January 8, 2008

U.S. Loses Capability to Equip Itself for Future Conflicts, new Forward Magazine Reports

January 08, 2008

U.S. Loses Capability to Equip Itself for Future Conflicts, new Forward Magazine Reports

ROLLING MEADOWS, Illinois, January 8, 2008 — The United States has lost critically needed capabilities to arm itself for future wars, the lead article in the January/February 2008 issue of MSCI’sForward magazine reports.

What’s more, the magazine says, the Pentagon lacks the information necessary to know whether important weapons components now rely on foreign-sourced parts or materials. The military procurement system doesn’t require lower-tier contractors to report their use of foreign-sourced parts and materials, and the Defense Department isn’t interested in pursuing the question. “The Navy,” says Rear Admiral Kathleen M. Dussault, deputy assistant secretary of the Navy for acquisition and logistics management, “does not have visibility into commercial items indirectly purchased (from China) via second- and third-tier producers.” This is the case for the Pentagon as a whole, the article notes.

As a consequence, a range of essential materials, used to make everything from ordinary ammunition to propellants for missiles and components of submarines, are no longer made in the United States. In some cases, essential materials are available almost exclusively from China.

“If the Chinese wanted to play hard ball, there would be some severe consequences,” says Archibald Cox, Jr., former CEO of a militarily significant company moved through a series of transactions to China. Adds counterterrorism expert Peter Leitner, who for 21 years was a senior strategic trade adviser at the Pentagon, “It’s a form of economic warfare, and no one is really paying a whole lot of attention to what the Chinese are doing.”

In other articles:

  • China’s currency, the yuan, is undervalued, but by how much? Forward’s “Under the Radar” polls economists to determine the surprising answer: Despite appreciation against the U.S. dollar, the yuan may still be as much as 60% undervalued, no matter what computing methodology is used.
  • What company is the largest independent distributor of metals in Europe and North America? Ryerson Inc.? Reliance Steel & Aluminum? No, it’s Klöckner & Co. of Germany, which in 100 years of topsy-turvy operations has survived an amazing series of mishaps and disasters to emerge on top.
  • Are metals industry sales people well-compensated compared with their peers in other industries? Forward and a panel of HR experts analyze the latest MSCI compensation survey, the industry’s most comprehensive compensation benchmark, to find out.
  • As Congress and the Canadian Parliament debate ways to attack excessive releases of greenhouse gases, the North American metals industry holds one of the best records on the environment of any economic sector.

It’s all available to readers of Forward, the metals industry’s only business thought-leadership publication. The January/February issue is in the mail to subscribers and will be distributed to all participants at the 2008 MSCI Tubular Products Division Conference later this month. It will also be available soon on the MSCI web site at


Founded in 1909, the Metals Service Center Institute has more than 420 members operating from about 1,200 locations in the U.S., Canada, Mexico and elsewhere in the world. Together, MSCI members constitute the largest single group of metals purchasers in North America, amounting each year to more than 65 million tons of steel, aluminum and other metals, with about 300,000 manufacturers and fabricators as customers. MSCI’s membership also includes almost all ferrous and non-ferrous industrial metals producers in North America. Metals service centers inventory and distribute metals and provide first-stage fabrication services.


Jonathan Kalkwarf, vice president, administration (847) 485-3007, jkalkwarf@msci.org

Steve Weiner, Readmore Communications, (847) 485-3011, sweiner@msci.org

NOTE TO EDITORS: The defense and yuan articles are available in .PDF form on the MSCI web site at http://forward.msci.org/articles/0108mission-impossible.cfm andhttp://forward.msci.org/articles/0108a-consensus-please.cfm.