Army full of Bradleys, BAE Systems factory workers face uncertain future
The Bradley Fighting Vehicle has been a staple of the U.S. Army and other defense departments as a personnel carrier since the 1980s, and it's been a manufacturing staple for the BAE Systems factory in York County.
That could be coming to a halt.
The Army says it has all the Bradleys it needs plus a couple of thousand en route or in storage. But BAE has been making the rounds urging Congress to fund and continue the company's work modifying and upgrading the Bradleys.
Congress has to weigh spending hundreds of millions a year on vehicles the Army says it doesn't immediately need in a time of fiscal constraint and ending wars versus having thousands of manufacturing workers laid off and small suppliers left without work.
BAE says a Bradley shutdown will affect 250 workers at the York County facility — 7,000 nationwide — and hit about 600 suppliers, nearly 400 of them small businesses, nationally.
For local companies, the pause could mean a lot less work supplying the parts and services.
Armed and ready
The Army will meet its requirements for Bradleys at the end of 2014, said Ashley Givens, a spokeswoman for the Army's Program Executive Office Ground Combat Systems, the office tasked with procurement of tanks, personnel carriers, robotics and artillery.
With 3,710 Bradleys in the active Army and National Guard and another 2,610 vehicles in long-term storage or in production with BAE, the Army has looked at pausing its acquisitions, she said. Since the 1990s, Bradley production has focused on upgrades and modifications to existing vehicles, including technology, armor and other equipment.
In fiscal year 2010, the Army bought 688 Bradleys of two models, Givens said. In fiscal 2011, the Army bought 196 vehicles, with one type ending. It spent $202 million on the vehicles in 2011, or a little more than $1 million per vehicle.
In fiscal 2012, the Army bought 190 vehicles and will buy 322 this year. The cost in 2012 was $250 million, or about $1.3 million per vehicle. The army is acquiring just 46 vehicles in fiscal 2014, completing its requirements, Givens said.
Part of the issue with the Bradley's future is that the Army is working on vehicles to replace them, according to a 2012 report from the Government Accountability Office, Congress's nonpartisan auditing arm. The report details various military programs, their costs and progress.
The $31.6 billion Bradley replacement program was supposed to start manufacturing in December. BAE and General Dynamics both have developmental contracts, but the Pentagon has decided just one contract will be awarded about six months from now, BAE spokesman Randy Coble said.
BAE says the pause in Bradley production will be more costly in the long run than scaling back and continuing work on the vehicles.
The company estimates the cost of stopping and restarting the line up to $750 million, whereas reduced production of Bradley upgrades might cost only $100 million a year, depending on what the Army and Congress eventually budget, said Alice Conner, director of manufacturing integration and employment at BAE.
Much of the cost estimate is for expenses such as severance for layoffs, rehiring and retraining workers at restart, parts acquisitions, requalifying subcontractors and increased costs of production, she said.
"The Army is still assessing costs and future options as part of its industrial base study. The facility at York is a contractor-owned, contractor-operated facility and as such the government bears limited direct costs of operation," Givens said.
However, if BAE stops Bradley production, suppliers will lose a significant customer order, Conner said. Many of the companies will refocus their work on the commercial sectors and, when Bradley production restarts, it will be expensive to requalify them to meet Department of Defense specifications.
"The further you go down those tiers of suppliers, the larger the impact," said Michael Smeltzer, executive director of the York-based Manufacturers' Association of South Central Pennsylvania.
In 2012, BAE spent $19.5 million with Central Pennsylvania firms due to its York County facility production, and that money would be in jeopardy without the Bradley line, according to the company.
It would be better for everyone if the military could scale back, as opposed to shutting down a line it knows it will restart in the near future, Smeltzer said.
"We can scale down if we have to," Conner said. "We understand that we're in a drawdown and are adjusting to meet that requirement."
