SIC 3795
TANKS AND TANK COMPONENTS



This category covers establishments primarily engaged in manufacturing complete tanks, specialized components for tanks, and self-propelled weapons. Establishments primarily engaged in manufacturing military vehicles, except tanks and self propelled weapons, are classified in SIC 3710: Motor Vehicles and Motor Vehicle Equipment, and those manufacturing tank engines are classified in SIC 3510: International Combustion Engines, Not Elsewhere Classified.

NAICS Code(s)

336992 (Military Armored Vehicle, Tank, and Tank Component Manufacturing)

Industry Snapshot

The end of the Cold War has reduced U.S. tank production to almost nothing. From a peak of about 900 new tanks produced each year in 1987-88, no new tanks were being built in the United States at the end of the century. The only work being done was upgrading of older tanks with new equipment at the rate of about 120 tanks per year. Although orders were anticipated in the post-2000 era from Denmark, Turkey, and Greece, no tank production was underway in the mid- to late 1990s for any of America's allies. This drop in production has resulted in the consolidation and closure of many defense-related manufacturers and subcontractors with further structural adjustments needed to accommodate the proposed cutbacks.

The largest U.S. tank manufacturers, General Dynamics Corporation of Virginia and Raytheon Defense Systems, headquartered in Tucson, Arizona, have adopted different corporate strategies to survive in this uncertain environment. General Dynamics has continued to focus its business on defense contracting, filling such key niches as nuclear submarines for the Navy and a new amphibious vehicle for the Marine Corps. Raytheon diversified its offerings to cover a wide range of electronic systems.

In the early 2000s, the military was moving steadily toward lighter weight armored vehicles that were easier to transport and provided quicker penetration of troops. However, the Army's use of the heavyweight M1A2 Abrams tank and the Bradley Fighting Vehicle in the war with Iraq in 2003 highlighted the tanks' durability under the duress of combat, giving pause to the government's decision to cut all funding in 2004 aimed at improving the tanks.

Organization and Structure

The tank manufacturing and component industry has relied mostly on government procurement trends to fund both the development and production of military armor. With few exceptions, defense manufacturers are privately held. Most of the contracts issued by the U.S. Department of Defense are fixed-price contracts that cover both the research/development and production of armored vehicles. These contracts have been problematic for manufacturers because they require considerable investment during the development stage. Traditionally, even though many of these contracts are multi-year and provide compensation if cancelled, such payments usually do not cover the price of new machinery and plants. As a result, there has been a consolidation of players in the defense industry, with many manufacturers having to shed facilities and workers to remain competitive in an uncertain defense-spending environment.

Plants that manufacture tanks and tank components vary between those that are contractor owned and others that are government owned and contractor operated. In the latter case, a plant may close but the facilities remain for possible future mobilization. It is extremely expensive, however, to mothball such facilities and then reopen them.

The only tank production plant still active in the United States during the mid-1990s was the General Dynamics facility in Lima, Ohio, operated by the company's Land Systems Division. General Dynamics closed its other tank facility in Sterling Heights, Michigan, in December 1996. By the time the Detroit facility closed, manufacturing employment there had shrunk to fewer than 100 workers, from a high of about 2,500 a decade earlier. The Lima plant was capable of assembling completed tanks as well as producing tank components. While the Lima plant was responsible for the assembly of the M1A1 and M1A2 tanks, it relied on countless subcontractors across the United States to supply it with key components in the tank assembly process. By 1997, the plant in Lima was upgrading about 120 older tanks a year for the U.S. Army, the sole tank production work being done at that time. Long-range plans to develop the next-generation Block III tank were scrapped for budgetary reasons in the early '90s. Some long-range planning was underway but no completely new tanks were expected to be produced until after the year 2010 at the earliest.

Background and Development

The tank, a British invention from World War I, had the mission of advancing on the static German defense lines in northern France. It was developed to flatten thick coils of barbed wire, fend off machine-gun fire, and to rumble over previously inviolable trenches. In short, the tank was to do what great waves of infantrymen had failed to do—break the stalemate of trench warfare.

