Industrial Base

Cuts in defense spending have reduced the volume of business and the number of jobs at many Abrams tank contractors. As of May 1993, 11 of the 14 tank contractors GAO queried had lost sales or had laid off workers because of defense cutbacks. So far, a combination of continuing Abrams tank production and spare parts sales, foreign military sales, and commercial and other defense sales has kept these 14 contractors afloat. Eight of the 14 contractors, however, were unclear about whether their current tank component production capabilities could be retained. The contractors said that their ability to reconstitute Abrams tank production would be affected by whether they had comparable commercial business and whether they produced the tank component using the same facilities, equipment, and personnel as were used in commercial production. The contractors said that they would need anywhere from six months to five years to reconstitute production for tank components. Impediments to reconstitution included obtaining critical skills, vendors, materials, test equipment, and production facilities along with meeting government requirements and specifications.

GAO found that: (1) of the 14 contractors involved in tank production, 11 lost sales or released employees due to reductions in defense spending; (2) although all the contractors were able to remain in business through completion of Abrams tank production contracts and spare part sales, foreign military sales, and commercial and other defense sales, contractors were unsure that they could retain their current tank production capabilities; (3) factors affecting the contractors' ability to reconstitute Abrams tank production depended on whether they had comparable commercial businesses and produced similar components using the same facilities, equipment, and personnel used in commercial production; (4) contractors estimated that 6 months to 5 years would be required to reconstitute tank production; (5) contractors involved in similar commercial production reported it would take less time for them to reconstitute production; and (6) impediments to reconstitution include obtaining critical skills, vendors, materials, test equipment, and production facilities along with meeting government requirements and specifications.