APPENDIX

May 18, 1989

OPENING STATEMENT

CONGRESSWOMAN MARY ROSE OAKAR, CHAIR
SUBCOMMITTEE ON ECONOMIC STABILIZATION
HEARING ON H.R. 486, THE "DEFENSE
PRODUCTION ACT AMENDMENTS OF 1989"
THURSDAY, MAY 18, 1989

TODAY, THE SUBCOMMITTEE ON ECONOMIC STABILIZATION CONTINUES

ITS LEGISLATIVE HEARINGS ON H.R. 486, THE "DEFENSE PRODUCTION ACT

AMENDMENTS OF 1989."

THE BILL IS REALLY MADE UP OF TWO TITLES. THE FIRST IS A SERIES OF MAJOR AMENDMENTS TO TITLE I OF THE EXISTING DEFENSE PRODUCTION ACT WHICH, AS YOU KNOW, EXPIRES NEXT SEPTEMBER 30 UNLESS RE-EXTENDED.

THE

TESTIMONY FROM 48

AMENDMENTS ARE BASED ON EXPERT WITNESSES REPRESENTING GOVERNMENT, LABOR, INDUSTRY, AND PUBLIC INTEREST GROUPS. WE HAVE HAD SOME 15 OR MORE HEARINGS OVER THE

PAST TWO YEARS ON MAJOR ISSUES AFFECTING THE U.S. DEFENSE INDUSTRIAL BASE.

ACTION ON THESE ISSUES IS LONG OVERDUE TO PREVENT FURTHER EROSION OF THE BASE AND ΤΟ PROMOTE A REVITALIZATION OF U.S. INDUSTRIAL CAPABILITIES.

H.R. 486 WILL SERVE AS A STEP IN THE RIGHT DIRECTION.

AS I SAID YESTERDAY, TITLE II OF THE BILL FOCUSES ON ECONOMIC ADJUSTMENT TO ASSIST INDUSTRIES, WORKERS AND COMMUNITIES IN HELPING TO OVERCOME THE ADVERSE EFFECTS OF CERTAIN DEFENSE SPENDING CUTBACKS AND MILITARY FACILITY CLOSINGS LIKELY TO OCCUR.

· 2

TITLE II IS A NEW CONCEPT AND NEEDS ADDITIONAL WORK SO THE CURRENT LANGUAGE IN THE BILL IS REALLY A BEGINNING POINT FOR

DISCUSSION.

OUR

WITNESSES

TODAY ARE ADMIRAL THOMAS MOORER, FORMER CHAIRMAN OF THE JOINT CHIEFS OF STAFF; MATTHEW B. COFFEY, PRESIDENT OF THE NATIONAL TOOLING AND MACHINING ASSOCIATION; AND KENNETH B. BERNHARDT, RECENTLY-RETIRED PRESIDENT OF HAMILTON

TECHNOLOGY, INC.

ADMIRAL MOORER IS GOING TO BE DELAYED UNTIL 10:30, SO WE WOULD LIKE то BEGIN WITH THE TESTIMONY OF MR. COFFEY WHOSE INDUSTRIES ARE VITAL то AMERICA'S

DEFENSE

INDUSTRIAL

PREPAREDNESS.

COMMENTS TO THE COMMITTEE ON

BANKING, FINANCE AND URBAN AFFAIRS

H. R. 486

GOOD MORNING MADAM CHAIR AND MEMBERS OF THE COMMITTEE.
I APPEAR BEFORE YOU TODAY AS A CITIZEN CONCERNED ABOUT

THE DEFENSE AND INDUSTRIAL PREPAREDNESS OF OUR COUNTRY.
I FULLY RETIRED LAST MONTH AS THE PRESIDENT OF A COMPANY,
WHICH FOR THE LAST 36 YEARS HAS DIRECTED 100% OF ITS EFFORTS
TO THAT SEGMENT OF ORDNANCE PRODUCTS REQUIRING THE DESIGN,
DEVELOPMENT AND PRODUCTION, OF MECHANICAL, ELECTRO-MECHANICAL
AND ELECTRONIC FUZING FOR ARTILLERY, MORTARS AND ROCKETS,

SAFE AND ARMING DEVICES FOR A VARIETY OF MISSILES AND

PRECISION TIMING DEVICES FOR VARIOUS APPLICATIONS,

SEVERAL LAND MINE PROGRAMS.

