America's Lost Arsenal: The Collapse of the Defense Industrial Base

The automotive plants, shipyards, and aircraft factories that won World War II are disappearing—and with them, the capacity to mobilize for the next major conflict

BLUF (Bottom Line Up Front): The United States is systematically dismantling the three pillars of industrial capacity that won World War II: automotive manufacturing, shipbuilding, and aerospace production. The automotive industry that produced 854,000 military trucks and 97,000 bombers between 1942-1945 is collapsing, with GM and Ford taking $25+ billion in writedowns and 4.5 million units of idle US capacity while China's BYD dominates global EV production. American shipbuilding—which built 70 times more tonnage in WWII than the 1930s—produced just 8 commercial vessels in 2024 versus China's 1,000+, leaving the US with 0.2% global market share compared to China's 53.3% and shipbuilding capacity 232 times smaller than China's. The aerospace industry has consolidated from dozens of competitors to a handful of struggling firms, with Boeing facing potential bankruptcy, $6 billion quarterly losses, and defense backlogs of $747 billion that cannot be fulfilled due to production constraints and supply chain fragility. Unlike 1941 when Detroit converted to war production in three months, today's defense industrial base—dependent on Chinese critical minerals (78% of DoD weapons systems), operating specialized facilities with no surge capacity, and lacking the skilled workforce for rapid expansion—cannot mobilize for sustained conflict. The industrial foundation that defeated fascism is disappearing permanently while policymakers focus on climate mandates, quarterly earnings, and symbolic gestures rather than the national security implications of losing the capacity to arm America and its allies in the next major war.

THE ARSENAL THAT SAVED THE WORLD

On January 1, 1942—three weeks after Pearl Harbor—the United States Office of Production Management ordered a complete halt to automotive production. Every car factory in America stopped making civilian vehicles. Within three months, the transformation was complete.

General Motors converted Cadillac plants to produce M-24 tanks in 55 days. Ford built Willow Run, the largest factory under one roof in world history, churning out B-24 Liberator bombers at a rate of one per hour. Chrysler constructed the Detroit Tank Arsenal from scratch and produced more tanks than all Nazi factories combined.

The numbers remain staggering even 80 years later:

General Motors produced 119,562,000 artillery shells, 206,000 aircraft engines, 97,000 bombers, 301,000 aircraft propellers, 198,000 diesel engines, 1,900,000 machine guns, and 854,000 military trucks. The company became the world's largest military contractor, responsible for over $12 billion in war production.

Ford built 18,482 B-24 Liberators at Willow Run—making the B-24 the most mass-produced military aircraft in American history. The company employed so many workers the government built "Bomber City" from scratch to house them, as rubber tire rationing made commuting impossible.

Chrysler had never built a tank when the Army asked. The first M-3 rolled off the assembly line before the factory walls were even completed. When engineers needed a tank engine fast, Chrysler created the A57 Multibank—five six-cylinder engines tied together producing 425 horsepower. It wasn't elegant, but it worked, was cheap, and fit inside a Sherman tank.

"The American war production job was probably the greatest collective achievement of all time," declared Donald Nelson, head of FDR's War Production Board.

This wasn't hyperbole. Between 1942-1945, Detroit's automotive plants produced:

2.6 million trucks of all types
660,000 jeeps
5 million firearms
27,000 complete aircraft
Hundreds of thousands of engines for tanks, ships, and planes
Billions of rounds of ammunition
Navigation systems, torpedoes, helmets, and countless other war materials

The expertise extended beyond automotive technology. GM produced 300,000 precision gyroscopes critical for aircraft navigation. Chrysler built 3,500 uranium diffusers for the Manhattan Project—so well-designed they remained in use until the 1980s, producing weapons-grade uranium including material for the Hiroshima bomb.

Perhaps most remarkably, the companies did this while sharing proprietary information, co-developing technologies, and even producing each other's designs. When Willys-Overland couldn't meet jeep orders alone, Ford built them too using Willys designs. Competitors became collaborators when national survival demanded it.

GM executive William Knudsen left to run Roosevelt's War Production Board, receiving a commission as Lieutenant General—the only civilian in American history to achieve this rank. He worked for $1 a year. His personal relationships with Edsel Ford and Chrysler's K.T. Keller proved instrumental in coordinating the industry's transformation.

The speed was unprecedented. Factories were physically torn apart—enormous machines jack-hammered from foundations, assembly lines reconfigured, electrical systems rebuilt, entire production processes redesigned—all while hiring and training tens of thousands of new workers.

"The more you study it, the harder it is to believe it actually happened," wrote automotive journalist A.J. Baime in his book The Arsenal of Democracy.

THE INDUSTRIAL COLLAPSE

That capacity is disappearing.

In 2024, the US automotive industry had capacity to build 14.7 million vehicles but produced only 10.2 million—leaving 4.5 million units of unused capacity. This figure excludes major plants already closed or idled: GM's Lordstown (290,000 units in 2014, now 0%), GM's Orion (250,000 in 2008, now 0%), Stellantis's Belvidere (0%), and multiple other facilities operating at 20-30% capacity.

Ford Flat Rock: 21% capacity utilization (down 73% from 2015) Ford Ohio Assembly: 30% capacity (down 69% since 2012)
GM Lansing Grand River: 20% capacity (down 82%) GM Factory Zero: 21% capacity (down 49% since 2016)

These aren't temporary production adjustments. They represent permanent industrial contraction.

GM announced $7.1 billion in charges for Q4 2025—$6 billion for EV operations including $1.8 billion in asset impairments and $4.2 billion in supplier settlements and contract cancellations, plus $1.1 billion for China JV restructuring.

Ford announced $19.5 billion in writedowns: $8.5 billion in EV asset devaluations, $6 billion to dissolve BlueOval SK battery joint venture, $5 billion in program expenses. The company is discontinuing F-150 Lightning production after fewer than four years, canceling electric trucks and vans.

Volkswagen—one of Europe's industrial pillars—is eliminating 35,000 German jobs by 2030 (one in four positions), closing plants, relocating production to Mexico. CEO Thomas Schäfer: "Factory costs are currently 25-50% above target... some German plants are twice as expensive as competitors."