The tank performed as required during World War I, but was viewed by most strategists as merely a precursor to infantry attack. That sentiment was ultimately put to rest by the German blitzkrieg into Poland in September of 1939, when a Polish brigade of cavalry vainly attacked an onrushing wedge of German tanks.

In June of 1920, the U.S. National Defense Act was passed into law. This act disbanded the army's tank corps, a unit created three years previously, and placed all tanks under the command of the infantry branch. Further, the act stipulated that no new branch of the army, such as a revived tank corps, could be created without congressional approval. This decision was based on the army's conclusion that the tank corps had failed to provide either a doctrine or a justification for itself as an independent arm of the American war effort.

The early perception was that the tank-based armies of the twentieth century were slower then the foot soldier's marching rate of a century before. This speculation concerning tank warfare inhibited its role as a support weapon for the infantry for years.

Following World War I, the most plausible threat to U.S. security was a naval war in the Pacific against Japan. In the following decade, Congress reduced the military budget. Senior officers cut costs by halting production and maintenance of equipment. Inevitably, tanks suffered from this policy, and the U.S. Army had no large tank formations during this inter-war period.

The beginning of the mechanization of the U.S. Army began in 1928 after Secretary of War Dwight D. Davies observed the British Army's Experimental Mechanical Armed Force. In response, the United States developed the Christie, complete with a modern suspension system and capable of speeds approaching 40 miles per hour. It was during this period that the war department recognized that the development of future armies depended on the proliferation of a mechanized force. The tank was, for the first time, perceived as an offensive power in its own right.

In the spring of 1939, America's main battle tanks were still the M1917 and the Mark VIII of World War I vintage. In the previous several years the army had produced several hundred tanks, the majority being experimental models of light tanks armored with only machine guns. Although some effort had been made to keep the United States abreast of mechanized warfare, until the outbreak of World War II the American experience of armor hardly existed.

Following the collapse of France in June of 1940, Congress passed a munitions program to provide material for an army of 1.2 million. Supplemental defense appropriations acts authorized $5 billion for armed forces expenditure. By the end of 1940, the country had produced only 331 tanks. By the end of 1941, it had outproduced Germany with 4,052 tanks. Tank production for the next two years was 24,997 and 29,497 tanks, respectively. By the end of the war in Europe, American industry had produced 88,410 tanks, of which 57,027 were medium tanks. More than 8,000 subcontractors working in some 850 different towns and cities throughout the United States had a hand in the production of these tanks.

By 1943, the U.S. Army had created 16 armored divisions and 65 independent tank battalions. Each of these armored divisions consisted of 10,937 men and 2,650 vehicles, of which 248 were tanks. Tanks were used as a highly mobile force for pursuit, exploitation, and disruption of unarmored forces, rather than as an arm of attack against other armored formations. This doctrine had important consequences for American tank design and development. The first of the wartime tanks, the M3 Stuart light tank and M3 Grant/Lee medium tank, were developed from pre-war designs. The main American battle tank of the war, the M4 Sherman, was first planned in March of 1941 and produced a year later. Weighing approximately 33 tons and equipped with a 75 mm dual-purpose gun, it was highly maneuverable and reliable and boasted a road speed of just under 30 miles per hour (mph).

The U.S. responded to Germany's Panther and Tiger tanks by producing the M26 Pershing. This tank held a 90 mm gun, weighed 42.5 tons, and had a top speed of 25 mph. This tank, however, played a relatively small role in the war because it had less speed and maneuverability than the M4 Sherman and because tactical air power was generally used to halt the German armored thrust. By 1947, due to the success of air power and the invention of atomic weapons, the role of the tank had again come into question.

During the Korean War, American tanks proved less than perfect. The M26 Pershing was underpowered for Korea's mountainous terrain, and the army at first was compelled to rely upon its Sherman tanks. The army eventually added the more powerful M46 and M47 Patton tanks to its lineup. In fact, the Korean War confirmed the tank's role as an essential part of the U.S. fighting forces. The heavier armor developed during this conflict changed the tank's principal role to fighting and destroying other tanks.

