U.S. has let defense industry demise go too far, local owner says

Published: Friday, August 04, 2017 @ 8:40 AM

Kettering defense contractor watching White House stance on defense parts outsourcing

When Rick Little met presidential candidate Donald Trump at a campaign stop in Dayton last September, Little brought up his concern about the shrinking U.S. defense industrial base.

“To me, it’s always been an issue that we’ve let so much of our industry go,” said Little, president of Starwin Industries in Kettering that makes parts to keep aging military jets flying.

President Trump, who aggressively campaigned in the Midwest manufacturing belt railing against U.S. trade policy and a loss of U.S. factory jobs, signed an executive order last month to assess the nation’s defense industrial base, including manufacturing capacity and workforce development skill gaps.

White House officials said the assessment, due in 270 days since Trump signed the order, was a “whole-of-government” review involving the departments of Defense, Labor, Commerce, Energy and others to assess the health of manufacturing and the defense industrial base, and the most comprehensive look since the Eisenhower administration.

Since 2001, the U.S. has lost more than 60,000 factories and five million manufacturing jobs, according to Peter Navarro, director of the White House Office of Trade and Manufacturing Policy.

“Certain types of military-grade semiconductors and printed circuit boards have become endangered species,” Navarro told reporters in a recent briefing. “Flat panel displays for aircraft and the processing of rare earth elements have left our shores entirely.”

EXCLUSIVE: Top Air Force general says ‘all programs are at risk’

‘Pulling out of a tailspin’

Now is “exactly the right time” for the defense and manufacturing study after sequestration-imposed spending reductions, said Andrew Hunter, director of the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies in Washington, D.C.

“We are just now pulling out of a tailspin, nose dive called sequestration which wreaked havoc on defense spending in general, but in particular wreaked havoc on the spending that Department of Defense does with its industrial base,” Hunter said.

Defense contract obligations reached a peak at $442 billion in 2008, which declined to $278 billion in 2015, or a drop of more than a third as judged in constant 2016 dollars, according to Hunter.

“Industry has borne a disproportionate share of the Department of Defense and that is obviously alarming if you care about the industrial base,” he added.

Defense experts cited concerns about finding skilled workers, potential vulnerabilities in the supply chain, and access to raw materials and components.

“We’ve lost some capabilities over the years through going offshore, through bad economies, through a changing industry base,” said Lloyd Fields, chief executive officer of defense contractor BasTech in Vandalia.

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The defense supply chain needs a better understanding of where components come from, said retired Air Force Lt. Gen. C.D. Moore, former commander of the Air Force Life Cycle Management Center at Wright-Patterson Air Force Base.

“One of the biggest risks is if you don’t know where all the components are coming from there is always the risk that either by malicious intent or not somebody could introduce either firmware or software into a system that could compromise the capability of the system,” he said.

The retired three-star general cited cyber security vulnerabilities in the defense industry as a major concern.

Who was hit hardest

Sequestration had a bigger impact in some areas of the defense sector than others, according to CSIS research.

“There are pockets of weakness in the industrial base, but it’s not uniform across all sectors,” Hunter said.

CSIS’s own assessment, still under way, showed “really severe and profound” impacts on Army acquisition of land vehicles, and a “whipsawing” effect in the aviation industry “that probably merits some investigation,” Hunter said.

After a downturn, Congress has upped the budget for the Air Force, he said.

Navy shipbuilding had the most stability on turbulent defense budget waters in recent years, Hunter said.

Commercial supply chains bolster the defense industrial base in some areas, but certain categories, such as building nuclear-powered submarines, are so specialized that there may be only one supplier, he added.

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Little said the federal government has heightened regulation and oversight of contracts to curb costs as spending caps have squeezed the defense budget.

Keeping aging weapon systems like the F-16 and F/A-18 fighter jets flying is harder over time. Starwin, where defense contracts account for about half the company’s business, makes radomes that cover the radar in each aircraft. “Things that were common 40 years ago are difficult to find now so it adds to the costs,” Little said.

