Outsourcing Our Security

The long decline of American manufacturing is often measured by the millions of jobs that have disappeared. But there is another cost: The U.S. has become reliant on China and other foreign countries for parts and materials critical to the military. As Defense Department officials told The Wall Street Journal last year, the U.S. relies on an Abu Dhabi-owned company, Globalfoundries Inc., to supply critical microchips used in U.S. spy satellites, missiles and combat jets. (All is not lost: Globalfoundries still makes the chips at plants in the U.S.) Asian countries are dominant suppliers of other high-tech essentials, including telecom equipment and advanced batteries. Though Americans invented many of the marvels that power our world, the U.S. no longer has the capacity to make some of them, and re-creating that capacity would take years.

Victoria Bruce’s “Sellout” calls attention to this problem by focusing on so-called rare-earth elements—such as praseodymium, neodymium and gadolinium—found in varying quantities throughout the world. They are used in magnets, batteries and other high-tech products, playing an important role in military hardware as well as consumer products. China, she notes, has a near global monopoly on processing them for use in manufacturing. It “could shut down exports on a whim and ultimately cripple the U.S. Armed Forces.”

Ms. Bruce, a journalist and documentary filmmaker who was trained as a geologist, builds her case around Jim Kennedy, a Missourian who, as we learn, nearly flunked out of high school and then rebounded to study business at Washington University in St. Louis. He worked for his father’s fund-management firm and eventually bought a hunting-and-fishing lodge in the St. Francois Mountains of southeast Missouri. The lodge was near a dormant iron-ore mine. Mr. Kennedy bought the mine, then discovered that it was loaded with rare-earth elements. He began looking for ways to exploit them.

He smacked into a huge obstacle: The rare earths were mixed up with thorium, and disposing of this radioactive material would be, for regulatory reasons, prohibitively expensive. Then he discovered that in the 1960s the U.S. government’s Oak Ridge National Laboratory, in Tennessee, had developed plans for a nuclear reactor that would use thorium. Proponents of such reactors have long said that they would be far safer than the plants we have today. Mr. Kennedy was appalled to find that the government shelved the thorium-reactor project in the late 1960s—and that China in recent years had ramped up its research into thorium reactors, drawing partly on U.S. expertise. Hence Ms. Bruce’s strident claim, in her book’s subtitle, that Washington “gave away America’s technological soul.”

Mr. Kennedy and several allies spent years trying to persuade Congress and federal authorities to revive the thorium-reactor project and to create a cooperative—a private-public consortium of sorts—to rebuild America’s capacity for processing rare-earth elements. They got the brush-off.

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The U.S. was magnificent at manufacturing when we needed to be, mobilizing the nation to make airplanes and tanks to win World War II. After the war, though, we squandered our world-beating abilities—partly through complacency and partly through a preference for the individualistic arts of design and marketing over the organizational and technical disciplines of manufacturing.

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https://www.wsj.com/articles/outsourcing-our-security-1497821442