Throughout the 1950s and early 1960s, the U.S. Army continued to regard its armored forces as central to its fighting doctrine. When U.S. forces were committed to Vietnam in 1965, however, armor had a reduced role. Still, the M48 tanks' firepower and mobility were valuable assets in creating quick reaction teams for preventing infiltration by enemy units. But to work well, the teams had to be part of an all-arms formation; without helicopters, air and artillery support, and infantry, the armored units could be unwieldy, noisy, and less then effective. Tank battalions successfully carried out roles such as route security, convoy escort, and border protection.

There were no major developments in the tanks industry during the 1970s. The anti-war movement of the late 1960s and early 1970s—coupled with the perception that the United States had fought a losing battle—resulted in the redeployment of government resources into domestic endeavors. In 1980, however, President Reagan vowed to rearm America with an unprecedented $1.6 trillion defense spending program over the next six years. The Defense Department's renewed interest in planning and multi-year funding of contracts boosted the sagging defense industry. The tanks and tank component sector of the defense industry was expected to grow by 12.6 percent over this period with nondefense growth hovering at 4.5 percent.

The army's M-1 tank benefited greatly from the increased defense expenditures. A heavy tank with a combat load of 54.5 tons, the M-1 was able to carry a crew of four and had a maximum speed of 45 mph on the road and 30 mph cross country. The tank's road range stood at 275 miles and its main armament was a 105 mm gun. The M-1 tank was criticized for transmission malfunctions and the need for frequent maintenance of other components during the test process. In addition, the M-1 was found to be incapable of digging itself into a hull-down battle position without the assistance of bulldozers. Nonetheless, the Defense Department budgeted for 7,058 M-1s at a cost of roughly $19 billion.

By 1986, defense budget outlays had grown to $200 million annually. These high levels of defense spending stimulated many U.S. industries. In 1986, 75 sectors of the economy produced at least 5 percent of output for defense purposes and 13 sectors produced at least 30 percent of output for delivery to the U.S. Department of Defense. The passage of the Gramm-Rudman deficit reduction bill, as well as reduced government research and development budgets, however, resulted in declines in defense production throughout the remainder of the 1980s.

The multi-year structure of re-armature programs from the 1980s temporarily insulated the defense industry from budget cuts. In the wake of reduced defense expenditures, many manufacturers began looking to foreign markets to maintain and expand their production base.

Significant events in the 1990s that had a major impact on defense forces and their supporting industries included the departure of Soviet forces from Eastern Europe; the dismantling of the Warsaw Pact; the reunification of East and West Germany; the successful eviction of Iraq from Kuwait by the Allied coalition forces; and various United Nations peacekeeping efforts. The very success of Operation Desert Storm prompted questioning in the U.S. legislature about the rationale behind developing new, costly weapons systems. (The ground war lasted just 100 hours with little loss of life or equipment on the Allied Coalition side while Iraqi forces suffered massive losses in both men and equipment.)

For the first time in 13 years, President Clinton authorized an increase in defense procurement spending for the year 2000. The U.S. Army was in the third year of a 1996 contract with General Dynamics to upgrade 600 M1A2s. The digital command and control capabilities, new infrared gunner systems, and upgraded commander thermal sights were part of the ongoing Systems Enhancement Package (SEP). Further improvements in the upgrade included under-armor auxiliary power units, a new computer mass memory unit and color display and maps. There was also ongoing fielding of M1A2 tanks to both Fort Hood, Texas and Fort Carson, Florida in 1999.

The trend toward private venture projects and cooperative agreements with foreign countries is necessary for the survival of U.S. defense manufacturers. General Dynamics, for example, expects to build between 500 and 1,000 tanks for Turkey between 2000 and 2010. This joint venture operation will see the tanks designed here but both components and final assembly taking place jointly in both countries. General Dynamics also expects to produce between 200 and 500 tanks for Greece in the period after 1999.

The Land Systems unit of General Dynamics estimated delivery of 240 M1A2 Systems Enhancement Packages to the U.S. Army at a rate of 10 per month, beginning August 1999. An extension of that multi-year contract included refurbishing additional tanks through the year 2005.

