US defense readiness depends on rebuilding production capacity

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 8:58

   the stockpile. Well, let's look at where we are today. So in terms of defense readiness, relative to our adversaries, 10,000 to one drone production gap versus China, 223x shipbuilding capacity disadvantage. And I think you've said a 2027 Taiwan window of danger. High level, we spend more than any other nation on defense. How ready are we? And how long will it take us? Well, our joint force is the best in the world. And so, you know, I think we have to couch the alarmism and commentary in that context here. But I think if you look at like the rate of change, our adversaries are moving very quickly. If you just look at the empirical loss of deterrence, you had the annexation of Crimea in 2014, the militarization of the Spratly Islands in 15, Iran with breakout capability to get the bomb in 17. You've had a pogrom in Israel. You have the

2. 9:48

   Houthis holding trade hostage in the Red Sea, not to mention the present conflict. So when you look at that, how can you not feel that deterrence is eroding? To Trey's earlier point of having capabilities that are so scary that picking a fight isn't worth it. And people are investing significantly on the low end of the mix. Our high end is still unquestionably amazing. But you can't keep shooting $2 million interceptors at $20,000 drones and have that math work very long? I think the second part, like why does it matter that we lost the American industrial base and have a defense industrial base is you lose volume, you lose the R&D stimulus to come up with creative ideas like using the methodology of building a bathtub to build the next generation low-cost cruise missile, right? And you get stuck in these platforms that are absolutely eye-wateringly

3. 10:33

   amazing but are $2 million a pop and you just can't produce them at the scale or with the speed that you really need to. Right. And Trey, you've talked about this. You wrote an article, No Solvency, No Security. Just share with us your view on the importance of this industrial base and what it takes for us to have strong defense requisite in a strong manufacturing industrial base. I mean, we really kind of sent most of these capabilities away during the last 30 years of globalization. And that gutted entire communities in the United States. I mentioned in this article that just in my immediate family, like grandparents, aunts, uncles, I have family members that worked at GM, at Ford, at Frigidaire, at National Cash Register, at Armco Steel. Every single one of these factories in Ohio closed. Not a single one

4. 11:20

   still exists. And they all have different places they've gone around the world. But one of the things we're doing with Andrel right now is we're building out a 5 million Square Foot Factory Campus in Columbus, Ohio. And we have the benefit of going back and tapping into that knowledge base that exists that's underemployed at the moment because the factories that kept them busy for many, many years are closed. And I think this is the story all over America. If you think about the at-scale manufacturing for a new company started in this century, in the 2000s, there's really only one that comes to mind. Just Tesla. That's it.

5. 12:00

   we haven't really built any muscle around new manufacturing capacity. And I think that as you spin things up, to Shams' point, we don't have the ability to do that quickly because we've atrophied massively by turning all this away globally. So I think readiness is a real problem and we have to start investing ahead of the conflict being there because you can't just start at the moment that it's absolutely needed. Tell us about the Arsenal one and then the man