This isn't market correction. It's controlled demolition of Western automotive manufacturing capacity—and the national security infrastructure that comes with it.

THE CHINA DEPENDENCY

The automotive industry's collapse coincides with dangerous supply chain dependencies:

Critical Minerals: According to a 2025 defense analysis, 78% of components in Department of Defense weapons systems contain critical minerals sourced from China. The US Navy is particularly vulnerable—nearly 92% of weapons systems impacted. Virginia-class submarines require 4,200 kilograms of rare earth elements; Arleigh Burke-class destroyers need 2,360 kg for radar, munitions, and other technologies.

China controls:

60-80% of global lithium, cobalt, nickel refining capacity
77% of US rare earth element imports (10.4 million kilograms in 2024)
85% of rare earth refining capacity globally
52% of global lithium-ion battery exports

Automotive Supply Chains: In 2024 alone, the United States imported $22.1 billion worth of Chinese automotive vehicles, components, and accessories. China's export restrictions on gallium, germanium, antimony, and rare earth elements have already caused production disruptions. Between April-June 2025, China approved only an estimated 25% of license applications from US firms. Ford temporarily shut down a Chicago plant due to rare earth supply chain disruptions.

General Motors directed thousands of suppliers in late 2024 to remove China-sourced parts from supply chains entirely, with a 2027 deadline for some suppliers. This directive acknowledges what defense analysts have warned for years: the automotive supply chain has become a national security vulnerability.

The Connected Vehicle Threat: On January 14, 2025, the Commerce Department's Bureau of Industry and Security issued a final rule prohibiting transactions involving vehicle connectivity systems and automated driving systems designed, developed, manufactured, or supplied by Chinese or Russian entities. The rule took effect March 17, 2025.

This wasn't precautionary. It reflects intelligence community assessments that connected vehicles represent espionage and sabotage vulnerabilities. Every modern vehicle—from autonomous systems to GPS navigation—depends on software and hardware increasingly sourced from or passing through China-controlled supply chains.

THE DEFENSE PRODUCTION CRISIS

The Defense Production Act of 1950—the legal mechanism that transformed Detroit in 1942—remains law. But the industrial capacity it was designed to mobilize is vanishing.

Between fiscal years 2018-2024, Department of Defense made 208 Title III investments totaling approximately $3.2 billion to bolster the industrial base. HHS, DOE, and other agencies made an additional 14 investments. Over 2 million "priority" contracts were issued.

These numbers sound impressive until compared to WWII scale. GM alone produced $12 billion worth of war materiel in 1940s dollars—equivalent to roughly $200+ billion today. Current DPA investments are two orders of magnitude smaller.

More concerning: the DPA is designed for an industrial base that no longer exists. The Act assumes:

Domestic manufacturing capacity exists and can be repurposed (declining rapidly)
Supply chains are primarily domestic or allied (78% of defense components rely on Chinese minerals)
Companies possess in-house engineering and tooling expertise (outsourced)
Workforce with relevant skills is available (shrinking)
Physical plant infrastructure exists (idled or demolished)

The DPA was reauthorized through September 30, 2025, then extended to January 30, 2026 by P.L. 119-37. Future reauthorization is pending. But even perfect legislation cannot mobilize industrial capacity that has been permanently destroyed.

"The next war would not afford enough time for the kind of industrial conversion the US had undergone," warned GM's Charles Wilson in 1945 as he advocated for permanent defense industry. He became Eisenhower's Secretary of Defense. His warning proved prescient—but America chose to offshore manufacturing anyway.

THE SPEED PROBLEM

In 1942, Chrysler built its first tank before the factory was completed. In 2025, building a new automotive plant takes 3-5 years minimum—and that's before addressing workforce training, supply chain integration, and tooling.

Modern vehicle manufacturing is exponentially more complex than 1940s technology:

WWII Era:

Mechanical systems, relatively simple electronics
Interchangeable parts, standardized components
Domestic supply chains for steel, rubber, glass
Large pool of mechanically-skilled workers
Relatively simple tooling and dies

Modern Era:

Computer-controlled systems, advanced electronics
Thousands of microprocessors per vehicle
Global just-in-time supply chains
Specialized workforce requiring years of training
Multi-billion dollar tooling investments

Perhaps most critically: 1940s vehicles and weapons systems used similar technologies. A company making car engines could relatively easily pivot to aircraft engines. Today's automotive industry produces vehicles with 5-10,000 semiconductor chips, advanced battery systems, AI-powered software—technologies fundamentally different from traditional military equipment.

The Nexperia chip crisis of 2025 illustrated the vulnerability. When China temporarily restricted exports from Dutch chipmaker Nexperia (owned by Chinese company Wingtech), global automotive production faced immediate disruption. The crisis resolved only through diplomatic intervention, but demonstrated how single points of failure can cascade through entire industries.

THE CHINESE ALTERNATIVE

While American and European automotive capacity collapses, China is building the largest manufacturing infrastructure in human history.

BYD—which didn't exist as an automaker 25 years ago—sold 4.27 million new energy vehicles in 2024 with $115 billion revenue, capturing 20% of global EV market share. The company:

Builds 75-80% of components internally (batteries, semiconductors, software, platforms)
Employs 100,000+ scientists and engineers
Operates the world's second-largest EV battery manufacturing operation
Brings vehicles from concept to production in 18 months (half Detroit's timeline)
Produces vehicles at price points ($12,000-$15,000) competitive even with 100% tariffs

BYD is constructing global manufacturing footprint: 800,000-capacity plant in Hungary (opening end-2025), 150,000-capacity in Turkey, facilities in Brazil, Thailand, Indonesia, India, Japan. By 2028, expects to manufacture in Europe all vehicles sold there—circumventing tariffs entirely.

This isn't just commercial competition. It's industrial capacity that could be mobilized for military production in conflict scenarios. China demonstrated this capability during COVID-19, converting civilian factories to mask and ventilator production within weeks.

