Defense Critical Supply Chain Task Force with Rep. Elissa Slotkin

ACME General: Welcome to Accelerate Defense, a podcast from ACME General Corp. I’m Ken Harbaugh, Principal at ACME, and host of this month’s episode. On Accelerate Defense, we hear from political figures, military professionals, and other thought leaders about how innovation shapes our national security landscape.

My guest today is Congresswoman Elissa Slotkin. She’s a former CIA analyst and was the acting assistant secretary of defense for International Security Affairs from 2015 to 2017. Now she represents Michigan’s eighth congressional district. As a member of the House Armed Services Committee, she chaired the bi-partisan Defense Critical Supply Chain Task Force, which recently released its final report. And she’s also a good friend, Elissa, Thanks so much for coming on Accelerate Defense.

Elissa Slotkin: Thanks for having me, Ken.

ACME General: So, it goes without saying that it has been an incredibly challenging time in Washington for anything with a bipartisan label on it. Can you tell me why it was so important to present this report from the Defense Critical Supply Chain Task Force as a robustly bipartisan effort?

ES: Yeah, I mean, I think for me, when I came up with the idea of the task force, it was really born of the experience during COVID that pretty much all members of Congress had Democrat or Republican, which was a year plus ago. I found myself in the middle of the night negotiating with the Chinese middlemen for a 78 cent mask for my frontline healthcare workers. And throughout the year, we really were constantly fielding calls and requests and sort of desperate asks for help from our constituents in various capacities because our supply chains had fundamentally failed. I mean, if a Congresswoman from Michigan without a private sector background is negotiating for masks in the middle of the night, something has failed. And I started thinking about, well, if that’s gone on in the private sector here, what the heck is going on with our defense supply chains? The supply chains that keep our military running.

And I came up with the idea, I went to representative Mike Gallagher, who is also on the House Armed Services Committee with me. And he had been thinking about the same things. And we went with the proposal and it was really important to me that we have equal numbers of Democrats and Republicans that we agree on our final recommendations, which are now being converted into amendments, and hopefully will become law, and to serve as an example, when we had these hearings we had nine or 10 hearings with different witnesses that on issues that are critical to our economic security and our national security, there are still people who can work across the aisle. And so that’s what we did.

ACME General: So it was your idea inspired by the fact that COVID revealed so many vulnerabilities in our supply chains, but those vulnerabilities were exposed, not presented as a result of COVID. I mean, these have been deep-seated problems in our supply chains. They persist to this day. Can you share with us maybe some examples that don’t have to do with the COVID supply chain? I’ve heard you talk about one from your district, the two GM plants. This is a systemic issue that goes way beyond COVID supply.

ES: Yeah. So the first thing we had to do was figure out, I mean, the supply chain for the department of defenses is enormous and not all supply chains are created equal. We had to basically come up with a list of critical supply chains, and that’s a hard thing to do, right? Because all of a sudden you may not think about a certain widget, but that widget can become very important if you can’t get ahold of it. So, we nailed down what we thought were a list of critical items, and that includes, frankly, microchips and the rare earth minerals that make them. And it was amazing. Right in the middle of this task force, all the chickens came home to roost on microchips in particular. And I do, I represent two GM factories and one of them was shut down for almost six weeks because we couldn’t get a 14 cent microchip.

We know that there’s a shortage across the world, basically, but it’s particularly exacerbated because the chip makers of the world want to make chips for our iPads, for our iPhones those sort of 5G capable chips. But people in the auto industry will tell you, the same thing with the military auto vehicle industry that we rely on a different type of chip. And no one wants to make that right now. So we had the ability to really like dig and go into the military supply chain when it came to micro electronics and microchips and rare earth minerals. And they were having the same exact problems as GM, and the big autos. So that’s become a particular area of focus for us, but there were other ones, there were very low tech examples as well. I mean, things like pharmaceuticals, the active pharmaceutical ingredients. Imagine, Ken, you were in the military. If the active duty force couldn’t get ahold of antibiotics or couldn’t get a hold of insulin we were lucky that there weren’t shortages of these things. So we really identified what was critical and certainly microchips is right up there.

ACME General: So you hit three of the four, I think we’ll just round it out by running down the list, you have semiconductors, rare earths, active pharmaceuticals, and the fourth is energetic materials. Right? You uncovered some especially worrying facts about the supply of energetics that the Army actually brought to you, right?

