Potential Impediment of Foundry Capacity Relative to National Defense Needs

EMD-81-134: Published: Sep 15, 1981. Publicly Released: Sep 15, 1981.

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GAO expressed concern that the potential impediment of foundry capacity relative to national defense needs is a possible problem heightened by contemplated increases in defense expenditures. Since 1957, about 1400 small foundries have closed. Apparently, this trend has not had a significant impact on total foundry capacity; however, recent closures of large automotive foundries could have different, adverse repercussions. These closures have reduced domestic casting capacity by over 1 million tons in 1980. This tonnage loss is equal to about 5 percent of foundry shipping capacity of all metals.

In the past, some of these closed foundries have been used for defense production purposes, and if similar foundry closures continue, GAO believes that the Nation's production capacity for defense or emergency mobilization may be impaired. Serious data deficiencies prevent an in-depth analysis at this time. Because Federal data were found to be very poor, overly aggregated, and either wrong or missing, GAO developed a database using a combination of Federal and private industry data. Initial findings show that a potential problem exists in foundry production capacity and the related effect on defense industrial capacity. Although the Department of Defense has industrial preparedness programs, the foundries sector has not been given adequate attention. Thus, no one is in a position to judge whether foundry closure trends would be an impediment to increased defense spending objectives or emergency mobilization requirements which would require industrial surge capacity.

Recommendations for Executive Action

  1. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Departments of Defense and Commerce should promptly initiate a joint study to identify further data requirements, then determine whether there is an imminent foundry capacity problem relative to increased defense spending, to surge, or to emergency mobilization needs. The Departments of Defense and Commerce should also keep the following concerned congressional committees advised of study plans and the expected availability of study findings: the Senate Select Committee on Small Business; the House and Senate Committees on Armed Services; the House Committee on Appropriations, Subcommittee on Defense; and the House Committee on Banking, Finance, and Urban Affairs, Subcommittee on Economic Stabilization.

    Agency Affected: Department of Commerce

  2. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Departments of Defense and Commerce should promptly initiate a joint study to identify further data requirements, then determine whether there is an imminent foundry capacity problem relative to increased defense spending, to surge, or to emergency mobilization needs. The Departments of Defense and Commerce should also keep the following concerned congressional committees advised of study plans and the expected availability of study findings: the Senate Select Committee on Small Business; the House and Senate Committees on Armed Services; the House Committee on Appropriations, Subcommittee on Defense; and the House Committee on Banking, Finance, and Urban Affairs, Subcommittee on Economic Stabilization.

    Agency Affected: Department of Defense

 

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