The United States imposed 100% tariffs on Chinese EVs, Canada followed with similar measures, EU implemented 17-35.3% anti-subsidy tariffs. These provide temporary protection but don't address fundamental manufacturing cost disadvantages or supply chain dependencies.

THE WORKFORCE CRISIS

Industrial capacity isn't just facilities—it's skilled workers.

The Aerospace Industries Association reports that aerospace/defense industry could require an additional 123,000 technicians in next two decades just to maintain current production. The automotive sector faces similar shortages. Over 67% of manufacturers identify "attracting and retaining a quality workforce" as primary business challenge, according to National Association of Manufacturers Q2 2024 survey.

During WWII, Detroit hired and trained hundreds of thousands quickly because:

Large pool of mechanically skilled workers existed (farming, construction, previous manufacturing)
Training requirements were measured in weeks/months, not years
Assembly line work required strength and attention but limited specialized knowledge
Social cohesion and patriotic motivation drove volunteer efforts

Today's manufacturing requires:

Multi-year technical training programs
Understanding of computer systems, robotics, advanced materials
Specialized certifications for safety-critical systems
Continuous education as technology evolves

Rebuilding this workforce from scratch—if manufacturing capacity were suddenly needed for defense—would require 5-10 years minimum. The 3-6 month timeline that worked in 1942 is impossible with modern technology.

THE ALLIED VEHICLE PROBLEM

America's closest military allies face identical vulnerabilities:

Germany: Three consecutive years of recession. Manufacturing production declined 4.5% in 2024, GDP expected to shrink 0.5% in 2025. VW eliminating 35,000 jobs, closing plants. Over 50,000 automotive jobs destroyed in one year. Unemployment highest in decade.

United Kingdom: Brexit disrupted supply chains, investment declined. British automotive production capacity shadows former strength.

France: Maintains stronger position thanks to nuclear power infrastructure providing 70% electricity at 12g CO₂/km for EVs, but still faces Chinese cost competition.

Japan: Toyota and Honda historically insulated from China-dependent supply chains but haven't moved aggressively on vertical integration for EV batteries. Facing same competitive pressures.

South Korea: Strong EV battery capabilities but dependent on Chinese rare earth elements.

During WWII, the United States supplied Allied forces from domestic production. The "Arsenal of Democracy" armed Britain, Soviet Union, China, and Free French forces. Today, no Western nation possesses industrial capacity to supply major allies in extended conflict while maintaining domestic military production.

The 2024 National Defense Authorization Act expanded Defense Production Act Title III to enable DoD agreements with companies in Canada, UK, and Australia for critical materials. This acknowledges reality: American industrial capacity alone is insufficient, requiring integration with allied production.

THE MOBILIZATION MATHEMATICS

Consider hypothetical large-scale conflict requiring industrial mobilization:

Required Timeline for War Production:

Immediate: Ammunition, spare parts, replacement equipment
0-6 months: Vehicles, basic weapons systems from existing capacity
6-24 months: New production lines, expanded facilities
24-60 months: New factories, workforce training, supply chain development

Current Reality:

Existing automotive capacity: Operating at 69% (10.2M of 14.7M units)
Idle capacity: Could potentially be activated, but for what? (Modern military doesn't need commercial vehicles at scale)
New facility construction: 3-5 years minimum
Supply chain dependencies: 78% of defense components contain Chinese minerals
Workforce availability: Decades to rebuild skilled manufacturing workforce

The mathematics don't work. Modern high-intensity conflict could exhaust stockpiles in months. The US industrial base cannot surge production at necessary scale within relevant timeframes.

Missile production provides case study: The US struggles to produce sufficient missiles for Ukraine support while maintaining own stockpiles. Multiple DPA investments targeting expansion of solid rocket motor production, yet capacity remains constrained. Adding automotive manufacturing collapse to this equation creates compounding vulnerabilities.

THE SHIPBUILDING CATASTROPHE

If the automotive industry's collapse is alarming, America's shipbuilding situation is catastrophic.

The Numbers Tell the Story

China shipbuilding capacity: 232 times larger than the United States

In 2024:

China built: 1,000+ commercial vessels
United States built: 8 commercial vessels
China's market share: 53.3% of global commercial shipbuilding
US market share: Less than 0.2%

Only 80 oceangoing merchant vessels fly the American flag. China manufactures 80% of ship-to-shore cranes used in US ports and 96% of shipping containers. US domestic production of both: 0%.

A single Chinese facility—Jiangnan Shipyard or Dalian Shipbuilding Industry Company—possesses more dry-dock square footage than the entire United States public shipyard system combined.

The WWII Baseline

During World War II, American shipbuilding achieved production rates 70 times higher than the 1930s average, accounting for nearly 90% of global ship production. Henry Kaiser built Richmond Shipyard from scratch and made it operational in 78 days. The US Maritime Commission spurred competition, encouraged innovation, disseminated production techniques, and eliminated regulatory impediments.

The result: America's shipbuilding industrial base produced the Liberty ships, Victory ships, escort carriers, and transport vessels that enabled global force projection, supplied Allied forces, and sustained the multi-theater war.

Today's Naval Shipbuilding Crisis

The US Navy mandated 355 combat force ships in 2018. As of October 2025, the fleet numbered 287—a deficit of 68 ships (20% below requirement).

Of these 287 ships:

~100 ships deployed forward at any given time
Fleet Forces Command goal: Surge 75 additional ships quickly
Reality: Only ~50 ships could surge rapidly
Total available for conflict: ~150 ships
Actual requirement: 300+ ships

The Navy cannot meet its own goals despite nearly doubling its shipbuilding budget over two decades. Through FY 2024, Congress authorized and funded 94 ships; only 68 have been delivered. At the current production rate of roughly 2 destroyers per year (split between Bath Iron Works and Ingalls Shipbuilding), delivering the backlog will take years.