Raytheon Company received a $13.3 million contract for the development of the Tank Extended Range Munition (TERM) for the Army's M1A2 tanks in 1999. This program is divided into two segments. Phase 2 will provide a multi-mode seeker and chemical energy warhead. Phase 2A, to begin in 2002, will fabricate the multi-mode seeker components, develop software and fusion algorithms, and integrate hardware.

Current Conditions

General Dynamics is the sole source of major battle tanks for the U.S. Army. Although the company completed its contract of 600 M1A2 Abrams tanks in 2001, manufactured in Lima, Ohio, the company continues to produce Abrams tanks for its international customers. For example, Egypt purchased 777 M1A1 tank kits, Saudi Arabia bought 315 M1A2 Abrams tanks, and Kuwait purchased 218 M1A2 Abrams tanks. The company was awarded a multi-year U.S. military contract for 307 M1A2 Abrams System Enhancement Program tanks to upgrade the existing systems, with production complete by 2004.

The tank played a key role in the 2003 invasion of Iraq. With press coverage at an unprecedented high, millions of Americans watched U.S. tanks roll across the desert on their way to Baghdad. Although the Pentagon ended plans for further improvement programs for both the M1A2 Abrams tank and the Bradley Fighting Vehicle in its fiscal 2004 budget, the future role of the heavy-duty tanks could now come under review. However, clearly the U.S. military is moving rapidly toward lightweight, quick-response vehicles that are not as cumbersome as the old 70-ton tank. The value of shipments made by the industry in 2001 totaled $1.2 billion.

Industry Leaders

Based in the Falls Church, Virginia, General Dynamics Corporation is among the nation's largest defense contractors and produces a wide range of major weapons systems for all branches of the armed forces. In 2002 the company had $13.8 billion in sales, resulting in a net income of $917 million. By the late 1990s, the company had concentrated its work in a few key areas: shipbuilding and marine systems, land and amphibious combat systems, information systems, and business aviation. The company's Land Systems division produced the upgraded M1A2 battle tank, radios for the army, and was working on the Advanced Amphibious Assault Vehicle for the Marine Corps.

Raytheon Systems Company, a global leader in defense electronics, was made up of five divisions: Defense Systems, Sensors and Electrical Systems, Command Control, Communications and Information Systems, Aircraft Integration Systems, and Training and Services. Raytheon Defense Systems Segment (DSS), headquartered in Tucson, Arizona, consisted of three business divisions that focused on total mission solutions in the areas of Combat Ground, Combat Air, Undersea Warfare, Air Defense, and Surface Navy. Raytheon reported revenues of $16.8 billion in 2002, resulting in a net loss of $640 million.

Subcontractors make up the remainder of the industry players in the tank and tank components industry. This group includes not only many of the top ten defense manufacturers, but also hundreds of smaller entities that produce more specialized and highly sophisticated subsystem equipment.

Workforce

In 2001 the industry employed 4,110 workers, down from 5,773 in 1997. In the tank and tank components industry, approximately 48 percent of the plant labor force is directly engaged in production, while the remaining 52 percent is engaged in management and support functions.

America and the World

The United States' tank and tank components industry is the largest and most technically advanced in the world. The health of the industry is closely tied to its ability to forge international cooperative agreements with larger arms-producing countries such as Russia, Germany, Britain, France, and China and to increase foreign military sales of tanks and tank conversion kits. The reduction in the U.S. military budget has had a direct impact on the ability of defense manufacturers to compete in foreign markets. Foreign sales of tank and tank components are an essential element in the survival of U.S. tank production facilities. In order to achieve this goal, the industry requires a sound and profitable production base to invest in the future and to maintain current cost/pricing levels. By protecting the industrial base, the United States will be able to honor pricing levels in completed foreign tank sales contracts and to assure foreigners of the U.S. manufacturers' ability to meet future demand at competitive pricing levels.

International sales of the Abrams M1A1 kits and M1A2 tanks had been strong in the Middle East near the century's end. Egypt, Greece, Turkey, Saudi Arabia, and Qatar expressed interest in the M1 tanks. Therefore, the U.S. Army and General Dynamics combined efforts to upgrade the tanks for sales to these countries. These opportunities abroad represent a market potential of more than $5 billion.