He is concerned parts manufactured for U.S. weapons in other countries could be withheld, and foreign suppliers or countries may be prompted to act because they disagree with U.S. actions.

“To me, it just shows a vulnerability,” said Little, past chairman of the Dayton Region Manufacturing Association.

Still, Hunter said there is a drawback if the nation relies solely on domestic suppliers in the defense base.

“The other factor is if you cut yourself entirely from international supply chains you’ve sacrificed some real significant capability,” Hunter said. “In the ‘60s, we could rest comfortable in the knowledge that the U.S. was essentially the cutting-edge leader in almost every significant area of defense-related technology in the world. That is not nearly as true today as it used to be. There are areas where other countries have the lead.”

In most cases, those technology leaders represent U.S. allies, he said.

Dayton’s defense industry

The Dayton area defense industry is recovering and “showing signs of strengthening” after the Great Recession and spending caps imposed under sequestration, according to David A. Burke, president of the Dayton Area Defense Contractors Association.

The defense industry has always had boom and bust cycles, experts said. But the region appears “to be past the low point and on the rise,” Burke said in an email.

“There were tough times during the low point of the recession and cuts, with some industry consolidation and contraction,” he wrote. “There are 10 to 20 (percent) fewer defense contractors in the region now, and the last base realignment and closure did not bring as many jobs as projected. But, research and development budgets have remained stable with modest growth, helping the community innovate and opening some opportunities for expansion.”

One shortcoming, Burke said, is “the marked increase of lowest price technically acceptable contract competitions” that have “reduced quality and innovation in many areas.” The industry is working to improve the situation, he said.

U.S. Rep. Mike Turner, R-Dayton and a member of the House Armed Services Committee, said Dayton was a “critical defense hub” for the country. Turner, chairman of the House Tactical Air and Land Forces Subcommittee, has Wright-Patterson Air Force Base in his congressional district.

“I’ve worked for years with Wright-Patterson Air Force Base and the surrounding communities to ensure we are bolstering our nation’s defense capacity,” he said in a statement to this newspaper. “I welcome this study on a national level to see how our country’s broader defense needs can be fulfilled most effectively. The first step towards rebuilding readiness should be quickly repealing the sequester of defense, which I will continue to advocate for in Congress.”

More local spending

In recent years, the Air Force has touted higher spending on local small businesses that has lifted area firms.

RELATED: Air Force redirects more money to small businesses

In one example, Air Force Research Laboratory obligations paid over several years to Ohio companies grew from $400.2 million in fiscal year 2013 to $552.6 million last year, according to the Dayton Development Coalition.

Much of that work is in the Dayton region.

AFRL is headquartered at Wright-Patterson, the largest single-site employer in Ohio with more than 27,000 employees and an estimated $4.3 billion economic impact.

RELATED: Wright-Patt economic impact on region up to $4.3 billion a year

Area defense contractors that work with the AFRL have maintained or grown their workforce, said John Ingham, Dayton Development Coalition vice president of aerospace programs.

“I believe if the defense budget is maintained or increased that will translate into additional jobs specifically in small businesses” that support aeronautical research and development, he said.

The area, a leading aerospace hub, has the fourth highest number of engineers per capita in the United States, he noted.

“… This region is ideally positioned to grow with increasing research and development dollars within the (Department of Defense) budget because of the brain power we have here,” he said.

The number of private sector civilian aerospace and defense workers in a 16-county region in and around the Dayton, Springfield and the Middletown-Hamilton area grew overall in a decade, according to a Wright State University Applied Policy Research Institute analysis.

In 2005, the region had 17,296 jobs in the category that grew to 18,751 jobs a decade later, the analysis showed. Projections estimate the number of jobs will reach 21,982 by 2025.

Among federal defense and government workers, the numbers showed growth initially, followed by a slight decline over the next decade.

The institute analysis estimated 26,727 federal civilian and military jobs in 2005 and 27,908 jobs a decade later. It projected 27,481 federal jobs in the region by 2025.

