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Outstanding Quote

March 17, 2010

A new study, released by McKinsey & Co. reveals how governments manage their defense spending. The USA doesn’t fair too well in the report according to John T. Bennett at Defense News:

“In general, countries that make it a point to support their domestic defense industries have higher procurement costs than those that rely on imports. Countries that procure older equipment from the global market tend to have very capable fleets for less money,” according to the report.

Specifically concerning the USA, the reports said this:

“The United States and Australia are the lowest performing countries with regard to equipment output for every dollar spent.”

 Here is the so-called “tooth to tail” ratio, or troops fighting in the frontlines compared to non-combat personnel:

The United States was second-to-last with 84 percent of its personnel in non-combat or combat support positions.

I was also a little shocked at this, considering the USA is most often in combat situations compared to other militaries.

If anyone can find the McKinsey & Co. report itself online, I would be much appreciative if you post it in the comments.

10 Comments leave one →
  1. March 18, 2010 10:53 am

    Hello steve coltman,

    very well said.
    If only British service chiefs and politicians had such a sound understanding of this subject.

    tangosix.

  2. steve coltman permalink
    March 18, 2010 8:58 am

    “In general, countries that make it a point to support their domestic defense industries have higher procurement costs than those that rely on imports.” I don’t think it is really that simple. I am no economist but it seems obvious that a £bn or $bn spent overseas is 1bn sucked out of a country’s economy and a hit on the balance of payments. By contrast a £bn spent domestically leaves much of that money circulating in the home economy, it will suck in some imports certainly but some of the money will trickle back to the Treasury as taxes etc. So what constitutes best value for the Defence budget is not the same as best value for the economy overall. Over and above this is the need to support troops in the field (Do I recall Belgium refused to supply Britain with ammunition during the Falklands war?) and to have the computer codes of the kit you buy (US please note). To a degree, public support for defence spending can stem from the domestic jobs it creates.

  3. Mike Burleson permalink*
    March 18, 2010 5:39 am

    Tangosix, thanks!
    I also notice we have another Mike in the discussion. Welcome.

  4. March 18, 2010 4:05 am

    Hello,

    the report can be found here:

    http://www.mckinsey.com/clientservice/publicsector/pdf/MoG_Benchmarking_Performance.pdf

    Countries are only able to inmport weapons systems because other countries go to the expense of developing those weapons.
    It is the nations developing the systems which benefit economically from their export and who gain primacy over those nations which depend on importing them.
    Warfare is like motor racing,the privateers rarely beat the factory teams.

    tangosix.

  5. B. Walthrop permalink
    March 17, 2010 10:57 pm

    Amen Chuck Hill. Amen.

    There are very good reasons that the US military is capable of doing what it is doing.

    Interestingly enough most of that capability comes with a cost.

    This is exactly why platform v platform comparisons always fall short in the “real world.”

    Ask leesea if you don’t want to take my word for it.

    V/R,

  6. papa legba permalink
    March 17, 2010 10:55 pm

    I’m just going to agree with the other posts here. Power projection isn’t cheap.

  7. Chuck Hill permalink
    March 17, 2010 6:25 pm

    Perhaps this means we have come closer to giving logistics its due.

  8. Mike permalink
    March 17, 2010 6:24 pm

    I’m not surprised about the fact that importing our defense equipment is cheaper than building it domestically, but that doesnt bother me. Not everything should be ruled by the mighty dollar. The question we have to ask ourselves is this; to save about 15% on our defense purchases are willing to destory close to a million american jobs and kill off almost an entire industry? Are we willing to put our national security at risk? People will argue that that the second one is untrue but the truth is that whenever you outsource your defense- you do put your national security at risk since you are no longer in charge of your destiny. A country we are on very friendly terms with now, may not be our friends tomorrow and if we relied on such countryfor lets say our ships, then they could strangle our navy.

    I’m sorry if this may dissapoint a few people but i believe the majority of americans and i would not be too happy to see “Made in China” on the side of our fighters

  9. michael M permalink
    March 17, 2010 6:14 pm

    our tooth to tail ratio is always low- we have the only expeditionary armed forces in the world- that always requires a lot of support troops. This canard has been around for years. We need to watch it but in truth our support troops are a major source of our strength.

  10. xbradtc permalink
    March 17, 2010 4:43 pm

    Well, consider that about half the services to start with are “infrastructure” such as the school systems and training base.

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