Selected Analysis

Wartime Lessons for Industrial Mobilization in a Time of Pandemic

Some six months after Pearl Harbor, with American industry in a desperate rush to build tanks, planes and ships to defeat Japan, the Higgins shipyard had no choice but to relinquish a contract it had signed only months earlier to build cargo ships. Higgins lacked the steel it needed. An exasperated New York Times editorial board asked: “Could not this shortage of steel have been foreseen when the contract was signed, or even months before then?”

Today, the world faces COVID-19, an emergency that many have compared to a war-like crisis. Countries around the globe struggle with multiple critical shortages in medical supplies and equipment. With COVID-19 cases rising rapidly, these shortages threaten to leave curable patients untreated and health professionals exposed, with potentially grave consequences. And this has produced calls to use U.S. national defense authorities to compel industry to shift production from consumer goods to critical medical supplies.

For many, the model is World War II, when American industry converted from civilian to military production on a scale that swamped Nazi Germany and Imperial Japan. Images of Ford auto factories turning out B-24 bombers inspire hopes that today’s war-like emergency can be met with a similar mobilization of American industrial might. But the experience of Higgins shipbuilding – and the hundreds of other firms that strove to pivot civilian manufacturing to military production – offer important lessons and cautions for today.

Today’s problem is easier in important ways. Fighting COVID-19 will not require a vast panoply of land, air, and sea weapons with thousands of different designs – today a handful of crucial equipment types will do. Planners in the 1940s worked with slide rules and typewriters – today’s information-age, computerized planning tools are far superior for coordinating complex undertakings.

But the World War II analogy has some real value in ways its advocates may not realize. In particular, it highlights often-overlooked challenges of organization and politics that can radically slow mobilization and create long-term problems from short-term fixes.

U.S. mobilization for World War II took a lot longer than many today realize. The Roosevelt administration began active planning for this almost two years before Pearl Harbor. With the Japanese attack, it issued an executive order on Jan. 16, 1942 creating a War Production Board with the power to compel industry to produce war materiel, and immediately used this power aggressively. An American economy emerging from the Depression had ample idle capacity, access to a vast unemployed potential work force, and a fire hose of federal money suddenly available for war production. Yet it was not until late 1942 that major quantities of new weapons and equipment started reaching the field. And production did not peak until late 1943, almost two years after the War Production Board was created.

What took so long?

A major contributor was the organizational challenge of quickly reorienting complex manufacturing systems at scale. Even in the 1940s, industrial production involved opaque supply chains, each step of which was a potential bottleneck, leading to major delays and inefficiencies.. In the early 1940s, multiple firms suddenly shifting to weapon production found themselves competing with one another for critical materials and components, causing shortages and supply bottlenecks well downstream from the assembly factory floor. Shortages were accompanied by inefficiency, as firms rushing to retool packed up and stored machinery and equipment that others needed. Sometimes one company desperately sought machines that sat – greased and wrapped in waterproof covering – in the storage lot of a company just down the street. Manufacturers could hire workers, but these workers had no experience building complex aircraft or radar components. The burden of training and educating a sufficient labor force became a bottleneck as severe as scarce materials.

In 1942, for example, the U.S. steel industry was a potential behemoth. Yet U.S. steel production was projected to fall short of 1941 levels unless mills received some 32 million tons of scrap. Scrap could be found (indeed, government photographers had pictures of great piles of scrap in dealers’ yards), but it was not making its way to mills because brokers had hoarded 2 million tons to force a rise in the price ceiling of $20 a ton. The scrap metal work force, moreover, had been cannibalized by other industries – many of its workers had found better pay in newly-available factory work. Those factories, however, needed steel, whose production was hamstrung by the shortage of scrap. A pure market approach to resource allocation produced chaos in an emergency; only when the government stepped in and ironed out a system for managing allocations strategically did the problem wane. Stamping sheet metal in new patterns could happen quickly, but reorganizing complex supply chains to keep suppliers and producers from getting in each other’s way took a lot longer.

Looming over all of this was the political threat of a disaffected public, if producers or officials were seen to be profiteering from a crisis. Crash spending creates opportunities for corruption. Rally-round-the-flag effects can mobilize short term public support in an emergency, but public anger at abuses can create a circular firing squad of recrimination that could risk the entire effort. In World War II, unscrupulous actors violated limits on civilian production, sold the government shoddy steel, and built substandard housing for war industry workers.

In 1942, a wartime housing project in Linden, New Jersey, meant to provide shelter for the labor force at the nearby Kearny shipyards, produced homes with roofs that blew off in the wind and basements filled with up to four feet of water from leaky foundations. Sensing the political peril from such abuses, the Roosevelt administration had mobilized the Senate Special Committee to Investigate the National Defense Program under then-Sen. Harry Truman, whose aggressive but even-handed oversight reassured the public and undergirded the sustained support needed for the all-out effort – its investigation of the Linden housing project led to prosecution by the Justice Department and attracted media attention to show the public its tax dollars would be spent responsibly.

There are important lessons here for today. First, don’t be surprised if mobilization takes longer than we expect. The binding constraints may again lie in supply chain complexity and organizational challenges that may not be immediately obvious. And this means being careful in scapegoating those who make honest efforts but don’t solve the problem overnight. Franklin Roosevelt did not publicly eviscerate Henry Ford for failing to provide thousands of B-24 bombers in a month. It might suit President Donald Trump’s political goals to lash out at General Motors CEO Mary T. Barra because he thought the automotive company should meet an unrealistic timetable, but it could deter other executives from enlisting in what could be seen as a suicide mission.

Second, a pure market approach has advantages in innovation and steady-state efficiency, but in a crisis, it can create supply chain fratricide or other cooperation challenges that can slow large-scale production. The fastest way to the 10,000th unit of output may require government action and coordination.

Third, moving fast creates political risk. There were profiteers and grifters even in the shadow of Pearl Harbor; there will be today, too. Roosevelt took action to reassure the public via transparency and serious investigatory oversight. We, too, should strengthen, not weaken, the institutional foundations for public confidence in the use of public funds with serious oversight of emergency funding.

Finally, America ought to do a much better job of quiet, professional, advance planning for the next crisis. The World War II mobilization would have taken far longer still were it not for the careful planning that Roosevelt’s administration undertook long before Pearl Harbor. Part of today’s problem is the inattention to, and disrespect for, planning and the civil service experts who do it. The combined lessons of World War II and 2020 should inspire us to do better next time.

Source: War on the Rocks

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