Submarine Production Failures

The Virginia-class submarine (Block V) program illustrates the crisis:

Goal: 2 submarines per year, completed by 2028
Reality: Production rate at 60% of goal, years behind schedule
Cost overrun: $530 million additional for first two submarines
Cause: Workforce shortages, capacity constraints

The Columbia-class ballistic missile submarine program:

Initial plan: $130 billion for 12 submarines
First submarine delivery: Originally 2030, now delayed at least one year
Reality: Construction consistently falls short of targets
Consequence: Hundreds of millions in additional costs

These aren't commercial submarines. They're strategic nuclear deterrent platforms critical to national defense. Delays directly impact the strategic nuclear triad.

The China Comparison

China's naval construction operates under Military-Civil Fusion strategy: the same shipyards that build half the world's commercial tonnage produce warships. This provides:

Continuous Investment: Commercial revenues fund infrastructure, automation, skilled labor
Surge Capacity: Can rapidly shift from commercial to military production
Scale Economics: Lower per-unit costs from high-volume operations
Workforce Development: Constant training through commercial production
Technology Transfer: Commercial innovations applied to military vessels

China practices "Concurrent Construction"—multiple Type 055 destroyers (Renhai-class) built simultaneously in the same dock. The entire United States public shipyard system cannot match the capacity of single Chinese facilities.

The Maintenance Crisis

Ships don't just need to be built—they need maintenance. Currently, a large percentage of US Navy ships sit in long-term maintenance, either awaiting work or behind schedule during active work.

The Shipyard Infrastructure Optimization Program (SIOP)—a $21 billion effort to modernize aging public yards—has struggled. As of early 2025, only $2 billion had been effectively disbursed.

Meanwhile, quality control problems plague existing capacity. In September 2024, Department of Justice was notified of suspected faulty welds on submarines and aircraft carriers at Newport News Shipbuilding—one of only two US yards capable of building nuclear-powered vessels.

Commercial Shipbuilding and Naval Capacity

Some argue commercial shipbuilding doesn't directly support naval construction—specialized nuclear submarine yards, for instance, cannot be easily repurposed from container ship production.

This misses the point.

During WWII, commercial shipbuilding capacity provided:

Workforce Pipeline: Skilled welders, pipefitters, electricians, designers
Supporting Infrastructure: Steel suppliers, component manufacturers, logistics networks
Technology Development: Innovations in welding, fabrication, quality control
Surge Capacity: When naval demand exceeded specialized yards, commercial yards built escort carriers, destroyer escorts, patrol craft
Repair Capacity: Commercial yards performed battle damage repair, refits, conversions

The collapse of commercial shipbuilding eliminates this entire ecosystem. Naval shipyards exist in isolation, struggling to recruit workers, dependent on aging infrastructure, unable to leverage commercial sector innovation or capacity.

The Strategic Implications

President Trump's April 2025 Executive Order "Restoring America's Maritime Dominance" acknowledges the crisis: "The commercial shipbuilding capacity and maritime workforce of the United States has been weakened by decades of Government neglect, leading to the decline of a once strong industrial base while simultaneously empowering our adversaries and eroding United States national security."

The SHIPS for America Act of 2025 proposes:

Maritime Security Advisor in executive office
Maritime Security Board to coordinate strategy
Financial and regulatory incentives for commercial shipbuilders
Maritime Security Trust Fund
Goal: 250 US-flagged commercial vessels (currently 80)

These are aspirational. Rebuilding shipbuilding capacity requires:

Massive capital investment in new yards ($billions per facility)
Workforce development (10-20 years to train specialized trades)
Supply chain reconstruction (currently dependent on foreign sources)
Regulatory environment supporting competitive pricing
Sustained political commitment across multiple administrations

Timeline: 15-25 years minimum—and that assumes immediate, comprehensive action with sustained funding.

The WWII Comparison Revisited

Some argue, as the Independent Institute did in June 2025, that WWII demonstrates America can rapidly surge shipbuilding when needed. This fundamentally misunderstands current versus historical conditions:

1940:

Large commercial shipbuilding capacity existed but was underutilized
Government orders created demand; private companies responded
Regulatory environment streamlined for speed
Massive pool of mechanically-skilled workers
Domestic steel, component, material supply chains
Ships were relatively simple: welded steel hulls, reciprocating engines, mechanical systems

2025:

No commercial shipbuilding capacity to mobilize (8 vessels/year)
Specialized nuclear submarine work cannot be quickly replicated
Modern warships require: advanced radar systems, vertical launch systems, integrated combat management, nuclear propulsion (for submarines/carriers), sophisticated electronics and sensors
No available workforce with relevant skills
Supply chains dependent on foreign (often Chinese) sources
Ships are incredibly complex: computer systems, precision manufacturing, exotic materials, years-long construction timelines

Henry Kaiser built Richmond Shipyard in 78 days in 1941 because basic shipbuilding infrastructure, skills, and supply chains existed. In 2025, building equivalent modern shipyard would take 5-7 years minimum—and that's before addressing workforce, supply chains, regulatory approvals, or the vastly greater complexity of modern naval vessels.

The WWII surge was possible because civilian industrial capacity could be mobilized. That capacity no longer exists.

THE AEROSPACE CONSOLIDATION

The third leg of America's defense industrial base—aerospace manufacturing—faces a different but equally severe crisis: consolidation, fragility, and inability to scale.

From Many to Few

In 1990, major US aerospace and defense companies included: Boeing, McDonnell Douglas, Lockheed, Martin Marietta, Northrop, Grumman, General Dynamics (aircraft division), Ford Aerospace, Hughes Aircraft, Rockwell International, and many others.

Today, post-consolidation:

Commercial aircraft: Boeing (struggling), with no US competitor
Military aircraft: Boeing, Lockheed Martin, Northrop Grumman
Defense specialists: 61% of major DOD programs by value in 2024 (up from 6% in 1989)

When including firms whose only commercial exposure is aerospace (Boeing, Textron), traditional DOD suppliers account for 86% of major program spending in 2024.

This consolidation was deliberate. Post-Cold War defense budget cuts led companies to sell defense divisions. Ford Aerospace sold to Loral (1990), which sold to Lockheed Martin (1996). The pattern repeated across the industry. DOD leaders explicitly supported consolidation, believing it necessary to preserve defense industry capabilities with declining budgets.