RELATED: Ohio leaders say funding will help protect Wright-Patt

Workforce gaps

Finding skilled workers in some specialties can be difficult, industry experts said.

Recruiting and hiring a software engineer with a top secret security clearance can take nearly two years at one local defense firm, a top company leader says, who noted waiting on the high-level security clearance alone can take more than 500 days.

There is such a demand hiring a software engineer quickly would mean hiring from another company, creating a gap somewhere else, said Scott Coale, executive vice president of defense services at Modern Technology Solutions, Inc., which conducts defense modeling and analysis at its Beavercreek office.

“We compete with Amazon, we compete with Microsoft” to attract those skilled workers, said Coale, a retired colonel and former vice commander of the Air Force Research Laboratory at Wright-Patterson.

“I think that’s our biggest challenge here locally is to find that skilled workforce.”

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Moore, a member of the Wright State University Board of Trustees, said area colleges and universities focus on preparing workers for manufacturing and small businesses in the defense industry.

The industry has worked locally with universities and community-based science, technology, engineering and math education initiatives to attempt to fill STEM jobs, Burke said.

But the region needs more graduates with security clearance credentials to meet demand, some said.

“We are not graduating enough students in science and engineering eligible to obtain security clearances,” Burke said.

Unmatched coverage

The Dayton Daily News is committed to in-depth coverage of defense and manufacturing, two key drivers of the Miami Valley economy. For more military news, like Dayton Daily News reporter Barrie Barber’s DDN Facebook page and follow him on twitter at @barriebarber.

DHL jobs to be cut, but workers could land with new employer

Published: Wednesday, January 17, 2018 @ 12:56 PM

A Boeing 767 painted in DHL livery within a hangar at Airborne Maintenance and Engineering Services at the Wilmington Air Park. TY GREENLEES / STAFF
A Boeing 767 painted in DHL livery within a hangar at Airborne Maintenance and Engineering Services at the Wilmington Air Park. TY GREENLEES / STAFF

Freight giant DHL will permanently lay off 229 workers in Lima by March 12, the company has told Ohio government.

The layoffs will happen at the company’s 635 N. Cool Road location in Allen County, the company said in a WARN (Worker Adjustment and Retraining Notification) notice to the Ohio Department of Job and Family Services.

But a DHL Supply Chain spokeswoman, Lynn Anderson, said the DHL work will move to another third-party logistics provider, who will interview affected employees. 

“We don’t expect there to be any net job loss,” Anderson said. 

That new provider has agreed to interview the current employees, she said. Anderson said she expects most of the current workers to be hired by that new provider. 

RELATEDFreight demand causing ‘perfect storm’ for local trucking industry

Those affected include forklift mechanics and operators, supervisors, dispatch workers and many others, the company said in its letter to the state, dated Jan. 9.

DHL has a major packaging and sorting hub at the Cincinnati-Northern Kentucky International Airport in Hebron, Ky. That 223-acre operation employs about 2,400 people, and DHL was expected to complete a $108 million investment there in 2017.

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When DHL closed a distribution hub in Wilmington in late 2008, more than 7,000 local jobs were cut.

DP&L lands $27.8 million Wright Patt power deal

Published: Wednesday, January 03, 2018 @ 12:00 AM

            In this 2013 Dayton Daily News file photo, electricians run conduit into a $20 million battery array that was under construction at Dayton Power & Light’s Tait generating station in Moraine. AES Energy Storage, a subsidiary to the parent company of DPL Inc. built the array of 800,000 D-size batteries to provide frequency regulation to power service in the region and beyond. CHRIS STEWART / STAFF FILE PHOTO
In this 2013 Dayton Daily News file photo, electricians run conduit into a $20 million battery array that was under construction at Dayton Power & Light’s Tait generating station in Moraine. AES Energy Storage, a subsidiary to the parent company of DPL Inc. built the array of 800,000 D-size batteries to provide frequency regulation to power service in the region and beyond. CHRIS STEWART / STAFF FILE PHOTO

Dayton Power & Light Co. has landed a $27.8 million contract with Wright-Patterson Air Force Base, according to the Department of Defense.

