Speaker 1: The United States is selling, lending, and donating weapons to
Speaker 1: its allies all over the world.
Speaker 2: Surging munitions to Israel, prepping a one point one billion
Speaker 2: dollar arms sale to Taiwan.
Speaker 3: Giving Ukraine an additional three hundred and twenty five million
Speaker 3: dollars in military aid.
Speaker 1: America has already committed more than forty four billion dollars
Speaker 1: in security assistance to Ukraine, and on top of that,
Speaker 1: the White House wants Congress to unleash more support for Ukraine, Israel,
Speaker 1: and Taiwan. Here's what President Joe Biden had to say
Speaker 1: on Wednesday, hours before a major Congressional vote on military aid.
Speaker 4: Congress needs to pass supplemental funding for Ukraine before they
Speaker 4: break for the holiday.
Speaker 3: Resource as simple as that.
Speaker 1: All of that is straining the US defense industry's supply chain,
Speaker 1: especially when it comes to the bullets, artillery shells, and
Speaker 1: missiles that the country itself might need in the event
Speaker 1: of a war. According to some measures, with current military policies,
Speaker 1: it would be roughly a decade before we'd be stocked
Speaker 1: for battle.
Speaker 3: The strategy is like taking out a full banner ad
Speaker 3: in Times Square to the Chinese and the Russians. That
Speaker 3: says Hey, we're really going to be prepared in twenty
Speaker 3: thirty five, but could you guys just kind of chill
Speaker 3: and not bother attacking us until then.
Speaker 1: That's retired Army Major General John Ferrari looking at America
Speaker 1: stockpiles today. He says the country has a problem. And
Speaker 1: Bloomberg reporter Courtney McBride told me he's not the only one.
Speaker 2: So the exact levels of US stockpiles are classified. But
Speaker 2: there is concern from really from all corners, you know,
Speaker 2: members of Congress, folks in the Pentagon that they are
Speaker 2: becoming depleted.
Speaker 1: Today on the show, America has a defense supply chain problem.
Speaker 1: How did we get here? And what could happen if
Speaker 1: we don't get it under control. This is the big
Speaker 1: take from Bloomberg News. I'm your host Salaamosen with a
Speaker 1: special report from Washington, d C. Retired Major General John
Speaker 1: Ferrari spent thirty two years in the US Army. Do
Speaker 1: I call you major General? I don't know what the
Speaker 1: Army protocol is.
Speaker 3: Yeah, you call me John.
Speaker 1: You also have a very cool last name.
Speaker 3: I do, but I drive a Camray.
Speaker 1: So Ferrari's service included working in the Army Material Command,
Speaker 1: that's the group that makes sure there are enough bullets
Speaker 1: to go around. He's seen firsthand what happens when there aren't.
Speaker 3: I was in the Pentagon on nine to eleven, right,
Speaker 3: and so when we had to start fighting that war,
Speaker 3: all of a sudden, we were running low on small
Speaker 3: arms munitions to give the soldiers, and we had to
Speaker 3: struggle just to provide people in the infantry with bullets.
Speaker 3: And if you remember at the beginning of Iranki freedom,
Speaker 3: when the Secretary of Defense Rumsfeld went to Iraq and
Speaker 3: he talked to the army force and they were complaining
Speaker 3: about their hillbilly armor.
Speaker 4: Our vehicles are not armored. We're digging paces of rusted
Speaker 4: scrap metal and compromised ballistic glass that's already been shot up, dropped, busted,
Speaker 4: picking the best out of this scrap to put onto
Speaker 4: our vehicles to take into combat.
Speaker 3: I've seen that scared look in everybody's face that we
Speaker 3: actually have to go fight and we don't have what
Speaker 3: we need. We owe them the bullets and equipment to
Speaker 3: be prepared in the training on the first day of war.
Speaker 1: And when it comes to our stock of bullets today,
Speaker 1: he says, America is already feeling a squeeze.
Speaker 3: If the question is is the United States ready to
Speaker 3: fight perhaps two and a half or three wars, well,
Speaker 3: our defense strategy says we're not.
Speaker 1: How much of the poor numbers would you blame on
Speaker 1: the fact that the Ukraine war has dragged on far
Speaker 1: longer than folks seem to have expected.
Speaker 3: Wars always drag on longer than expected, right, So if
Speaker 3: you go into a war thinking that it's going to
Speaker 3: be over quickly, and you size your stockpile of bullets
Speaker 3: for it to be over quickly, you're probably going to
Speaker 3: be on the wrong end of that fight. War is
Speaker 3: about in some ways, it's not about military capacity in
Speaker 3: the short term, because you're trying to break the will
Speaker 3: of the person you're fighting against. And if you don't
Speaker 3: have enough bullets and they know that they just have
Speaker 3: to last a little bit longer, right, you're giving them
Speaker 3: hope and the reason to keep fighting.