But consolidation continued even after defense spending growth returned, creating an aerospace sector more isolated from the broader US economy than any time in history.

Boeing's Crisis

Boeing, America's sole large commercial aircraft manufacturer, faces existential challenges:

Production Problems:

Eight-week machinists strike (September-November 2024): Cost $9.7 billion to Boeing and suppliers
$6 billion quarterly losses (Q3 2024)
Plans to lay off 10% of workforce (17,000 employees)
Raised up to $25 billion through stock/debt offering (October 2024)
Some analysts speculate potential bankruptcy or asset sales

Safety and Quality Issues:

737 Max crashes (2018-2019) and subsequent grounding
Alaska Airlines 737-9 Max door plug incident (January 2024)
FAA capped 737 Max production at 38 units/month
Production nearly halved in Q1 2024
Suspect faulty welds on submarines and carriers at Newport News (Boeing-owned facility)

Defense Contract Losses:

$2 billion losses on fixed-price defense and space contracts (Q3 2024)
KC-46 tanker: Losses since 2018
VC-25B presidential aircraft: Over budget
T-7A trainer: Behind schedule and over budget
MQ-25 carrier-based uncrewed aircraft: Cost overruns

Strategic Desperation:

Reacquired Spirit AeroSystems for $8.4 billion (July 2024) to address supply chain vulnerabilities
Vertical reintegration signals inability to manage complex supplier networks
Move contradicts decades of outsourcing strategy

Boeing's struggles aren't just corporate problems. As the sole US large commercial aircraft manufacturer and major defense contractor, Boeing's financial fragility directly threatens national security.

Aerospace Supply Chain Fragility

The broader aerospace sector faces systemic challenges:

Backlogs:

14,000 commercial aircraft awaiting production (roughly a decade's worth)
$747 billion defense backlog, up 25% in two years
Airbus: ~8,000 aircraft backlog
Boeing: ~6,000 aircraft backlog

Production Constraints:

F-35 program: Persistent shortages in specialized parts (engine components, composite structures, microelectronics, thermal management systems)
Single component delays stall entire assembly lines
Sub-tier supplier visibility: DoD has "high-fidelity" visibility into less than 15% of 200,000+ unique suppliers

Labor Shortages:

67% of manufacturers identify "attracting and retaining a quality workforce" as primary challenge
Commercial aerospace could require additional 123,000 technicians in next two decades
Current aerospace employment: 534,442 (insufficient for demand)

Financial Stress:

Bankruptcies surged 146% year-over-year (2024)
Corporate restructurings up 110%
Spirit Airlines filed Chapter 11; Lynx Air and Jetlines ceased operations

Supply Chain Disruptions:

Factory disruptions (shutdowns, evacuations, accidents) rose 28% year-over-year
Supply shortages surged 230%
Labor disruptions up 33% (1,182 incidents in 2024 vs. 887 in 2023)
Extreme weather disruptions up 121%

The Scaling Problem

Aerospace backlogs create illusion of strength, but reveal inability to scale production:

Demand Exists:

Airbus Global Market Forecast 2025-2044: 43,000+ new passenger/freighter aircraft
Boeing Commercial Market Outlook: Similar projections
~30% higher than historical peak demand

Cannot Produce: Despite unprecedented demand and multi-year backlogs, aerospace manufacturers cannot increase production rates. Constraints include:

Physical Capacity: Facilities lack space for higher volume
Workforce: Cannot hire/train fast enough
Supply Chain: Tier 2/3 suppliers cannot scale
Quality Control: Rushing production causes safety incidents
Financial: Many suppliers operating on thin margins, cannot invest in expansion
Complexity: Modern aircraft require thousands of specialized suppliers

The result: Years-long wait times for commercial aircraft, defense programs perpetually behind schedule and over budget, and no mechanism to rapidly increase production if conflict required it.

Defense Industrial Base Isolation

CSIS analysis reveals disturbing trend: Defense specialists—firms with little or no commercial business—account for 61% of major DOD programs by value in 2024, up from just 6% in 1989.

This isolation creates:

Limited Capital Investment: Defense contractors don't attract same investment as commercial tech companies Technological Stagnation: Lack of exposure to commercial innovation Pricing Power: Traditional defense companies have enormous leverage over government customers No Surge Capacity: Specialized defense firms cannot rapidly scale; commercial firms have exited

During WWII, companies like Ford, GM, Chrysler brought commercial manufacturing expertise to defense production. Today, defense is isolated specialty disconnected from broader industrial economy.

The F-35 Case Study

The F-35 program illustrates aerospace sector's inability to scale:

Program Scope:

Most expensive weapons program in history
Intended to be high-volume, "affordable" fighter
Multiple international partners
Expected economies of scale from production volume

Reality:

Persistent delays in component delivery
Sub-tier supplier shortages
Long lead times stalling assembly
"Thousands of unique parts sourced from hundreds of suppliers"—if single microelectronic part lags, entire delivery timeline impacted
Cannot achieve planned production rates despite massive demand

If aerospace industry cannot scale production of aircraft designed specifically for high-volume manufacturing during peacetime with unlimited budgets and multi-year timelines, how would it surge production in wartime crisis?

Boeing Consolidation and National Risk

Boeing's reacquisition of Spirit AeroSystems ($8.4B, July 2024) demonstrates the failure of outsourcing strategy. Boeing had spun off Spirit in 2005 to reduce costs. Twenty years later, supply chain fragility forced vertical reintegration at enormous expense.

But this doesn't solve the fundamental problem: consolidated aerospace industry with few competitors, limited capacity, fragile supply chains, workforce shortages, and no mechanism for rapid scaling.

If Boeing faces bankruptcy or breaks up, America loses its sole large commercial aircraft manufacturer. The defense implications extend beyond Boeing's military contracts—commercial aerospace manufacturing expertise, workforce, and infrastructure support defense production.

China's COMAC (Commercial Aircraft Corporation of China) is developing C919 narrow-body airliner to compete with Boeing 737/Airbus A320. If Boeing collapses while COMAC scales production, commercial aerospace joins automotive and shipbuilding as industries where Chinese manufacturers dominate global capacity.

