Thursday, May 31, 2012

China's fake military parts



  
Outsourcing-focused trade policy decisions since the early 1990s (Bill Clinton) that, with the enthusiastic support of major defense contractors and big technology companies, have sent much advanced U.S. electronics production to China.  When this began happening in the 90’s I stood and screamed at anybody who would listen “THIS IS NOT GOOD….IS ANYONE PAYING ATTENTION TO THIS PENDING DISASTER……DOES ANYONE CARE ABOUT WHAT THIS ALL MEANS……NOT JUST KILLING JOBS BUT COMPROMISING OUR NATIONAL SECURITY ……..HELLO…….ANYONE…..” But unfortunately nobody on the planet (besides me) cared and now here we are.  Exactly where I said we would be.

Senate Armed Services Committee has once again just reminded Americans that counterfeit imported electronics parts have been "flooding" into major U.S. military systems for years.

in 2009 and 2010 alone, staff found more than 1 million individual "suspect" parts bound for use or actually installed in several types of military aircraft, and even in the Pentagon's anti-ballistic missile systems. More than 70 percent of those suspect parts were traceable to China. 

Moreover, such counterfeiting has been public knowledge since being spotlighted in a Commerce Department report released in January 2010.  If these geniuses only found out about Chinese counterfeiting in January 2010 these people need to read my emails because I have been talking about this topic for over a decade.

The best data available indicate just how alarmingly America's vulnerability has grown. U.S. Business and Industry Council research shows that as of 2010, products from China controlled nearly 28 percent of the total U.S. market for a huge group of civilian electronic components widely used in U.S. defense goods. This Chinese market share has roughly tripled since 1997. Chinese import penetration rates are nearly as high and also surging in categories such as printed circuits, printed circuit assemblies, resistors, transformers and broadcast and wireless communications equipment.

As long as U.S. companies can supply lucrative American civilian and defense customers from very low cost, highly subsidized, regulation- and tax-free Chinese production sites in particular, the Pentagon will remain dangerously dependent on a country that's anything but friendly and whose systemically secretive, cronyist business practices can frustrate even the most intrusive - i.e. unrealistic - monitoring and inspection programs.

Although America has its own unscrupulous businesses, domestic production would be much cheaper to monitor effectively for logistical reasons alone. Don't forget the economic payoffs of recouped output, jobs, innovation capacity and taxable business activity. Throw in improved national security, and it's clear that even the substantial short-term challenges of globally restructuring this major industry don't remotely offset the upside.


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