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(The Hill)   Defense contractors complain they can't make a profit without taxpayer money. If only there was some sort of market that tied a corporation's profit with its performance   (thehill.com) divider line 210
    More: Fail, killer, Pratt & Whitney, EADS, carbon sequestration, House Armed Services Committee, defense contractors  
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3932 clicks; posted to Business » on 19 Jul 2012 at 1:54 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-07-20 08:44:01 AM

Ricardo Klement: Philip Francis Queeg: Oh, so you want to include the cost of all the raw materials and all of the profitst for the secondary suppliers when analyzing the cost of the wars and defense contracts?

You'd be double-counting for raw materials. You can include service contracts, though.

Ultimately, the point is that the MIC doesn't have disproportionate power.

After all, which would you rather be, a defense contractor or an oil company?


Does our government spend more on oil procurement than the rest of the world combined?
 
2012-07-20 10:01:38 AM

a stainless steel rat: Funny, through all this no one suggested giving all that money back to the people who originally gave it to the gov: The tax payers. So, fine, gut defense, but every last penny should be returned to the tax payers.


Cuz the cuts weren't actually necessary to balance the budget or anything.
 
2012-07-20 12:35:42 PM

Diogenes: Gig103: Hey, if the car industry and commercial airline businesses can get 'bailed out', then so can the defense industry.

I'm sorry...Is Lockheed at grave risk of going bankrupt and taking down the American economy and causing a wave a trouble globally?


More than you know...

And it still ain't my farking problem and I still don't want my government using the money I give them to make sure Lockheed can continue it's ruinous business practices.

The whole "defense supply chain" took a wallop in '09 and has struggled to ramp up. Imagine Ethel, for a moment, working at a place that makes ball bearings that go into rotors and things, eventually put into a pratt and whitney engine. She has been diligently inspecting little stainless steel balls for nigh on 25 years. She knows a good ball by feel. She can seemingly *sense* issues before they arise and address them. She has the largets payroll expenses of any employee in the Quality Department. So when 2009 rolls around, a beancounter at Mr. Balls Steel Bearing Co., Inc. sees that they can reduce overhead in an area that hasn't seen an issue in over a decade by at least 15-20% with a single stroke of his pen. And thus Ethel's position is eliminated and she's replaced by a temp.

That temp, fresh out of college, is just as dedicated, just as motivated, and just as smart as Ethel. But he's looked at a grand total of 50 ball bearings in his life, none of which were examined especially closely.

Suddenly, throughput in QC drops to 80% of its previous level, and the yield drops by 25%.

Now Mr. Ball's customers are getting inferior product, with longer leadtimes, made at higher cost. One of two things happens. 1. The customer lives with this. 2. The customer finds a new supplier.

In situation 1, the customer then passes on all inherent issues to all steps in the rest of the supply chain.

Quality of Pratt and Whitney engines takes a hit either way though. In the first case, they now have to inspect the rotors they are purchasing and develop a test method to detect any out-of-tolerance issues introduced by increased variance in the supply chain. In the second, they have to eat the dead-band introduced by the exploration that We Do Rotors, LLC has to perform in order to identify a quality supplier.

As the engine quality drops and lead time increases, Lockheed now has to adjust *their* inspection methods, lot-control methods, specifications, required inspection lists... they have to increase the robustness of their ERP system to accommodate the increased lot-to-lot variance of not just their engines, but their ailerons, wheels, hydraulics, materials, gaskets, wires, cables, control boards and other sundry electronics.

Everything gets more expensive when you decide that you'd prefer to burn your toast and scrape it, rather than figure out why your toast is getting burnt in the first place.

SO much of our economy is tied up in the MIC, it's hard to even understand, let alone explain. But the downturn damn near crippled it. They are all still hobbled, and some are doing ... better... at learning to walk again. Some... are hiring more people to scrape their toast.
 
2012-07-20 01:16:01 PM

rewind2846: Giltric:

You had me up until the part about teaching Marines how to fix their helicopters. Everyone knows they eject at the first sign of trouble.

5/10

The Marines I've known that fix their own helicopters are usually smarter than folks like you.
0/10


If they were smart they wouldn't have to join the service. They probably were just answering a calling to kill brown people.
 
2012-07-20 09:11:47 PM

IronTom: Government provides for defense and security. That is one of the major things it does.


Once again, what's a bigger threat to the USA, foreign combatants or a lack of a good health care system/lack of a good infrastructure?
 
2012-07-20 09:51:18 PM

vpb: GAT_00: Well, as I understand it, any company that can't survive without government handouts should die.