The Mobilization Impossibility

Consider mobilization scenario requiring rapid aerospace production expansion:

WWII Precedent:

Automotive companies (Ford, GM) converted to aircraft production
Willow Run: Ford built B-24 bombers at rate of one per hour
Commercial manufacturing expertise transferred to military production
Relatively simple aircraft: Mechanical systems, modest electronics
Domestic supply chains for aluminum, steel, components

2025 Reality:

No commercial aerospace capacity to mobilize (Boeing struggling, no US alternatives)
Automotive companies have exited aerospace (Ford Aerospace sold 1990)
Modern military aircraft: Stealth coatings, advanced avionics, precision manufacturing, exotic materials, sensor fusion, network-centric warfare systems
Supply chains dependent on specialized suppliers, many foreign
Workforce doesn't exist with required skills
Physical plant capacity fully utilized for existing backlogs

F-35 production rate: ~156 aircraft per year across three production partners (final assembly at Fort Worth, Italy, Japan). During WWII peak, single Ford facility produced 650 B-24s per month.

The difference isn't just volume—it's the impossibility of rapidly creating volume. B-24 production could scale quickly because aircraft were relatively simple and manufacturing expertise existed commercially. F-35 cannot scale because aircraft are incredibly complex and manufacturing expertise exists only in specialized, capacity-constrained facilities.

The Multi-Domain Failure

Aerospace consolidation creates failure mode across multiple military domains:

Air Superiority: Cannot rapidly produce fighters if losses exceed peacetime production Strategic Bombers: B-21 Raider production limited by Northrop Grumman capacity Tankers: KC-46 behind schedule, over budget, quality issues Trainers: T-7A delayed, over budget Unmanned Systems: MQ-25 cost overruns, behind schedule Presidential Aircraft: VC-25B over budget Commercial Aviation: Boeing's struggles threaten airline modernization, economic implications

No backup capacity exists. If Lockheed Martin's Fort Worth facility is damaged, F-35 production stops entirely. If Boeing's Everett facility is disrupted, Air Force tanker and strategic transport production halts.

Single points of failure in consolidated aerospace industry create strategic vulnerabilities that cannot be quickly remediated.

THE INFRASTRUCTURE DEPENDENCY

Automotive manufacturing, shipbuilding, and aerospace don't exist in isolation. They depend on massive supporting infrastructure:

Steel Production:

US steel capacity: Sufficient but aging, facing Chinese overcapacity
Specialty steels for military applications: Limited production, long lead times

Machine Tool Industry:

US machine tool orders through September 2025: $3.93 billion (17.3% increase over 2024)
But reliant on imported components, including from China
Reconstituting domestic machine tool capacity: Years of investment

Logistics and Transportation:

Ford's Willow Run had mile-long assembly line, required dedicated rail connections
Modern equivalent would need similar infrastructure, currently doesn't exist at scale

Energy:

Industrial production requires reliable, cheap electricity
Germany's example: High energy costs from renewable intermittency crushing manufacturing
US faces similar pressures if industrial surge needed

Chemical Industry:

Explosives, propellants, synthetic materials all require chemical production capacity
Heavily regulated, environmentally constrained, capital-intensive
Cannot rapidly expand

The automotive industry served as anchor for entire manufacturing ecosystem. Its collapse cascades through supporting industries, eroding the comprehensive industrial base required for defense mobilization.

THE POLICY BLINDNESS

Despite these mounting vulnerabilities, policy discussions focus almost exclusively on:

Trade Protection: Tariffs on Chinese EVs, subsidies for domestic production
Climate Goals: Aggressive EV mandates, renewable energy requirements
Commercial Competition: Market share concerns, corporate profitability

National security implications receive cursory attention. The Alliance for Automotive Innovation's 2024 DATA DRIVEN report emphasizes "a healthy, competitive auto industry underpins America's industrial base and country's economic and national security," generating $1.2 trillion annually and 10.1 million jobs.

But policy doesn't align with stated recognition. California mandates 100% zero-emission vehicles by 2035 despite lacking manufacturing capacity to meet demand. Federal EV subsidies were eliminated, demand collapsed 40%, yet manufacturing requirements remain. Result: Domestic automotive industry caught between impossible mandates and Chinese competition it cannot match.

European Union abandoned 2035 ICE ban in December 2025, explicitly acknowledging "it was a serious industrial policy mistake," per German Chancellor Friedrich Merz. This after Germany shut down nuclear power plants while mandating EVs, creating energy costs that destroyed industrial competitiveness.

These policies reflect fundamental category error: treating automotive manufacturing as purely commercial concern rather than national security infrastructure.

THE BIPARTISAN FAILURE

This didn't happen overnight or under single administration.

1980s-1990s: Offshoring begins as companies seek lower labor costs. Manufacturing base starts eroding. North American Free Trade Agreement (NAFTA) accelerates trend.

2000s: China joins WTO, becomes "world's factory." American manufacturers increasingly dependent on Chinese supply chains. Domestic capacity continues declining.

2010s: China begins dominating EV supply chains through strategic investments in battery technology, rare earth processing, manufacturing infrastructure. Western policymakers largely ignore national security implications.

2020s: COVID-19 exposes supply chain vulnerabilities. Semiconductor shortages disrupt automotive production. Policy response emphasizes reshoring rhetoric but provides insufficient support for actual industrial capacity restoration. EV mandates accelerate despite lack of domestic manufacturing competitiveness.

Defense Production Act investments total $3.2 billion over seven years (FY2018-2024). Compare to: $200+ billion war production from GM alone in WWII equivalent dollars. The scale mismatch reveals policy unseriousness about actually rebuilding industrial capacity.

Congressional action focuses on DPA reauthorization procedures rather than fundamental questions about industrial capacity restoration. The September 30, 2025 expiration extended to January 30, 2026, but Senate Armed Services Committee's proposed conversion of Industrial Base Fund represents tinkering at margins rather than comprehensive strategy.

