BAE’s planned sale of Land Systems South Africa reminds us that not just companies, but countries, can reconstitute some industrial capabilities when needed.


As was widely reported on Monday, BAE Systems and investment firm DGD are selling their Land Systems South Africa business to state-owned Denel for (US) $80 million. As Bloomberg Business Week noted, LSSA does make more than MRAPs, including “remote weapon launching platforms, fire directing systems, mechanical driveline products and precision-machined components and gears.” But mine-resistant armored troop carriers, from the widely-fielded RG-31 to the hulking RG-35, have been its signature product line for decades. As the press release from group president Erwin Bieber explained, the sale is aimed to “further focus” the rest of Land Systems on “strong franchise positions” in tracked vehicles and artillery. After all, few countries are buying wholly new MRAPs, as huge wartime purchases in the recent past have crushed demand today. That Denel is getting the business for such a low price manifests just how far the market has shrunk.

BAE’s retreat from wheeled armored vehicles is also an admission of worldwide market entry: plenty of companies now know how to build vehicles like MRAPs. In the US, Oshkosh and Navistar pretty much figured it out from separate standing starts after 2005. In Germany, KMW makes the Dingo; in Italy, Iveco makes the Lynx. As Defense Industry Daily observed, the business in Benoni may have been “the expertise base for the firm’s mine-resistant vehicles, but the US MRAP program helped spread that competency” around much of BAE. If buying ever does revive, BAE’s factory in Pennsylvania can probably dust off the old plans for RG-33s, or license newer plans from abroad, and reconstitute a production line.
Observe, then, that what companies can reconstitute, countries can too. As I wrote earlier this week, there’s simply not enough money available to spend on every possible technical or tactical contingency. Hard choices are eventually coming. In the last war in Iraq, MRAPs were important strategically, as they limited American casualties long enough to ensure politically that American troops could stay in the fight. But the Pentagon has soundly concluded that as quickly as that industry sprung up, it can be shut down too without dire consequence. For if it is ever needed again, it can be rebuilt more quickly than it was built at first. After all, delays in purchasing MRAPs were more about military perceptions and preferences than about actual industrial readiness, and there’s reason to hope that the same mistakes might not be made again.
This begs the question of what other industries can be safely discarded, or at least deemphasized in military purchasing, in the dénouement of Atlanticist involvement in the Middle East. From the MRAP experience, I recommend considering three factors:
     First, is the needed military-industrial expertise resident in a friendly country? In the case of the MRAP, consider how the long experience of South Africans and South African émigrés jump-started the American industry. If you can find a similar core of expertise in another field overseas, just ask whether it would be available in wartime. But remember also that South Africa wasn’t exactly a NATO ally. It was just a country with friendly relations with the United States, and with a more than willing industry.

     Second, is there sustained demand for related products from commercial customers? In the case of the MRAP, consider how many of the underlying vehicle platforms were commercial designs. As long as people are buying trucks, someone will be building trucks. Don’t be fooled by marketing pitches. Generally, a military truck isn’t a “tactical vehicle”, but just a heavy-duty, off-road truck, which most truck builders can build, if to varying degrees of quality. And don’t presume that everything must be sourced domestically, particularly in an emergency. Products that are readily purchased around the world are expensive targets for autarkic impulses.

     Third, is there already a competitive industry actually in the United States? Domestic production, admittedly, is more readily controlled. In the case of the MRAP, consider how American commercial truck builders rose to the challenge, with not just financial enthusiasm, but actual patriotism. Vehicles started flowing overseas by the hundreds each month just months after Secretary Gates demanded big orders in the spring of 2007. A large commercial industry also meant that even large military orders were manageable, even if extra staff had to be hired, and orders subjected to military prioritization.
Truck building, commercial aircraft manufacturing, cyber security, and a host of other economic sectors pass all three wickets. Contrary to that infamous Pentagon budget justification of some years ago, the government need not actually buy MREs to maintain a “food industrial base”. But plenty of other militarily-important sectors pass the first two—like ocean shipping, commercial shipbuilding, and even uniform apparel manufacturing. Sometimes, accessing an industrial capability is just a matter of opening the checkbook. Purchasing these abroad in peacetime may be verboten, but in wartime, expediency will again rule. And that’s the stressing case towards which planners should plan.
James Hasik is a senior fellow in the Brent Scowcroft Center on International Security.