Research and Technology

Research and development funding in the tank industry has suffered along with production as defense spending dwindled. That which continues focuses on upgrades of systems dealing with targeting and night vision. Much of the production in the defense industries is inherently inefficient because high volume, mass production techniques are not applicable. Except for the turret and hull components of a tank, most of the production involves small batch processing of relatively complex items with frequent modifications or changes in design. In this type of low volume manufacturing, specialized equipment is under utilized and inventories are relatively high.

Although computer-aided automation has moved slowly into the tank production process, computer-controlled machine tools are standard fixtures in machining operations. Examples of these processes include automated spray systems used for coating metals; automated inspection and optical measuring systems; and computeraided manufacturing applications used for forging and electron beam welding in tank production. Other areas of the production process which have been computerized consist of process modeling, performance measurement, and on-line production information systems.

Many of the technological changes that have taken place in tank manufacturing involve metalworking. Automated metal cutting systems are in place that use computer-controlled laser machining techniques. Computer-integrated welding systems are in places that make use of sensory process controls. The technology is available to transform the manufacturing system of tank production facilities into a totally computer-integrated process, but the economies of scale associated with expensive outlays in plant and equipment have deterred the manufacturers from pursuing this option.

In the mid-1990s, main battle tanks possessed nuclear, biological, and chemical (NBC) systems that regulate the environment within the tank in case of this type of warfare. The Department of Defense has made land navigational systems a priority for improvement and installation in all tank subsystems. In the wake of Operation Desert Storm, more emphasis was placed in the development of friend or foe devices to reduce friendly fire causalities. Such technology would become a part of the tank's vehicle protection system, which already includes threat displays, sensors, and decoy launchers.

Other areas of research include ways to construct smaller and lighter main battle tanks, armored turrets to protect the vulnerable top of the tank, development of more powerful cannons, experimentation into a common chassis for futuristic combat vehicles, guns that will utilize electromagnetic and electrothermal cannons. Electromagnetic guns use electric currents as their power source and can power a round farther and faster than a conventional cannon. Electrothermal guns use hot gases and a high-energy charge to propel artillery with comparable results.

By 1999 the Abrams tank contained many of the aforementioned upgrades making it superior on the battlefield. The upgraded guns, combined with a 1,500 horsepower turbine engine and special armor, made the tank suitable for both attack and defense. The tanks featured increased armor protection; suspension improvements; nuclear, biological and chemical protection; a Commander's Thermal Viewer and improved weapon station; data and power architecture; an embedded diagnostic system; and an upgraded fire control system. The new radio interface was compatible anywhere on the battlefield.

Further Reading

Baumgardner, Neil. "Army Accepts First Anniston-Assembled Interim Armored Vehicle." Defense Daily, 5 April 2002.

——. "United Defense Believes Its FCS 'Prototypes' Could be Ready for 2008." Defense Daily, 29 October 2002.

Brosky, John. "New Land Forces for a New Century." Armada International, February/March 2003, 72-80.

Erwin, Sandra I. "Army Confident About Move to Wheeled Combat Vehicle." National Defense, September 2001, 22.

General Dynamics. "Land Systems," 2003. Available from http://www.generaldynamics.com .

General Dynamics. Press Releases, 1999. Available from http://www.gdls.com .

Kennedy, Harold. "Army Overhauls Its 70-Ton Behemoth—The Abrams Tank." National Defense, September 2001, 26.

Maxwell, David. "New Tanks for Old." Armada International, December 2002/January 2003, 6.

Squeo, Anne Marie, and Greg Jaffe. "War's Early Lessons May Curb Enthusiasm for Older Weapons." Wall Street Journal, 11 April 2003, A4.

Strong, Michael, Brent Snavely, Laura Bailey, Terry Kosdrosky, and Amy Lane. "War Stories." Crain's Detroit Business, 24 March 2003, 24.

Triggs, Marcia. "Stryker Gets New Armor, Decreases in Weight." U.S. Army, 9 March 2002. Available from http://www.army.mil .

U.S. Army. Technology. 1999. Available from http://www.army-technology.com .

U.S. Census Bureau. Statistics for Industry Groups and Industries: 2001, January 2003. Available from http://www.census.gov .



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