ES: Yeah. I mean, I think the whole process over the four months or so that we were working was kind of the equivalent of picking up the rug and looking at all the creepy crawlies underneath. And I think on the issue in particular of the propellant, that’s in a of our munitions, a lot of our ammunition, that that story was the one that really got a lot of us… The Pentagon came to us and they were briefing us. And we know many, if your listeners are hunters, they know there’s an ammunition shortage right now, people have been buying a lot of weapons, a lot of ammunition. And that includes shortages in cases for the military. So of course, ammunition and munitions are made all over the country, all over the world. But the propellant that goes in 90% of the military’s munitions is single sourced to China.

So, the irony, right, that China, as one of our certainly competitors, and some would say adversaries, the irony that we could have a munition shortage, should we ever need to go to war with China, because the propellant for those munitions is made single sourced in China was not lost on anyone Democrat or Republican, former military or not. So, the Pentagon in this case had actually been really flexible and nimble and had used the defense production act to try and mitigate that problem. But that’s the kind of thing that, unless you’re really looking at supply chains in a thoughtful way, you can miss and find yourself in a whole lot of hot water.

ACME General: A lot of the report focuses on the opacity of defense supply chain, something that seems really, really basic, and that the DOD half the time or more doesn’t even know, or cannot tell what is going into the end product. You made that a priority. Why?

ES: Yeah. I mean, I think, again, this is where I learned a lot of lessons from listening to GM. The military was never required to understand exactly where their supply chains were coming from. Of course, we understand that there’s a very specific buy-American requirements that are on the defense department, but not on every single widget and every single piece and every single plane, or ship that we make. And when we started asking the question how would you… Please provide us some transparency. Where does all this stuff come from? They were open about the fact that they just didn’t know in all cases that between contractors, subcontractors going down the tiers of suppliers, that they couldn’t account for every single part of their supply chain. In some cases we heard from the big defense contractors that they wouldn’t even try, it was like too big of a problem.

And I can tell you that answer did not sit well with me and many of the members of our task force. So a lot of the recommendations are like, you got to get a handle and get some transparency on this. And you’re right, it sounds basic, but you talk to a company like GM and they’ll tell you, they sort of realized in December of 2020 that they were going to have shortages in the early spring of 2021. You better believe that GM has gotten religion on transparency in their supply chain, and if a big multinational corporation like that can do it, so can the US military.

ACME General: You go well beyond the buy American requirements that attach to some of these pipelines and coin a new phrase, which I want you to talk about. I think it’s original to the report, ally and friend shoring. What is that and what do you hope to achieve with it?

ES: Well, I’m a good Midwesterner, a Michigander. So of course I want every single thing manufactured and used in the military to be made in the United States, and preferably in Michigan, but that’s just not realistic. And I think what we realized really quickly when we started investigating our supply chains here in the United States is that our allies and partners were having some of the same heartburn, right? They were also dependent on a lot of things, single sourced to China. They were also really vulnerable during COVID and some of the same issues and what we started to, to really think about, and what we made a lot of recommendations on is like, “Look, let’s kind of team up here where possible”, especially with our English speaking cousins, right? The Canadians, the Australians, the Brits, they were having the same problem. So why wouldn’t we talk about supply chains as a strategic problem we’re all having and pool our resources, right?

If we all know that we will buy from a third country particular items, if we could possibly inspire more investment in another country, excluding China, let’s have that conversation and let’s do that. And then if friendly nations, partner nations, were willing to work with us, partner with us to invest in certain things that we need so that we weren’t just dependent on a place like China, we could be having relationships with the Romanians or the Vietnamese. I mean, that’s what we think there’s a lot to do on is to sort of build this up as a coalition issue almost, and get our private sector leaders talking to each other. We’re all complaining that we’re dependent on a place like China, so let’s deal with that problem and diversify our supply chains.

ACME General: One of the themes we have been exploring here on Accelerate Defense is this contest between efficiency, and resilience. We recently had Dr. Melissa Flag on talking about her war against efficiency. And when I think about it in the context of this conversation and the globalization of supply chains and the dependence upon competitors, like China for propellant, or Russia for rare earths, that’s an exercise in efficiency, but it really damages resilience. Do you ever think about it in those terms that there is a trade off, and the pendulum has swung too far in the direction of efficiency?