During the Iraq War surge, BAE was producing about eight Bradleys a day at its York County Facility, she said. A normal production rate is about three or four a day, and the company proposes keeping the line "warm" by producing one a day or fewer, she said.
To meet the Army's needs and save money, BAE has proposed pulling several future upgrades forward from 2017 and filling its line with other work, such as upgrades to the Army's Hercules heavy recovery vehicle and the Paladin self-propelled Howitzer artillery units that it's working on, Conner said.
"We're trying to provide multiple options not to shut down this line," she said.
However, the modifications scheduled for 2017 will not change the essential capability of the Bradleys, Givens said.
Congress treads carefully
Congressional response to the issue of the Bradley pause has carefully walked a minefield of fiscal responsibility, national security and jobs.
U.S. Rep. Scott Perry, a Republican representing Harrisburg, York County and parts of Adams and Cumberland counties and a former Army pilot in the Iraq War, said the primary issue is whether the Army needs the vehicles to be operationally ready. At the heart of such matters is Congress' responsibility to provide for common defense balanced with its need to prevent unnecessary spending.
"You have to make tough choices at the end of the day," Perry said.
A study to get "unvarnished answers" to the Army's need and costs of the Bradley program proposed by Pennsylvania's senators Bob Casey and Pat Toomey, a Democrat and Republican respectively, would be important, Perry said.
"The FY13 National Defense bill requires the Army to submit a report to Congress about the Bradley Fighting Vehicle by May 1, 2013," Casey said in a statement. "I have confidence that the report will see the value of the Bradley industrial base both in terms of the role that it plays for our military and southcentral Pennsylvania's economy."
The Army plans a broader study in 2015 to decide whether future Bradley upgrades can continue to be done in field modifications or whether a depot or factory is needed, Givens said.
All of this is taking place amid a backdrop of sequestration, the automatic budget cuts to the federal budget designed to reduce government spending if Congress couldn't do so with more exacting action.
During the past several years, military spending has been looked at closely for unnecessary expenditures. In 2011, the GAO said the Pentagon spent $135 billion more on its largest programs, $65 billion of that on unplanned purchases such as mine-resistant vehicles, according to The New York Times. Such vehicles were formerly produced by BAE, but programs have since ended. The rest of the overrun was inefficiencies.
The 2012 GAO report said the Pentagon spent $74 billion more on programs in a year. Of that, $30 billion was for quantity changes, and the rest was research, development and inefficiencies.
The long history of the Lockheed Martin Hercules C-130 aircraft, its cost overruns and constant lobbying by the company to keep the program going despite the Pentagon's desire to scrap the cargo plane bear some similarity to BAE's case to keep the Bradleys going, according to a January story from news magazine Mother Jones.
If the Army and Congress pause the Bradley lines, one cost is certain: BAE will lay off 250 workers, another blow to state and local economies that have slowed recently.
There's really no reason for BAE to keep them around, Smeltzer said.
"They're not going to sit on the cost of retaining those people for three years," he said.
BAE: Commercial transition not a possibility
If the Army pauses its Bradley Fighting Vehicle program and that line goes cold at BAE System's York County facility, the company is not going to transition the line to any nonmilitary application to save jobs, it said.
"You would have to reshape your business to do that," said Alice Conner, BAE's director of manufacturing integration and employment.
BAE does have nonmilitary production at other sites, but the company has to keep its military and commercial production separate because of strict requirements from the Department of Defense, she said.
"To meet these requirements, defense companies are required to have a much larger infrastructure, which results in a cost structure that puts it at a competitive disadvantage from a commercial business," said Randy Coble, a spokesman for the company in York County.
The West Manchester Township facility still has a lot of defense work, so to legitimately separate a commercial line from the military ones there wouldn't work either, he said.
"Our business development folks are working to bring in work to keep our line warm," Conner said.
That could be vehicle production for U.S. allies or other defense applications, she said.
But don't expect BAE to start making firetrucks or other heavy commercial vehicles in York County, Coble said.