The United States “is like a giant boiler,” British Foreign Secretary Edward Grey is said to have remarked as America’s industrial might was brought to bear to help rescue European allies in World War I. “Once the fire is lighted under it, there is no limit to the power it can generate.”
As the United States confronts a new era of threats to our national security and economic competitiveness, some crucial ingredients in that cauldron are struggling to stay alight – and in some places at risk of flickering out.
They are the furnaces, hammers, presses, and skilled workers that heat, shape and convert raw metals and alloys into the forgings that make up the backbone of our armed forces and those of our allies – in tanks, warships, submarines, fighter aircraft, helicopters, missiles, and more.
Washington is making historic investments in our technological edge to compete in this new era of great power competition. But the North American forging industry is at risk of being neglected – by a combination of inattention from government authorities, a stubborn myth that it lacks sufficient capacity to meet demand, and trade policies that hobble us and aid our adversaries.
The forging industry consists of more than 152 plants in 38 states and employs more than 36,000 workers. Forged products are feeding the aerospace, automotive, space, mining, transportation, semiconductor, clean energy, medical, and construction industries, just to name a few. And we are answering the call to restock U.S. and allied inventories of weaponry depleted by the war in Ukraine, demonstrating the adaptability and versatility to support our larger defense buildup.
But we are capable of doing much more.
Untapped capacity
In a recent independent survey, roughly 60 percent of forging companies that were evaluated reported that they sell products to the defense industry.
The independent assessment by the accounting firm Wipfli which specializes in the manufacturing industry, also found that roughly half of the 41 forging companies surveyed are operating only at a 52% capacity utilization level. Underutilization is even more pronounced among those that responded that they primarily do defense-related work.
What does this mean? There is ample untapped capacity to do additional work to support our armed forces. However, an overly cumbersome defense acquisition system and unpredictable material shortages stymies the nation’s ability to tap into the industry’s capacity, even as the Department of Defense’s needs are growing.
It also reinforces concerns across the industrial bases that there are key areas where capacity is being underutilized. For example, in a recent letter to Defense Secretary Lloyd Austin, a bipartisan group of senators called for a greater examination of “unused capacity” to identify ways to better take advantage of new military veterans to fill gaps in trade jobs.
There are concrete steps our industry, in collaboration with our customers and government partners, can take to help address the growing mismatch.
We need to streamline the process for adding forging companies to approved vendor lists, as well as adding more varied types of materials. We also need to extend the period of contracts to allow companies to better utilize the capacity they have.
A recent study by Boston Consulting Group concluded a more reliable demand signal would help the forging supply chain plan more effectively, while longer term contracts would also take better advantage of untapped capacity.
At the same time, additional investments in new technology, infrastructure, and workforce development programs would have a major impact.
For example, the Defense Department could more aggressively utilize several funding streams that were designed to support the defense industrial base.
These include the Defense Production Act Title III and the Industrial Base Analysis and Sustainment (IBAS) programs, which could help fund new equipment like furnaces and scanning technology to improve the quality of hot forged parts.
There is a growing realization at the highest levels that the headwinds facing our industry require more collective action.
In 2022, President Joe Biden signed an executive order, Securing Defense-Critical Supply Chains, that highlighted the importance of the forging supply chain because “many of these parts are high importance/low-volume and minimal demand items that support critical go-to-war weapon systems and platform.”
Meanwhile, the Pentagon’s Innovation Capability and Modernization Office has undertaken a Casting & Forging Initiative that calls for investing $2 billion over the next five years to help modernize and expand domestic capacity to ensure we don’t love it.
“Casting and forging are fundamental components of manufacturing; without adequate domestic capacity DoD cannot sustain its current force or modernize critical platforms, systems, and weapons,” the office recently told government and industry stakeholders.
The trade problem
But meeting the needs of our defense industrial base also requires policymakers to rethink some of our trade policies.
For years, unfair trade practices have siphoned off billions of dollars’ worth of commercial work from America’s forging companies, in favor of less costly imports. Since China entered the World Trade Organization in 2001, more than 241 plants have closed or consolidated and over 21,000 jobs have been lost.
Original equipment manufacturers, or OEMs are incentivized to buy from foreign producers over our own, particularly in China, where government subsidies provide a major competitive advantage.
The Department of Defense recently acknowledged that government policies limit global competitiveness and cited how “foreign competitors dominate [the] value chain” and the “domestic workforce is shrinking.”
While U.S. defense systems require a special waiver to use Chinese forgings, these larger market shocks directly threaten our domestic forging industry and its ability to meet current military demand, let alone respond to a future crisis.
What’s needed are higher tariffs on Chinese forgings – more than the current 25% tariffs currently in place – to help bring back some of that lost business. More aggressive efforts are also called for to prevent China, India, and others from dumping into the market forgings such as gears and connecting rods that are far below fair market. That means considering outright bans on certain countries from importing forgings.
The Leveling the Playing Field Act 2.0, a bipartisan proposal co-sponsored by dozens of members in the House of Representatives, would strengthen anti-dumping laws and offer relief to industries harmed by such practices.
No time to stand still
To meet this moment, our industry is not simply looking for government handouts. We are taking pre-emptive action and demonstrating a level of adaptability and versatility that often gets overlooked.
We are adopting automation, using additive manufacturing to add features to forgings and repair our tooling, and other advanced processes to increase capacity and improve performance. We are identifying new sources of raw materials like the nickel-based alloy that is currently in short supply for the propellers of warships.
The new survey by Wipfli, which has also evaluated tool builders, plastics processors, metal formers, die casters, screw manufacturers, coaters, and contract machinists, found that more than three-quarters of the forging companies surveyed have invested in robotics. And companies that have invested in software and automation have been able to fill open positions and improve efficiency.
Our industry is also taking more aggressive steps to recruit and nurture the highly skilled technical workforce that will be necessary to remain robust well into the future, by working with technical schools and state and local governments.
Yet there remains a prevailing bias in acquisition offices and among prime contractors to favor what are perceived to be the higher-tech sectors of the gig economy – think semiconductors or AI, or electric vehicles, which are the beneficiaries of historic taxpayer investments through recent bipartisan legislation.
But just as forging was a central ingredient of America’s leadership in the Industrial Revolution, so it remains in the digital age, where even some of the most automated equipment and weapons platforms require that mix of carbon, steel, aluminum, titanium, nickel, or alloys to perform their required functions.
The hard truth is that the nation is at serious risk of future shortages of many of the metal forgings that are central to our industrial might and national security.
John Cain, the CEO and chairman of the board of Scot Forge Company, which provides forgings for everything from submarines to armored vehicles and space launch systems, likes to say that “forging started 4,000 years ago.”
“The reality is the longer something’s been around, the odds are higher it will still be around in the future.”
It’s time we act like it – and relight the “giant boiler” that could help determine if we are prepared for the next major crisis – or better yet, so that we can deter our adversaries from testing us in the first place.
James R. Warren is the President and CEO of the Forging Industry Association in Cleveland, Ohio, which represents 231 North American metal forging producers, suppliers and service providers.