ES: Yeah. I mean, look, coming from Michigan, the autos have been using just-in-time delivery for 30 years and they’ve really gotten hyper efficient at it. And that’s why when the shortage came about, it was just a hop, skip, and a jump until they were shutting down manufacturing lines, because they just didn’t have something stored up for a rainy day. I mean, they just didn’t. So, I think, the whole world is thinking about that trade off now, I do think that it’s interesting, I think about resilience and being able to sort of take and absorb a shock as kind of the new deterrence for the 21st century. And I think about it for our supply chains. Are we able to still make our Humvees or put together our uniforms, make those MRE’s if there’s some sort of external shock to the supply chain, but also I think about it in terms of like cyber security, right?

I mean, the colonial pipeline attack was a ransomware attack. People looking to make money, but it was super effective, and it caused gas lines, and gas shortages on the east coast. If you’re a country like China or Russia and you’re looking at that, you’re like, “Huh, they’re just not that resilient.” I mean, a small threat, like that can really impact a good portion of the United States that inspires more attacks. So, if we are more resilient and we can absorb the hits, if we become less attractive, our infrastructure becomes a less attractive as a target. So I think it’s super important to think about resilience, not just because we want to be able to absorb shocks, but because I think it actually has to do with our deterrence going forward.

ACME General: That’s an interesting way to put it because in other conversations, other interviews you’ve given about the report you talk about not just looking inwardly at our vulnerabilities and the need for increased resilience, but researching cataloging, understanding near peer country vulnerabilities as well in their supply chains. Can you speak to that? It doesn’t really come out in the report, but it’s a particularly interesting feature of your conversations about it.

ES: Yeah. I mean, I think maybe this comes from me having a defense background. And so I tend to look at sort of military versus military competition. And I think when it comes to supply chain, that’s important. We need to know where we have dependencies. We need to make sure those dependencies don’t influence our decisions about whether to get into a limited contact or a conflict or not. I mean, that’s the thing that got me worried, is if we are dependent on China for a bunch of things, and they continue to be aggressive in the South China Sea, and we don’t have freedom of navigation in, and around these islands that they’re building, would we somehow change our decision-making based on our dependencies on China economically? That is a problem for someone who cares about national defense. But I also think we need to have, I need, and we all need to have a more well-rounded view when we look at the competition with a place like China.

And it was actually the secretary of agriculture of all people, Secretary Vilsack, who reminded me, because I was concerned and I was talking to him, we happened to be together in my district. And I said, “I’m worried about our supply chains. And we’re so dependent on China”, and I’m going on. And he said, “Yes.” And they depend on us for 30% of their food.” And it sort of stopped me in my tracks because while I had been looking at our vulnerabilities, I hadn’t been considering their vulnerabilities. And it really needs to be like a 360 degree conversation. We need to understand where they’re dependent on us and we need to understand what we’re depended on them to have a real sense of the chess board.

ACME General: Are you suggesting a follow on report?

ES: Well I’d always have to talk to the chairman of the House Armed Services Committee. He is the one who gave us the writ to do this task force, but I think it’s actually bigger than defense, right? It’s bigger than the House Armed Services Committee. The United States is not great at combining kind of our economic policy with our military policy, our foreign aid policy, our trade policy. And if we’re moving into a decade where competition with China is going to increase, we better get that three-dimensional chess going, but it’s well beyond just the military conversation.

ACME General: I’m really glad you’re taking us there because I wanted to provoke that conversation, this report is about the defense critical supply chain, but there are so many nodes in our economy that are really single points of failure that don’t fall under that category of defense supply. Right? I mean, if we all lost the ability to use our phones, the country would fall apart, at least my kids’ social lives would. So how do you expand the learnings from this report to prompt other committees or other industries to seriously consider their vulnerabilities? Or is it already happening? Are there things you still need to do?

ES: Yeah, well, there’s definitely things we still need to do, but I think I know that I’ve been prompting the conversation and having the conversation, particularly about our food supply chain. Because you want to talk about another supply chain that’s absolutely critical? Imagine if we couldn’t feed ourselves as a country, right? It’s a wonderful thing that the United States still can feed itself. And if, God forbid, during COVID, we couldn’t get our food imports in, we would still be able to feed our nation. Wouldn’t be as exciting sometimes, we wouldn’t have our favorite specialty items, but we’d be able to feed ourselves. I don’t think that people looked at that as a deliberate strategic issue, but you better believe it should be looked at that way. And luckily in Michigan, our senior Senator, Debbie Stabenow, is the chairwoman of the Ag committee in the Senate.