INCLUDING

LAST YEAR I HAD THE OPPORTUNITY TO MEET WITH THIS COMMITTEE

TO EXPRESS MY CONCERNS ON THE EROSION THAT HAS BEEN OCCURRING
TO THE INDUSTRIAL PREPAREDNESS AND THE MOBILIZATION CAPABILITIES

OF OUR COUNTRY. TODAY I APPEAR BEFORE YOU AND I AM DISTURBED

TO REPORT THAT EVENTS AND ACTIONS HAVE TAKEN PLACE, THIS PAST YEAR, WHICH CONTINUE THIS EROSION.

SINCE I LAST MET WITH YOU, TWO OF THE FEW REMAINING FUZE
COMPANIES WENT OUT OF BUSINESS. THEY ARE: SOONER DEFENSE
IN LAKE WALES, FLORIDA AND ACTION MANUFACTURING COMPANY IN
PHILADELPHIA, PA. OTHER LARGE CORPORATIONS HAVE DIVESTED

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PORTIONS OF THEIR DEFENSE BUSINESSES OR SOLD THEIR ENTIRE

BUSINESS TO OTHERS. IN SOME CASES THESE COMAPNIES NOW HAVE

FOREIGN OWNERSHIP.

A FEW EXAMPLES ARE:

INTERNATIONAL SIGNAL

AND CONTROL MERGED WITH FERRANTI OF ENGLAND. ACCUDYNE HAS BEEN SOLD TO ASTRA, AN ENGLISH HOLDING COMPANY AND KDI'S DEFENSE

SEGMENT IS UP FOR SALE. WE HAVE ALL READ THAT HONEYWELL HAS

OR IS IN THE PROCESS OF SELLING THREE DIVISIONS WHICH ARE

HEAVILY INVOLVED IN THE MANUFACTURE OF DEFENSE PRODUCTS. EVEN

AS I SPEAK THE COMPANY I RETIRED FROM IS IN THE PROCESS OF BEING

SOLD TO A MAJOR COMPETITOR.

SINCE BOTH COMPANIES ARE IN THE

SAME MARKETS, FUTURE CONSOLIDATIONS COULD RESULT IN ANOTHER

DIMUNATION OF THE FUZE BASE.

EXISTING LAWS, REGULATIONS, AND POLICIES HAVE NOT DEMONSTRATED
THEIR ADEQUACY TO REVERSE, SLOWDOWN OR STOP THIS CONTINUAL

WEAKENING OF OUR INDUSTRIAL BASE AND OUR MOBILIZATION CAPABILITIES.
EVEN THOUGH SUCH LAWS, REGULATIONS AND POLICIES HAVE LANGUAGE
DESIGNED TO DO SO. FOR INSTANCE: FOR FIFTEEN (15) YEARS OR
SO ORDNANCE ITEM CONTRACTS CONTAINED THE PRECISION PARTS AND
PRECISION GEAR AND PINION CLAUSES. THESE CLAUSES WERE DESIGNED

AND IMPLEMENTED AS A RESULT OF THE LARGE CONCERN OUR GOVERNMENT
OFFICIALS HAD WHEN IT WAS DISCOVERED THAT SUCH COMPONENTRY WAS
ACQUIRED FROM OVERSEAS SOURCES FOR THE MANUFACTUR OF THE ORDNANCE
ITEMS REQUIRED FOR THE VIETNAM CONFLICT. COSTS WERE THE DRIVER
FOR SOME DOMESTIC MANUFACTURERS TO TAKE THIS COURSE OF ACTION.
TODAY, NEITHER REQUESTS FOR PROPOSALS NOR THE RESULTANT CONTRACTS
CONTAIN THESE CLAUSES. THE REGULATIONS ARE IN PLACE BUT NOT BEING