MCLEAN, VA - The importance of restoring available credit to ensure a strong U.S. manufacturing technology industry to support the nation’s economy and defense industrial base was the subject Wednesday, May 13, when an executive from a test equipment manufacturing company testified before the U.S. Senate Banking Committee’s Economic Policy Subcommittee.
Eugene Haffely Jr., chief operating officer of Dayton, OH-based Assembly and Test Worldwide Inc., testified May 13, 2009, on his own behalf, and as a member of the Board of Directors of AMT – The Association For Manufacturing Technology, which represents America’s machine tool industry and other manufacturing technology companies that form the basis of manufacturing in the United States. Addressing the committee, Haffely said that the manufacturing technology industry is critical to building and maintaining the strong and dependable defense industrial base that enables the military to protect U.S. citizens and their ideals around the world. He testified that if nothing is done to get credit flowing again to America’s manufacturers, the country could lose its ability to create the new innovative defense systems that provide an advantage over adversaries throughout the world. Then too, there is risk of dependence on foreign sources for U.S. defense needs and national security.
In his testimony, Haffely noted that for the past seven months, banks have been denying credit to even the most creditworthy manufacturing technology companies. This lack of bank credit is threatening to drive those companies out of business. Haffely implored the committee to look to the Defense Production Act (DPA) as part of the solution. The DPA confers on the president the power to mobilize the domestic economy in order to best supply the military in the event of a wartime mobilization. It authorizes the president to direct certain industries to produce vital military products.
In order to advance America’s defense production needs, Title 3 of the DPA provides for federal loan guarantees to companies that play an important role in the nation’s defense industrial base – companies that would be important to mobilization efforts if it were necessary to move from a peacetime economy to a wartime economy.
Haffely suggested that the committee consider increasing the loan guarantee authority under Title 3 as it considers the DPA’s reauthorization this year, so that credit is available to the U.S. defense industrial base companies that are unable to get credit elsewhere in the current economic environment. This program would allow assistance to be quickly targeted and precisely applied to defense-related companies, such as those in the manufacturing technology industry, that are in desperate need of bank credit.
He further noted, however, that the current Title 3 guarantee program funding is insufficient to have an effect in this current crisis. Thus, in reauthorizing Title 3, it would be necessary to provide significantly greater lending authority to give banks the confidence to get credit flowing to manufacturing technology companies and the many other companies who make up the backbone of the defense industrial base. Reauthorization at a higher loan guarantee level would be a step toward protecting America’s national security while at the same time saving jobs and small industrial companies that are so important to our economic health.