So she and I have started to have this conversation about the food supply chain, and how to think about it strategically, how to put things into law that make sure we never lose the ability to feed ourselves. That’s a farm policy, food policy conversation. You can’t kick a bunch of farmers out of their small farms if your goal is to always be able to feed ourselves here in the United States, you have to think about that. And so we’ve, because part of the reason I had the secretary of agriculture in Michigan was to talk about the agricultural supply chain, the food supply chain, not to mention all the meat processing plants and all the angst that’s been going on around our ability to process our food. So, I certainly have taken the learning I’ve done on the defense supply chains and started to apply it on the agricultural side, the food side.

ACME General: For the lay person listening. And you’ve set this up nicely. Can you paint a picture of a worst case scenario? Say, for instance, there is a real kinetic contest over Taiwan. What might happen?

ES: You mean in general, or with supply chain?

ACME General: Specific to supply chains, just how vulnerable are we? COVID exposed, some of those acute vulnerabilities in the civilian sector, but what happens to our defense posture if the supplier for our defense industry decides to quit supplying?

ES: Yeah, I mean, I think, the worst case scenario that I have thought a lot about is China goes into Taiwan, the microchip plants that are largely based in Taiwan are seized. China ceases to export rare earth minerals to the United States, so we have no opportunity to really make our own microchips in our burgeoning semiconductor industry. So, no one could get any new electronics. And then at the same time, the Chinese who are working hard at being able to be very competitive in space, they have the ability or soon will have the ability to make us go blind, make us go deaf, and affect our ability to even use the phones that we do have, use the electronics that we do have, use anything that’s satellite connected in our country, which is so many things now.

That to me is really one of the worst case scenarios that not only can we not… And then the military situation that stems from their takeover of Taiwan, but their ability to have us go blind and go deaf, their ability to control the supply of future electronics, I think, is not to mention what it does for their power projection as a world, a global leader, is a real worst case scenario.

ACME General: So, to stave that off, you make a number of recommendations. If you’ve got a shorthand for them, I invite that, but I’m not going to read down the list. They’re all good, but they’re detailed. Do you have the quick version of it? Otherwise I’ll ask a couple of specific questions about it.

ES: Yeah, I mean, I think the recommendations are basically, hey, Pentagon, get a handle on your supply chains, get some transparency, get a framework to get more awareness on your own supply chain, so you know the problem’s coming around the corner. Work with allies and partners to diversify our supply chains, and then come back to us, and show us your work, and recognize your supply chain as both a strategic opportunity and a strategic vulnerability, and treat it as such. That, to me, is the short version.

ACME General: That is really well summarized. I’m glad I asked. There was one, however, that kind of stands apart that I found really interesting. And the more I read about how you came to this one, the more appreciative I was, and it’s about workforce. Can you talk about the intersection of workforce and the defense supply chain?

ES: Sure. Well, actually this one’s easy to explain because I think probably most Americans are aware that we’re having a really hard time getting people to work right now. And that’s the reason if the average American goes out to a restaurant or goes out somewhere maybe the service is slow. Maybe they can’t even open the dining room it’s because we can’t get people to work at this moment. Well, imagine that in the world of skilled trades and the people who make all this defense equipment that we want to make in America. If you can’t get enough people to go into the skilled trades, if you can’t attract enough talent, then we can have all the buy-American requirements, and law that we want. But if you can’t actually physically make it because you don’t have the workforce, you have a problem.

So we really started to feel that the workforce was kind of part of the supply chain, that you got to invest in programs that bring people into the skilled trades that allow people to apprentice in the skilled trades, that allow them to have good jobs, good paying long lasting jobs for a lifetime in those skilled trades that serve the defense industry. And if you don’t, if you only focus on the equipment and the stuff that you’re making and not on the people who are there to make it for you, you’re missing the full picture.

ACME General: I’m glad you included it. Certainly a huge theme here in Ohio. Last serious question, I’ve got one to close with, but last serious one. You have really talked a lot about the acquisition process, which isn’t a focus of this, but it’s something that we harp on again and again, here at Accelerate Defense. Can you talk about the reforms needed there and your concerns about the valley of death and the importance of reconcile, the different cultures and some of your concerns related to how we get kit in the DOD?

