Small Wars Journal

This Week at War: Corporate Downsizing Comes to the Pentagon

My column at Foreign Policy discusses the Pentagon's labor cost problems. I also discuss the Mexican government's attempts to squash rumors of paramilitaries in Veracruz.

Corporate downsizing comes to the Pentagon

Last weekend, Scott Shane and Thom Shanker of the New York Times revealed just how much the White House has fallen in love with its fleet of Predator drones. "Disillusioned by huge costs and uncertain outcomes in Iraq and Afghanistan, the Obama administration has decisively embraced the drone, along with small-scale lightning raids like the one that killed Osama bin Laden in May, as the future of the fight against terrorist networks," the article explains.

The drones and special operations raiders seem able to go anywhere and produce clean and spectacular results. Meanwhile, costly counterinsurgency (COIN) patrolling in Iraq arguably ruined George W. Bush's presidency and few of this year's crop of Republican presidential candidates seems eager to defend the COIN mission in Afghanistan or criticize Obama's decision to get out by 2014. For a Washington policymaker, the choice seems clear: machines are good, boots-on-the-ground are bad.

But this is only one reason why the logic of downsizing -- so effectively and ruthlessly used by corporate managers in the private sector to boost efficiency -- will soon be coming to the Pentagon. Just like General Motors and many other previously labor-intensive businesses, the Pentagon has a labor cost problem. And just like Corporate America, the solution to the Pentagon's labor cost problem will be the substitution of new weapons for soldiers, in an attempt to get more national security output per troop. The Army and the Marine Corps, the most labor intensive of the services, should brace for the bad news to come.

Recent defense think-tank reports explain how large the Pentagon's personnel costs have become and, if unaddressed, what a barrier they will be to the Pentagon's ability to adapt in the period ahead. According to the Center for Strategic and Budgetary Assessments (CSBA), the Pentagon's personnel costs (military and civilian and including fringe benefits) are now 45 percent of the department's "base" (non war-related) spending. With defense spending now scheduled to drop, perhaps dramatically, over the next decade, policymakers will have to take an ax to this 45 percent of the budget if there is to be a reasonable amount of funding remaining for equipment modernization and realistic military training.

The CSBA report also notes an impending explosion in the cost of veteran benefits, even as the number of living veterans is due to decline sharply over the next decade. Recently expanded educational, medical, and disability benefits are ballooning the VA's budget. Pentagon budget planners just received an order from the White House to transfer an additional $25 billion over the next ten years to the Veterans Administration in order to protect VA medical funding from cuts, one more consequence of personnel costs.

A report on Pentagon budget options released this week from the Center for a New American Security discussed how the United States might attempt to fulfill its traditional global security strategy under four increasingly onerous funding scenarios. All of the options presented relied heavily on manpower cuts to ground forces, reductions in the Pentagon's civilian workforce, and other cuts in support services. The report noted the huge savings the department could capture through reforms to retiree pensions and health care spending -- another parallel with General Motors and other old, struggling labor-intensive industries.

Even if the Pentagon didn't have a labor cost problem, policymakers would be loath to engage in more labor-intensive and costly ground campaigns. Military and industry leaders who can present seemingly attractive alternatives such as drones, special forces raids, and related procurement programs stand to be rewarded by Washington. Policymakers will view soon-to-be redundant ground forces as the logical targets for savings. Whether this turns out well remains to be seen. But for now, it is the budgetary path of least resistance.

The soldiers and civilians in the budget crosshairs will rightfully resent the unjust reward they will soon receive for their service. Their feelings will match those of their predecessors elsewhere in the private sector who received similar rough treatment. But just like Corporate America, the Pentagon is under great pressure to step up its productivity. And just like everywhere else, that will mean a boost to plans that replace soldiers with machines.

Mexico battles cartels -- and rumors of paramilitaries -- in Veracruz

This week, the Los Angeles Times reported that the Mexican government is sending the army and federal police to stamp out an outbreak of cartel-on-cartel violence in the coastal state of Veracruz. In addition to suppressing the violence, the government seems equally eager to smother the perception that Mexico's drug war, which has killed 40,000 people over the past five years, may now be entering a new phase marked by paramilitary vigilantism.

On Sept. 20, 35 dead bodies, most linked to the militarized and very violent Zeta drug cartel, were dumped on a road near Veracruz's port. A new group, the "Zeta Killers," released a video in which the hooded speakers promised more attacks on the Zeta organization. In announcing the security operation in Veracruz, Interior Secretary Jose Francisco Blake Mora declared, "Those who seek justice by their own hand, or invade the state in its intransferable duties, become delinquents, and the government will apply to them the full force of the law."

