to bureaucracies, hierarchies and special interests) in planning controlling qualities and flows of products to markets. He also advocates greater U.S. allied cooperation in funding, procurement, production and deployment of common conventional weapons. With the savings from such cooperation, the United States could then reduce Federal deficits, finance and operate a civil-industrial-university complex for advanced research and development (patterned after precedents of the U.S. agri-business-university complex), and revive the Marshall Plan to boost manufacturers' exports and enhance political and economic ties with Third World nations.