Speaker 1: To understand the current scale of America's weapons shortage, I
Speaker 1: sat down with Courtney McBride. She covers diplomacy and national
Speaker 1: security for Bloomberg News.
Speaker 2: So since Russia's full scale invasion of Ukraine in February
Speaker 2: of twenty twenty two, the US has sent more than
Speaker 2: forty four billion dollars in weapons and other assistance to Ukraine. Rockets, missiles, tanks, helicopters.
Speaker 1: Where are these weapons coming from? Are the ones the
Speaker 1: US already had in warehouses somewhere?
Speaker 2: It's a mix, but yeah, much of the assistance has
Speaker 2: come from US inventory. The US government has pulled equipment
Speaker 2: from existing US stocks to be able to send that
Speaker 2: to Ukraine as quickly as possible. There have been some
Speaker 2: contracts for new equipment, but there's a much longer lead
Speaker 2: time for those, as it would have to be built
Speaker 2: before being sent to Ukraine.
Speaker 1: The US sending weapons to its foreign allies isn't new.
Speaker 1: It's been doing that for decades, both in times of
Speaker 1: war and peace. Part of what makes now different is
Speaker 1: the number of active conflicts America is supporting. First, there's
Speaker 1: the war in Ukraine. Just this September, the Army Science
Speaker 1: Board released a report saying that Ukraine had exposed fragilities
Speaker 1: in the Army's defense base. Those fragilities left the board
Speaker 1: concern that the American defense supply chain may not be
Speaker 1: able to meet demand. And that's despite the US being
Speaker 1: the largest military spender in the world. Then a month
Speaker 1: after that report, sort the Israel Hamas War started, so
Speaker 1: the US would be expected to send weapons to yet
Speaker 1: another ally. Two days after the initial attack, on October seventh,
Speaker 1: the US Army Secretary Christine Warmouth told reporters at a
Speaker 1: press conference that the current defense stock wasn't enough to
Speaker 1: supply both Israel and Ukraine in.
Speaker 2: Terms of our capacity to expand production and then to
Speaker 2: also pay for the munitions themselves. We need additional support
Speaker 2: from Compress, so I hope we'll see that soon.
Speaker 1: And let's not forget America is also backing Taiwan in
Speaker 1: its stand off with China. Earlier this year, a war
Speaker 1: studies think tank ran a simulation modeling what would happen
Speaker 1: if a conflict with China broke out in the Taiwan Strait,
Speaker 1: and it found the US would run out of some
Speaker 1: key weapons in less than a week. Experts don't think
Speaker 1: America is on the brink of a direct military conflict,
Speaker 1: but it's the government's job to be ready.
Speaker 2: The Pentagon would say, they have to plan for every
Speaker 2: contingency and be prepared for it.
Speaker 1: And what is the real concern? Why should anyone be
Speaker 1: worried about the US weapons supply dropping really low.
Speaker 2: There are concerns that adversaries are watching, and you could
Speaker 2: potentially seize an opportunity presented by US weaknesses or shortfalls
Speaker 2: and equipment. So it's natural security, yes, protecting the homeland,
Speaker 2: and beyond that, not only could the US need these
Speaker 2: weapons or these systems, but there could be another ally
Speaker 2: or partner that needs assistance.
Speaker 1: That increased demand from US allies is part of what
Speaker 1: got the country here in the first place, but it's
Speaker 1: also a supply problem. After the break, we'll learn about
Speaker 1: a meeting in the.
Speaker 3: Nineties famously called the Last Supper.
Speaker 1: That changed the course of a supply chain and what
Speaker 1: it would take to boost weapons production. Now we're back
Speaker 1: looking at the US weapons supply and how it wound
Speaker 1: up spread so thin. Retired Major General John Ferrari told me,
Speaker 1: the US didn't just wake up one day and find
Speaker 1: its stockpiles empty and its allies begging for weapons. The
Speaker 1: country made a choice back in the nineties at the
Speaker 1: end of the Cold War to stop investing so much
Speaker 1: in defense.
Speaker 3: What happened was wishful thinking and rosie planning assumptions. We
Speaker 3: assumed away the problem.
Speaker 1: The idea was that if the country trimmed that budget,
Speaker 1: it could spend more on other things in loose the economy.
Speaker 1: It became known as a piece of it end.
Speaker 5: Two years ago, I began planning cuts in military spending
Speaker 5: that reflected the changes of the new era. But now
Speaker 5: this year, with imperial communism gone, that process can be accelerated.
Speaker 1: That's President George H. W.
Speaker 3: Bush.