ES: Yeah, so everybody and their brother, I think at this point in the defense circles knows that we are not doing a great job in the Pentagon at quickly incorporating the newest and best technology American made, and American designed technology into our military. And that while we might be able to get a pilot program going some company out of Silicon Valley gets like some little start starter money, that valley of death, as you outlined, to going from start pilot program, starter pilot program to program of record is just, it’s sort of missing the mark and we’re not converting the best technology into our doctrine and into how we work in the military. So, I think we’ve all like admired the problem a lot, coming up with a solution is much, much more complicated. So, first, before my time in Congress, there was a lot of emphasis around changing the law so that the Pentagon had more flexibility on acquisition.

And that was done, frankly, under multiple administrations. There are a lot of different authorities out there that the Pentagon can use. I think at this point they have the authorities, they need. It’s culture that’s holding us back and that is a way harder thing to fix. And the way that I try and talk to people about this is just frankly, trying to spook them a little bit with what happens if we don’t change the culture. If we don’t change the culture around acquisition and bringing in the best, and brightest talent, and ideas, I think it’s a fair statement to say that within a decade, we could lose our military edge over China. And no one living knows what it’s like to have a world where the United States is not the dominant military actor.

We’re already starting to see countries hedge their bets. Countries, who for decades, and decades would drop everything to work with the United States of America who are now, yes, talking to us, but also hedging their bets and talking to the Chinese. If we do not deal with our culture problem, if we do not deal with our ability to quickly incorporate these ideas, which of course the Chinese government being, not a democracy being an autocratic regime, they can just decide to make these strategic investments in new technology, like artificial intelligence, and directed energy and tools and space. If we don’t see this problem for what it is, we’re going to be admiring the problem, right through losing our military edge over China.

ACME General: You have a background as an analyst in CIA. I’m sure you wear that hat from time to time in assessing these threats and opportunities, with some benefit of hindsight, do you think that engagement with China was a strategic mistake?

ES: No. I never think, I mean, if you’re a CIA analyst, you want as much information as you can get. And a lot of that information comes from engaging with a country or with a group, right? It’s part of the reason it was so hard to figure out that we had sort of had the ability to win the Cold War so much earlier than it actually ended. We just didn’t have great information on what was truly going on with the Soviet economy and the Soviet military. So I always want to have proximity to any country, or group that I’m trying to understand, but I think what we could have done differently is brought a bit more skepticism to that engagement, and put more red lines on the Chinese, particularly as it comes to adhering to international norms and standards.

I mean, we watched, and we were sort of encouraging them to become part of the family of nations while they were stealing all our intellectual property. And I think the fact that we haven’t set clear boundaries on that and haven’t rallied the free world to set boundaries on that is on us. We’ve allowed them to think that cheating is okay and they can still come to all the big meetings and engage with us even though they’re cheating. So, I think that engagement is fine. You negotiate with your enemies, that’s how diplomacy gets done, but we could have been much more clear that if you want to be in the family of nations and be taken seriously, you need to adhere to the same norms and standards that the rest of us do.

ACME General: Well, thanks, Elissa. This has been great. Last question, and for those who do know you, they will appreciate this as a respectful question. I know your backstory, I’ve heard your stump speech. It’s one of the best. So can you explain to us how a hot dog is not a sandwich?

ES: I’m actually just straight up offended by the idea that a hot dog could ever be considered a sandwich and for all of your listeners who think that it’s a sandwich, I don’t know what’s wrong with you and you need to seek help. It is not a sandwich. A hot dog, the glory is in the middle, and the bun is just a side show. And I don’t know what to tell you other than the hot dog is the star of the show. And the bun is just the carrying case. And so it is not in my book, a sandwich.

ACME General: And in addition to being CIA, and a member of Congress, your hotdog authority comes from where?

ES: Yeah, we are hot dog people in my family. My family had a meat company, a family meat business that my great grandfather founded and my grandfather took over, and my dad and his brothers ran. And we did all the meat for Nathan’s hot dogs for the first 50 years. And we invented the ballpark frank at Tiger Stadium. So we are hot dog people.

ACME General: Well, as the world begins to open back up, let’s share a game and a hot dog, not a sandwich, sometime soon. It’s been great Elissa.

ES: Thanks, Ken.

ACME General: Thanks again to Congresswoman Slotkin for joining us on this month’s episode of Accelerate Defense.

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Accelerate Defense is a monthly podcast from ACME General Corp. Our producer is Isabel Robertson. Audio engineer is Sean Rule-Hoffman. Special thanks to the team at ACME. I’m Ken Harbaugh, and this is Accelerate Defense. Thanks for listening.