That doesn't apply to the military. Socialized single payer military isn't socialisims because heroes.


Yeah, am I the only one thinking about that thread yesterday pointing out what exactly the military is turning into?

/Making our 'heroes' rape machines is not a good plan here.
 
2012-07-20 11:02:19 PM

SomethingToDo: I wouldn't flat out agree with GAT_00 that no company should exist that needs the government dime to be a going concern, but businesses in that situation need as much public scrutiny brought to bear on them as possible, and the question continually asked, "is this worth it?" Governments shouldn't privatize things that only the government sector is paying for - they should pursue their own efficiencies - and governments shouldn't throw good money after bad.

/The relatively newly elected conservative government in my state is getting rid of its publishing and office supply agencies. It's one of the first good decisions I think they've made.


Many of the companies that provide military equipment have been split off from their original companies and are still surviving just fine. Without doing any R & D. Take a look at MTU. This company was originated by GM in 1939, and became Detroit Diesel in 1965. Then it was sold off in 2006, yet they are still making brand new engines and rebuilding the rest for oil field and generators successfully.

"Those of us who worked for Detroit Diesel® in the 2-Cycle's heyday recognized that there was still a lot of life left in this product line," states Polson. "When the off-highway division of Detroit Diesel® became part of the global MTU organization, we saw an opportunity and urged MTU to also purchase the legacy 2-Cycle division. MTU was quick to realize the importance of our 2-Cycle heritage and made a commitment to give it the same comprehensive, long-term product support that it provides with all MTU products."

And they support legacy on-highway engines. And build new ones for the USA. Of course they are a part of the Tognum Group (or Tognum AG) which appears to be German.

So, we've lost control of a key component of our ability to maintain and construct new military equipment to a key NATO ally. Just because the steel manufacturers weren't bailed out back in the late '70s
 
2012-07-21 01:12:52 PM

Philip Francis Queeg: Ricardo Klement: Philip Francis Queeg: Oh, so you want to include the cost of all the raw materials and all of the profitst for the secondary suppliers when analyzing the cost of the wars and defense contracts?

You'd be double-counting for raw materials. You can include service contracts, though.

Ultimately, the point is that the MIC doesn't have disproportionate power.

After all, which would you rather be, a defense contractor or an oil company?

Does our government spend more on oil procurement than the rest of the world combined?


Spending isn't the right metric anyway. If I buy body armor for my soldiers, but you don't buy any for yours, am I evil because I out-spent you?
 
2012-07-22 04:56:55 PM
I'll never get it. People come in and complain about defense spending. Meanwhile, social programs and debt payments make up a far higher part of our debt (with these programs already taking up 60% of the budget to defense's 20%). Meanwhile, the debt grows at a phenomenal rate and people are still in poverty or apparently having problems getting health care. The answer here is truly obvious, but there are clearly a lot of stupid people who think that medicare, medicaid, social security, and other collectivist pipe dreams are doing exactly what they said they would. Even if we could eliminate the entire portion of the defense from our federal budget (which we can't, refer to the Constitution), we would still see significant federal deficits each year. On top of all this, these social programs are increasing as a percentage of the budget at a phenomenal rate, while defense has been relatively steady when looked at on the whole since WWII.

So, before we start to touch defense, perhaps we should see if there is any way we can knock down these entitlement programs that are dragging us down so fast. I'm all for helping people charitably, but when it is clear they have become little more than dead weight, that is the portion of the budget we need to be paying the most attention to.
 
2012-07-22 11:09:19 PM

06Wahoo: I'll never get it. People come in and complain about defense spending. Meanwhile, social programs and debt payments make up a far higher part of our debt (with these programs already taking up 60% of the budget to defense's 20%). Meanwhile, the debt grows at a phenomenal rate and people are still in poverty or apparently having problems getting health care. The answer here is truly obvious, but there are clearly a lot of stupid people who think that medicare, medicaid, social security, and other collectivist pipe dreams are doing exactly what they said they would. Even if we could eliminate the entire portion of the defense from our federal budget (which we can't, refer to the Constitution), we would still see significant federal deficits each year. On top of all this, these social programs are increasing as a percentage of the budget at a phenomenal rate, while defense has been relatively steady when looked at on the whole since WWII.

So, before we start to touch defense, perhaps we should see if there is any way we can knock down these entitlement programs that are dragging us down so fast. I'm all for helping people charitably, but when it is clear they have become little more than dead weight, that is the portion of the budget we need to be paying the most attention to.


Everything you said is completely wrong.
 
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