The amount covers the first year of a three-year agreement through 2020. Previously, DP&L was paid $83.9 million to provide electricity between 2015 through 2017, according to the utility. The base was given an 11 percent discount on DP&L rates for 36 months under the arrangement, according to the Public Utilities Commission of Ohio.

The latest agreement is an extension of an earlier deal reached in October 2014, according to PUCO.

The Air Force Life Cycle Management Center, headquartered at Wright-Patterson, awarded the sole-source electricity contract.

Separately, DP&L and Wright-Patterson have a 50-year pact for the utility to own and maintain electrical equipment at the Miami Valley base. The pact began in 2011.

Wright-Patterson is the largest single-site employer in Ohio with an estimate of more than 27,000 civilian employees and military personnel and has a more than $4 billion impact on the regional economy.


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Walmart using robots to stock shelves

Published: Monday, October 30, 2017 @ 11:56 AM
Updated: Monday, October 30, 2017 @ 12:10 PM

            Ashley VanHorn, a grocery department dry goods manager, stocks shelves at the Walmart in Fulton, N.Y. Walmart is now using robots to help stock shelves at 50 stores across the country. (Roger Kisby/The New York Times)
            ROGER KISBY
Ashley VanHorn, a grocery department dry goods manager, stocks shelves at the Walmart in Fulton, N.Y. Walmart is now using robots to help stock shelves at 50 stores across the country. (Roger Kisby/The New York Times)(ROGER KISBY)

Walmart is now using robots to help stock shelves at 50 stores across the country.

The robots are helping scan and stock items in stores before the busiest shopping season of the year. The robots are about two-feet-tall and are outfitted with cameras that help them scan aisles and identify missing or mislabeled inventory across the stores. The robots also check for mispriced items, and give the information to employees who fix the issues.

The technology will be used in a test cycle at stores in Arkansas, Pennsylvania and California, according to the Arkansas Democrat-Gazette.

Walmart officials say the robots can scan and search for items more efficiently than humans can. “If you are running up and down the aisle and you want to decide if we are out of Cheerios or not, a human doesn’t do that job very well, and they don’t like it,” chief technology officer for Walmart U.S. and e-commerce, Jeremy King told Reuters.

“From our perspective, when you’re doing things like this you’re trying to improve your service to your customers and trying to make things simpler and easier for your associates at the same time,” John Crecelius, Walmart’s vice president of central operations, told the Arkansas Democrat-Gazette.

Humans don’t have to be worried about their jobs anytime soon, Walmart officials said. The robots do not have arms, so they can’t pick any products up in the aisles, said Martin Hitch, chief business officer at Bossa Nova Robotics.

The newest frontier for hackers: your car

Published: Saturday, October 14, 2017 @ 8:00 AM
Updated: Tuesday, October 17, 2017 @ 1:29 PM

Ohio State researchers hack a car to test cybersecurity software

Imagine driving down the road minding your own business when suddenly your car brakes sharply on its own. Or your steering wheel veers wildly toward the ditch. Or your accelerator pedal inexplicably gets pressed to the floor.

As computer technology increasingly controls critical vehicle safety features and more cars are connected to the internet, the danger of a hacker taking control of vehicles is becoming less like a Hollywood movie plot and more like something that can actually happen.

Wily cybercriminals have already proven their ability to breach government, military, corporate and individual cybersecurity walls. They’ve stolen personal information, medical records, financial data, military secrets and other data with near impunity.

The newest frontier for hackers bent on mischief? Your car. 

“These are super complicated high-speed networks on wheels,” said Vance Saunders, director of Wright State University’s cybersecurity program. “I don’t have to unlock your car. Because your car is just a mobile network.”

Vance Saunders, instructor in computer since and director of the cybersecurity program at Wright State University.(Staff Writer)

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Using the internet and one of the multiple points of access into your vehicle’s computer systems, researchers have already demonstrated that they can take control from miles away. A growing number of computer-equipped, internet-connected smart cars are on the road, and automakers are testing fully autonomous vehicles that have even more high-tech controls that allow the car to do the driving for you..

