Pentagon pushes Mexico to reopen factories as concerns about military hardware supply shortage start to bite
President Donald Trump might emphasize time and again the need to shut the US border with Mexico to stop the influx of illegal immigrants and secure the country internally, but there are also areas where his administration is heavily dependent on the southern neighbor. Several American defense firms, especially in the field of aircraft manufacturing, are reliant on Mexican suppliers whose functioning has either shut or slowed down during the current COVID-19 pandemic. And the superpower wants those supply lines reopened.
On Monday, April 20, Ellen Lord, defense undersecretary for acquisition and sustainment, said in a press conference at the Pentagon: “I think one of the key things we have found out are some international dependencies. Mexico right now is somewhat problematic for us but we’re working through our embassy, and then there are pockets in India, as well.”
She discussed the supply issue with the US Ambassador to Mexico Christopher Landau last week and said she would approach Mexican Foreign Secretary Marcelo Ebrard “to ask for help to reopen international suppliers” in that country.
Lord, who took office in February 2018, said the closing down of several pockets internationally is witnessing an impact on the industrial base. She said during her media interaction on Monday: “Domestically, we are seeing the greatest impacts in the aviation supply chain, ship-building, and small space launch. We are seeing impacts on the industrial base by several pockets of closure internationally. Particularly of note is Mexico, where we have a group of companies that are impacting many of our major primes.”
Among the US’ major defense suppliers that outsource significant parts of their supply chain to Mexico are Boeing, Raytheon, Lockheed Martin, General Electric, Honeywell and General Dynamics. Key electrical parts in Lockheed’s Black Hawk and S-92 helicopters and also fighter planes are made in Chihuahua, Mexico, with the backing of French company Safran, Mexico’s biggest aerospace employer.
US military news site Defense One cited a 2013 report of the US International Trade Commission in one of its recent articles to explain why America’s defense companies’ supply chains have increasingly found base in Mexico and that has happened despite the fact that the political leaderships of the two nations have met challenges at times under the Trump Presidency.
“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 said.
Lower-tier suspension hitting first-tier performance
The US defense suppliers are not feeling easy, either. Todd Blecher, a Boeing spokesperson, was cited by Defense One as saying in a statement sent over email: “Of most immediate concern is lack of a clear designation of aerospace as essential business. 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 US, Canada, and Mexico governments to harmonize these rules to ensure that these essential businesses and supply chains around the world can remain open.”
James “Hondo” Geurts, the chief of the Navy acquisition, told reporters last week that the US is “a little living on the benefit of on-hand stock” and cautioned that it too will start running out at some point if the downstream production supply is not generated.
The coronavirus pandemic has seen over 820,000 people getting hit in the US while 45,000-plus have died. In Mexico, around 9,500 have been affected while only 857 deaths have been registered.