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Army’s Plans to Halt M1 Abrams Refits Portend Fights Ahead

by: Matthew Potter
May 18, 2011

Category: Business Line, Companies, Congress, Department of Defense, Events, Federal Budget Process, General Dynamics, Michigan, production program, Restructuring, Services, States, Suspensions, U.S. Army | RSS 2.0

The U.S. Army has proposed to halt work on M1 Abrams tank refits in 2013 for a period of three years. This means that rather then spending about $500 million a year in the Warren, Michigan area it will use the money for other means. The local government and members of Congress are not happy about the decision. The major contractor involved, General Dynamics (GD), is also ramping up their lobbying to protect the work.

The M1 has been in production for the U.S. Army, Marine Corps and Allies since the 1980’s. Now the major work for the U.S. is upgrading, modifying and refitting the vehicles as they return from the fighting in Iraq and Afghanistan. GD is also building the system for several foreign customers. Much of the work is managed from Michigan and done in various places including Anniston Army Depot in Alabama.

The Army has proposed a three year stop to production and work as they feel the current fleet of tanks meets their needs. The goal is to save over a billion dollars in the proposed FY12 budget which would be reprogrammed for other uses. This proposal has met with criticism as a blow to the U.S. industrial base as it would be the first gap in U.S. production of such systems since the 1930’s.

Congress of course has the final say in the proposal being able to write into the Defense Budget money to keep the line open and work continuing. The House has kept about $250 million in the budget for sixty tanks which is less then the current average funding but it would keep the line open. A three year stop would require layoffs by GD and also may require work to re-certify the line and the ability to bring back workers to meet the needs in 2016 when the Army plans to restart production.

It would not just be GD that would be affected but also all of their various sub-contractors and suppliers. The gap may require GD to find new suppliers able to build the parts as some companies may stop making or keeping the ability to produce the parts needed as they turn to other markets. In today’s economy it is hard to just stop work for three years and then be expected to start it up again. There would be an economic cost to all of this some of which would be paid for by the Army offsetting the savings to the budget due to the halt.

All this portends many other battles if and when the U.S. military begins to make similar cuts across their budgets. Every program cancelled or scaled back will have an economic effect on some Congressional district, companies and employees. All three groups will fight to keep it even if the Defense Department and Obama Administration claim there is no need for it. This small battle – and $1 to 2 billion is a small part of a $700 billion budget – will occur again-and-again as the U.S. tries to deal with its budget crisis and the winding down of Iraq and Afghan operations.

Photo from Michigan Municipal League Flickr photostream.

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2 Comments

  1. Timhogs on May 21st, 2011 2:06 pm

    General Dynamics Land Systems Division gave layoff notices to 110+ employees in Woodbridge, Virginia on May 4, and 160+ engineers in Sterling Heights and Shelby Township, Michigan, on May 19th.

  2. Congress Slashes AMRAAM Funding due to Reported Production Delays | Defense Procurement News on June 22nd, 2011 2:02 am

    […] to wind down the U.S. defense budget is already seeing some reductions. The Army especially is adjusting their production numbers for certain systems due to the decline in combat operations lowering requirements for things like M1 tanks and HUMVEE […]

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