Part of the research involved in developing a smarter car is developing a more secure car.

“The point is that suddenly we are exposed to major-scale attacks that can happen to us. And those attacks can result in fatalities,” said David Barzilai, chairman and co-founder of Karamba Security, a start-up vehicle cybersecurity company based in Israel.

David Barzilai’s Israel-based company, Karamba Security, is working with 16 automakers and parts suppliers on improving vehicle cybersecurity. Barzilai said Karamba’s software is designed to recognize and block hackers before they gain access to the various computerized functions of a vehicle.(Staff Writer)

In addition to whatever mayhem could occur on the roadway, your car has also become yet another way for your personal information to be stolen. Newer vehicles are now able to collect a startling amount of information about you, including your address and birth date, driving habits, where you travel, your music preferences and soon, credit card information you provide so you can make purchases from inside your car.

“You could probably put together a pretty good intelligence report,” said Seth Hamman, assistant professor of computer science at Cedarville University.

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Many newer vehicles are equipped with multiple sensors and Electronic Control Units (ECU), essentially an array of small computers that are connected to each other via a network, that are involved in a variety of vehicle functions.

The standard one people are most familiar with is the on-board diagnostic computer that mechanics use to diagnose problems. Automakers have also added an assortment of driver assistance technologies, such as automatic emergency braking, lane-keeping assistance and other features to make cars safer and smarter.

ECUs can control safety-critical systems like braking, along with navigation systems, location services, fleet management systems, and entertainment and communication systems. Within the vehicle, the ECUs work together to keep these functions humming along, mostly without the driver even realizing it.

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Automakers can send software updates to the vehicle via the internet, vehicle occupants can use an in-car hot spot to surf the web, and connected semi-trucks can drive in “platoons,” following very closely in single file and communicating braking and speed information to each other.

“Today’s cars are connected, and advanced technologies will make the cars much more connected in digital form than now,” Barzilai said.

While that brings “significant benefits of technology and connectivity, at the same time cars are much more vulnerable to cyberattacks,” he said.

The ECUs are designed to communicate with each other, which hackers can exploit, according to Barzilai. If one ECU is penetrated, a hacker could then send commands to the other controllers on the network, he said.

Multiple access points

Hackers can gain access in multiple ways. Vehicles are equipped with embedded internet modems, Wi-Fi routers, Bluetooth modules, USB ports, high-definition radio, the on-board diagnostic port and near-field communications devices that let you unlock or start your car remotely.

In 2015, security researchers Chris Valasek and Charlie Miller showed how the Jeep Cherokee could be remotely hacked, gaining internet access through the entertainment system and then taking control of vehicle steering, brakes and transmission. That hack led Fiat Chrysler Automobiles to recall 1.4 million vehicles to fix the security flaw.

Security researchers in 2011 took remote control of a car’s brakes using Bluetooth, and more recently researchers took control of the brakes on a moving Tesla from 12 miles away, according to a June New York Times story.

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Auto manufacturers encourage these “white-hat” hacks by security experts so vulnerabilities can be fixed. In fact, spokespersons for Tesla and Fiat Chrysler say they participate in a “bug bounty” program that offers rewards to people who find and report cybersecurity vulnerabilities.

“FCA is deploying the latest hardware technologies to protect against cyber intrusions,” said Sandra Hosler, senior manager for global vehicle cybersecurity for Fiat Chrysler Automobiles’ U.S. operations. “But we also improve protection by partnering with others.”

Tesla released a statement saying the company “works closely with the research community to ensure that we continue to protect our systems against vulnerabilities by constantly stress-testing, validating and updating our safeguards.”

New challenges

Two years ago auto companies formed the Automotive Information Sharing and Analysis Center, a central hub that tracks, analyzes and shares intelligence about cyber threats, vulnerabilities and incidents. That level of cooperation stands out in the notoriously competitive auto industry.

Karamba Security, which also has an office in Detroit, is working with 16 automakers and parts suppliers on improving vehicle cybersecurity, Barzilai said. Karamba’s software is designed to recognize and block hackers before they gain access to the various computerized functions of a vehicle.