Speaker 1: He was speaking during his State of the Union address
Speaker 1: in nineteen ninety two, a month after the Soviet Union collapsed.
Speaker 3: So what happened in the nineteen nineties was we said,
Speaker 3: we don't want to spend as much money on defense,
Speaker 3: and so we cut the defense budget.
Speaker 1: In the decade after the Cold War, the military's annual
Speaker 1: budget and real terms dropped about thirty percent, and part
Speaker 1: of that meant trimming down the number of companies the
Speaker 1: government could pay to produce weapons. So the Deputy Secretary
Speaker 1: of Defense at the time, William Perry, gathered all the
Speaker 1: defense contractors in a room for a.
Speaker 3: Meeting famously call the Last Supper.
Speaker 1: Picture about twenty CEOs sitting around a table in the
Speaker 1: Secretary's dining room at the Pentagon. They ate their meal
Speaker 1: and then they shuffled over to a conference room next door.
Speaker 1: That's where the Secretary told them, we need to trim
Speaker 1: the fat.
Speaker 3: They decided which defense companies were going to fold and
Speaker 3: which ones were going to stay alive.
Speaker 1: This set off a chain reaction of consolidation. At the
Speaker 1: time of the Last Supper, there were fifty one so
Speaker 1: called prime contractors, which are considered the highest quality. Today
Speaker 1: there are just five. So now, when America suddenly finds
Speaker 1: itself in need of bullets, those few companies have a
Speaker 1: hard time quickly scaled up production, and they rely on
Speaker 1: a patchwork of American factories with the capacity to produce
Speaker 1: specific weapons systems. For example, there's one single factory in
Speaker 1: Louisiana that can produce the black powder that's needed for
Speaker 1: the artillery shells that are most commonly used in Ukraine.
Speaker 1: This stuff is hard to make and dangerous. In the
Speaker 1: last twenty five years, that factory has had at least
Speaker 1: seven fires and explosions, so it's not like we can
Speaker 1: just spin up several new factories to make this stuff overnight.
Speaker 1: On top of spending less on defense overall, Congress also
Speaker 1: passed laws that led to changes in what the US
Speaker 1: spent its defense money on. These changes led the military
Speaker 1: to focus on big ticket items like tanks and ships
Speaker 1: and let the smaller, less sexy ones like bullets fall
Speaker 1: to the wayside. Addressing the shortfall that this created isn't
Speaker 1: going to be cheap. Let's take the example of one
Speaker 1: highly sought artillery shell, the one five five millimeter round.
Speaker 1: Before Russia's invasion of Ukraine, the US was producing about
Speaker 1: fifteen thousand of those a month, but Ukrainian fighters are
Speaker 1: blowing through almost half of that every day. So the
Speaker 1: Pentagon is trying to ramp up production by five hundred
Speaker 1: percent in the next two years. That's going to cost
Speaker 1: an extra one point five billion dollars. The idea of
Speaker 1: increasing defense spending like that is something that some of
Speaker 1: our leaders want to avoid, especially when the government is
Speaker 1: already trillions of dollars in debt. But Ferrari says not
Speaker 1: taking action now can have serious consequences.
Speaker 3: There's a saying, right, the only thing more expensive than
Speaker 3: preparing for war is fighting a war, and the only
Speaker 3: thing more expensive than fighting a war is losing a war.
Speaker 3: There is no strong economy without a strong defense. What
Speaker 3: do you think is going to happen to the stock
Speaker 3: market if we lose a war with China. What's going
Speaker 3: to happen to everybody's four one k in there right there, Iras,
Speaker 3: And so that's what's at state, is the economic viability
Speaker 3: of our nation if we don't maintain the free flow
Speaker 3: of goods across the world.
Speaker 1: But of course the best thing for the economy, it
Speaker 1: would be peace. Bloomberg Economics calculated that this year, the
Speaker 1: cost of conflict of the global economy is on track
Speaker 1: to be the highest since the end of World War Two.
Speaker 1: Lost trade deals, loss investments, and domestic programs, not to
Speaker 1: mention lost lives, and that cost is immeasurable. Thanks for
Speaker 1: listening to the Big Take from Bloomberg News. I'm Salaiah Moosen.
Speaker 1: This episode was produced by Julia Press, Anna Masarakis, and
Speaker 1: Naomi Shaven. It was fact checked by Oshna Shah. It's
Speaker 1: part of a special series from our DC newsroom. Blake
Speaker 1: Maples is our mixed engineer. Our story editors are Caitlyn Kenny,
Speaker 1: Wendy Ben Jaminsen, and Mike Sheppard. Sage Bauman is our
Speaker 1: executive producer and head of podcasts. Thanks for tuning in.
Speaker 1: I'll be back next week.