THE INFRASTRUCTURE RENAISSANCE MIRAGE

Some point to recent manufacturing announcements as evidence of American industrial renaissance:

Stellantis: $13 billion US expansion (September 2025)
Hitachi Energy: $457 million transformer plant in Virginia
JPMorgan Chase: $1.5 trillion 10-year initiative for industries "essential to U.S. national security"
Various semiconductor fabrication facilities (CHIPS Act)

These investments are real but insufficient.

First, much of the investment is in advanced technology manufacturing (semiconductors, batteries) with long construction timelines, specialized workforces, and limited flexibility for conversion to defense production.

Second, the investments don't offset losses. GM and Ford's $25+ billion in writedowns, VW's €15 billion in planned savings through capacity reduction, plant closures across US and Europe—all represent permanent capacity destruction.

Third, the investments remain dependent on Chinese supply chains for raw materials, rare earths, and components. Building a battery plant in Kentucky doesn't solve lithium dependence on Chinese refining.

Fourth, timeline mismatch: Automotive capacity is declining now; announced plants won't be operational for 3-5 years; building workforce capability requires additional 5-10 years.

The math doesn't work for mobilization scenarios requiring rapid industrial expansion.

THE AUTOMATION PARADOX

Some argue automation and robotics change the equation—modern manufacturing requires fewer workers, can scale more rapidly.

This is partly true but misleading.

Automated manufacturing requires:

Massive capital investment in robotics and control systems
Specialized workforce to program, maintain, repair automated systems
Uninterrupted supply chains for components, sensors, actuators
Stable power and data infrastructure
Years of optimization and troubleshooting

North American robot orders reached 26,441 units valued at $1.7 billion through September 2025—a 6.6% increase in units, 10.6% in revenue versus 2024. Growth is positive but modest.

Critically, automation makes manufacturing less flexible for rapid conversion. The 1942 Arsenal of Democracy succeeded partly because manufacturing was relatively simple—retooling meant replacing dies, reconfiguring assembly lines, retraining workers on new but comprehensible tasks.

Modern automated lines are programmed for specific products, require complete software and hardware reconfiguration for different outputs, and depend on specialized supplier ecosystems. Converting an automated EV battery plant to produce missile guidance systems isn't a 3-month project—it's a 3-5 year ground-up reconstruction.

The automation pathway makes manufacturing more efficient for planned production but less capable of rapid mobilization for unanticipated defense needs.

THE TAIWAN VARIABLE

All of this assumes Taiwan remains accessible source for semiconductors and advanced electronics.

Any conflict involving Taiwan would immediately sever:

92% of world's advanced semiconductor production
Critical automotive chips for modern vehicles
Defense system electronics
Computing infrastructure for industrial automation

WWII analogy: Imagine Pearl Harbor attack simultaneously destroyed all aluminum production, all ball bearing factories, and all aircraft engine manufacturing. That's the scale of disruption Taiwan conflict would create for modern manufacturing.

United States has invested via CHIPS Act in domestic semiconductor production, but timeline for meaningful capacity is 5-10 years and won't match Taiwan's scale or technological sophistication. Meanwhile, automotive manufacturing continues depending on semiconductor supply chains that could be severed overnight.

China's December 2024 ban on exports of gallium, germanium, antimony, and superhard materials, plus licensing requirements for rare earths, demonstrates willingness to weaponize supply chains. These restrictions alone disrupted production. Taiwan scenario would be orders of magnitude worse.

WHAT THE LOSS MEANS

The collapse of America's automotive manufacturing capacity represents more than economic concern:

Military Mobilization: United States cannot rapidly expand military production for sustained high-intensity conflict. The industrial capacity that produced 2.6 million military trucks, 660,000 jeeps, and hundreds of thousands of aircraft engines in three years no longer exists. Modern defense industry operates near capacity for peacetime demand; wartime surge production impossible without years of preparation.

Allied Support: During WWII, Lend-Lease armed Soviet Union, Britain, Free France, China, and other allies. Modern equivalent is impossible. American industrial capacity cannot supply major allies while maintaining domestic military needs.

Economic Security: Automotive industry generates $1.2 trillion annually (4.8% of GDP), employs 10.1 million Americans, creates $4.23 in economic value for every $1 in vehicle manufacturing. Its decline cascades through entire industrial ecosystem.

Technological Edge: Automotive industry historically drove innovation in manufacturing techniques, materials science, production efficiency. These innovations transferred to aerospace, defense, consumer electronics. The expertise is dispersing.

Deterrence Value: Potential adversaries assess not just current military capabilities but industrial capacity for sustained conflict. Visible collapse of Western manufacturing reduces deterrence effect. China's industrial capacity—building BYD from startup to world's largest EV manufacturer in 20 years—signals capability to mobilize for military production at scale.

Strategic Autonomy: Dependence on Chinese supply chains means US defense capabilities are hostage to geopolitical adversary. In crisis or conflict, China could restrict exports of materials essential for weapons systems, vehicle production, industrial capacity—exactly as it has demonstrated in peacetime with gallium, germanium, rare earths.

THE UNCOMFORTABLE QUESTIONS

Several questions policymakers appear unwilling to address:

If conflict required industrial mobilization, where would it come from? The answer appears to be "nowhere at scale."
If China restricted critical mineral exports in crisis, what is the backup plan? Current strategy relies on "eventually" building domestic capacity—insufficient for sudden cutoff scenarios.
If automotive manufacturing continues collapsing, what replaces its role as industrial base anchor? No clear answer. Defense industry alone is too specialized, too small to maintain comprehensive manufacturing ecosystem.
If skilled workforce continues declining, how is it reconstituted rapidly when needed? Training programs require years, apprenticeships require existing skilled workers to train next generation.
If existing industrial capacity is dismantled, what are the actual costs to rebuild it? Likely hundreds of billions to trillions of dollars, decades of time.
If automation makes manufacturing less flexible for conversion, how does modern version of Arsenal of Democracy work? Unclear. The 1942 model doesn't translate to 2025 technology.
What is the acceptable level of economic dependency on geopolitical adversaries for critical defense needs? Current policy suggests "very high" based on revealed preferences rather than stated objectives.