He said the company will soon do field trials for the software in France, deploying self-driving cars in a closed area.

Experts say autonomous, or self-driving, cars will become more the norm in future years, presenting new and more complex cybersecurity challenges.

Researchers from Ohio State University are testing vehicle cybersecurity at the Transportation Research Center in East Liberty to learn how to protect vehicles from hackers who could try to take over braking systems, steering wheels and other key functions of cars and trucks. SUBMITTED.(Staff Writer)

Research at Ohio State University and the Transportation Research Center in East Liberty is showing how to combat intrusions by better authenicating the command received by the vehicle, said C. Emre Koksal, associate professor of electrical and computer engineering at Ohio State.

“We have to address these (cybersecurity) issues before we deploy all these systems. And before we talk about how to rely on all those signals for our safety,” Koksal said.

He said experiments by his researchers show that vehicle security can be enhanced, but he said there may be no cure-all.

C. Emre Koksal, associate professor of electrical and computer engineering at Ohio State University, said it might not be possible to protect against every kind of attack. But, he said, “We have to address these (cybersecurity) issues before we deploy all these systems.”(Staff Writer)

“To say that we will absolutely protect everybody from every kind of attack is an insurmountable problem,” Koksal said. “So we are basically narrowing down the set of potential attacks.”

‘You can never prevent hacking’

Resolving cybersecurity issues will be critical to advancing the autonomous vehicle industry, said Carla Bailo, assistant vice president of mobility research and business development at Ohio State.

Carla Bailo Assistant Vice President Mobility Research and Business Development at Ohio State University(HANDOUT/Handout)

“You can never prevent hacking,” Bailo said, but with robust cybersecurity systems in place the technology would “recognize the hacking symbol and your car can ignore it, or the infrastructure, the traffic signals, will ignore it.”

RELATED: Would you ride in a car with a brain?

Barzilai also believes anti-hacking technology can make the cars safe.

“What we’ve found is the complexity is so high, hackers are going to find it so hard to hack they may look for other goals,” Barzilai said. “I don’t know if it is going to be 100 percent safe, but it is doable. The systems can be hardened in quite an effective way.”

Multiple states have passed laws addressing autonomous car safety and cybersecurity. Congress is looking at increasing rules for autonomous cars and cybersecurity safety with the SELF DRIVE Act, co-sponsored by U.S. Rep. Robert Latta, R-Bowling Green, which passed in the House and is now being considered by the Senate.

Experts say the auto industry knows it has to get this one right. Otherwise, said Hamman, consumers will lose confidence and they won’t be willing to shell out money for cars outfitted with high technology that puts them at risk.

“In the recent past we would have been willing to go a lot further to get the cool next feature without worrying about the exposure,” Hamman said. “Whereas today I think that line is moving back because of the security issues.”

Vehicle access points for hackers

The opportunity for cyber intrusions is increasing as more vehicle functions are controlled by computer technology and vehicles are connected to the internet. Here are some of the vulnerable access points:

  • On-board diagnostics: One of the earliest forms of connectivity in vehicles, it allows auto repair shops to diagnose problems and fleet managers to collect information from vehicles.
  • Bluetooth module: Allows wireless short-range communication and data transmission between electronic devices and enables streaming data and media.
  • Embedded internet modems: Cellular technology allows the vehicle to be part of a larger network and access digital services such as entertainment, navigation and emergency calls.
  • Wi-Fi internet routers: Hot spots provide local wireless connectivity and allow multiple devices to connect to the internet.
  • USB device port: Used to connect electronic devices and computers, charge power devices and play music on car audio systems.
  • Near-field communication devices: Short-range wireless data transfer technology that does not require an internet connection and is used for auto-paying tolls, car access, engine starts, and personalized settings for components like mirrors and adjustable seats.
  • High-definition radio: Digital broadcasting that plays music and displays data such as song titles, weather, traffic and emergency alerts.

Source: Karamba Security


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