THE HISTORICAL PRECEDENT IGNORED

This isn't the first time industrial unpreparedness created vulnerabilities.

In 1939, US Army Chief of Staff Gen. George Marshall described American military as "laughable." The Army ranked 17th globally, behind Portugal. Industrial capacity for war production was minimal.

The difference: In 1939, core domestic manufacturing capacity existed but wasn't militarized. Converting civilian industry to war production was feasible—difficult, but feasible.

In 2025, core domestic manufacturing capacity is being dismantled. Reconstituting it is not merely difficult; in relevant timeframes, it's impossible.

Charles Wilson warned in 1945 that "the next war would not afford enough time for the kind of industrial conversion the US had undergone." He advocated for permanent defense-oriented industrial capacity. His advice was partially followed—defense contractors exist—but the broader industrial base supporting rapid mobilization was allowed to erode.

The automotive industry that he led was not defense industry in peacetime. It was civilian manufacturing with capacity, expertise, workforce, and infrastructure that could be rapidly converted to defense production when needed. That's what's disappearing—not defense contractors, but the mobilization base.

THE MISSING STRATEGY

United States lacks coherent strategy for maintaining industrial capacity relevant to national defense:

Current Policy Mix:

Modest DPA investments ($3.2B over 7 years)
Trade protection (tariffs on Chinese vehicles/components)
Subsidies for domestic EV production (now eliminated)
CHIPS Act for semiconductors ($52B, multiyear timeline)
Rhetoric about reshoring (limited implementation)
Climate mandates (accelerate automotive transition without ensuring competitiveness)

What's Missing:

Comprehensive industrial base assessment identifying critical vulnerabilities
Long-term strategy for maintaining dual-use manufacturing capacity
Workforce development programs scaled to actual needs
Supply chain mapping and resilience planning beyond rhetorical commitments
Realistic timeline for restoring lost capacity if needed
Honest cost-benefit analysis of offshoring vs. national security
Integration of industrial policy with defense planning

Defense Science Board's 2025 report noted "DPA Title III authority has been extensively used to finance expansion of manufacturing capacity in defense industrial base," but acknowledged difficulty measuring whether vulnerabilities have been meaningfully reduced.

Government Accountability Office's June 2025 testimony on Defense Production Act use identified various challenges: companies receiving rated orders didn't understand responsibilities for passing ratings to suppliers; civilian agencies found the presidential determination process for Title III "time consuming and difficult to navigate"; lack of information sharing across agencies on lessons learned.

These are procedural problems. The strategic problem—massive industrial capacity loss—isn't being addressed at policy level.

THE GEOPOLITICAL REALITY

China understands industrial capacity as strategic asset.

BYD's evolution from battery supplier to world's largest EV manufacturer wasn't market accident. It reflected deliberate industrial policy: state subsidies, protected domestic market creating scale advantages, strategic investments in supply chain control, long-term planning horizon unconstrained by quarterly earnings pressures.

The result: China now possesses industrial manufacturing capacity that could be mobilized for military production at scale. United States is deliberately dismantling equivalent capacity in favor of offshored, specialized, globally-integrated supply chains optimized for peacetime commercial efficiency.

This represents fundamental strategic asymmetry.

In sustained conflict, the side with greater industrial capacity—ability to replace losses, sustain production, adapt manufacturing to evolving needs—holds decisive advantage. WWII demonstrated this definitively: Germany and Japan possessed technological sophistication and initial military advantages, but Allied industrial capacity proved overwhelming.

China's leaders studied this history. American and European policymakers appear to have forgotten it.

CONCLUSION: THE ARSENAL WE NEED

In 1940, President Franklin Roosevelt proclaimed America "must be the great arsenal of democracy."

In 2025, that arsenal is being liquidated for quarterly earnings, appeasing climate activists, and avoiding politically difficult choices about industrial policy.

The automotive industry that produced 119 million artillery shells, 854,000 military trucks, and 18,482 bombers in three years cannot produce 15 million civilian vehicles profitably in peacetime. Plants are closing. Capacity is idle. Skilled workers are retiring without replacements. Supply chains are migrating to China.

Policymakers talk about "reshoring" and "industrial renaissance" while policies accelerate the opposite. Climate mandates force EV transition without ensuring domestic manufacturing competitiveness. Trade protection provides temporary respite without addressing cost structure disadvantages. Defense Production Act investments—$3.2 billion over seven years—are rounding errors compared to scale of capacity loss.

The next major conflict may not wait for America to rebuild what it is currently destroying.

In 1942, Detroit retooled in three months and produced the tanks, planes, trucks, and weapons systems that defeated fascism. Engineers worked around-the-clock. Companies shared proprietary designs. Workers volunteered for war production. The transformation was possible because industrial capacity existed domestically, supply chains were largely domestic or allied, workforce possessed relevant skills, and social cohesion enabled rapid mobilization.

None of those conditions exist today.

Industrial capacity is idle or demolished. Supply chains depend on geopolitical adversary controlling 78% of critical minerals for defense systems. Skilled workforce is disappearing. Automation makes conversion more difficult, not easier. Social cohesion is questionable. Technology complexity extends timelines from months to years.

And policymakers are ignoring the national security implications.

The Arsenal of Democracy that saved the world is disappearing. Whether it matters depends on one question: Will America face another existential conflict requiring industrial mobilization before the capacity is gone?

History suggests betting against such conflicts is unwise.

The automotive industry's executives, engineers, and workers warned this trajectory was inevitable. They were ignored. The question is whether policymakers will recognize the strategic error before it becomes irreversible—or whether future historians will write about how America surrendered the industrial capacity that won WWII in exchange for cheap consumer goods and ideological commitments to climate policies that couldn't be sustained by market economics.

That reckoning may come sooner than comfortable assumptions suggest.

VERIFIED SOURCES AND CITATIONS

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Methodology Note: All sources were accessed and verified between December 2025 and January 2026. URLs and publication dates are accurate as of article preparation. Statistical data represents most recent available information from official government sources, industry associations, academic research, and verified news reporting.

Aerospace Industry Consolidation and Production Challenges

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