It is too soon to know whether paramilitary vigilantism, which plagued Colombia during the 1990s, has arrived in Mexico. More likely, the Zeta Killer group is an affiliate of one of the Zeta's rivals along the Gulf of Mexico coast, such as the Sinaloa or Gulf cartels. The Zeta Killer video, with its effort to explain why the group is purportedly on the side of the people, is in keeping with the attention the cartels now give to media and message control. The Zetas' method of message control comes with its own brutality: in Nuevo Laredo, an editor at a local newspaper who used social networking sites to report on cartel crimes was found decapitated, accompanied by a note left by the Zetas.

With the Mexican government seemingly helpless to stem the violence, it would not be a surprise to find a noticeable increase in vigilantism. However, this is not the case. According to George Grayson, a professor and Mexico expert at William and Mary, scattered incidents of vigilantism in Mexico are not correlated with either the recent jump in Mexico's violence or with the focal points of the cartel wars. Such acts of vigilantism that do occur seem to crop up sporadically in mostly rural areas and in response to lawlessness unrelated to the drug trade.

Today's Mexico is still far from Colombia in the 1990s. But the Colombian story provides the indicators that analysts can look for to gauge whether Mexico might enter its own period of paramilitary vigilantism. As I discussed in a recent column, President Felipe Calderon's war against the cartels was sparked by what he viewed as a national security imperative, namely preventing any of the drug cartels from threatening the authority of the state. In the late 1980s, Colombia faced this menace, with Medellin drug leader Pablo Escobar the most notable threat. Colombia's security forces were too weak and corrupt to bring down Escobar by themselves. In what became an essentially unrestricted military campaign, Colombia's policymakers subcontracted the dirty work of destroying Escobar's organization to a paramilitary organization, with the state very likely supplying this group with the intelligence it needed to complete the task, which it did in an efficient manner.

Are the Zeta or Sinaloa cartels as menacing to the Mexican state as Escobar was to Colombia? And will the Mexican government have to clandestinely associate with groups like the Zeta Killers to preserve its authority? This week, Mexican officials attempted to squash such perceptions. But should there be more body-dumps, accompanied by more videos produced by hooded "friends of the people," the comparisons to Colombia's dark days will only multiply.




Mon, 10/10/2011 - 2:10pm

This is sort of my own little soap box, but, speaking in very broad numbers...I believe there's somewhere around 170 battalions within the current division structure which does not include TRADOC. I'm sure with TRADOC and the Headquarters units we probably double that number, so round that to around 350 and that doesn't really get into the recruiting stations. Probably have to add at least two recruiting battalions per state, on average, so that's 450.

I'd venture to guess that each BN has about four companies plus a staff section. 450 x 5 = 2250. I'd also guess that each company & staff section burn up at least one ream of paper per week at a minimum. 2250 x $8 per ream = 18000, 18000 x 52 = 936000

So, using some conservative numbers, that's close to a million in paper alone - just for the Army. . I'm sure the true cost is way over a million per year just for paper that people print from their computers. That doesn't factor in the paper used at headquarters and printing offices for various uses, which probably adds several more million to the tally. Add to this the incredible amount of office supplies I see in every supply room and I'm sure it doesn't take long to reach 1 billion for this crap across the Army. When I first came into the service I never saw a computer and now we have them virtually down to the squad level. The supply closet, yes closet, I remember had no long shelves of highlighters etc. There were no Leathermans and Gerbers given out like candy. I'm quite confident that at least four billion per year could be saved just from office waste within the DOD and we could probably get to five without any discomfort.

Go to a four day work week for non-essential training and personnel...probably save about one billion throughout DOD per year, if not more, on fuel, electric and water.

If they deducted $50 per month from all active duty pay, that would total over 1 billion per year (we have to give back because we know our politicians certainly won't).

Without eliminating people or anything necessary at all, we could easily get 10 billion saved from the DOD budget every year.

Next purge the computers and the stupidly long admin requirements. It should not take a "packet" to go on leave. We can cut at least four billion per year in automation equipment, and related expenses across the DOD.

It wouldn't take long to get rid of all the nice to have things and focus on fighting and the support to the warfighter, and we'd quickly get to 100 billion in savings without any issues at all.

When it comes to operational and training budgets: stop sending people TDY for worthless training like Master Resiliency Training and similar enterprises. Do we really need to send cadets from west point to any school? Is that really necessary? They're not even commissioned. We could cut the traffic at Airborne school in half, easily, and still fill coded slots. Same for air assault and other courses. Mobile Training Teams are probably much more economical.

I'd be willing to be we could get better gear, better facilities (gyms etc) and still cut 50 billion per year within the DOD by simply eliminating waste. Combine that with no more than a 5% decrease in benefits (TRICARE etc which would be about 7.5 billion in savings, which is 5% of 154 billion listed as current personnel costs) and smart operational budget savings and we can trim 10% off the DOD budget without loss of one person or capability.

Ken White

Sat, 10/08/2011 - 10:24pm

Good article, Robert. I agree with your assessment of the likely course. I do not think it <i>has</i> to be that way.

We are trying to operate in the second decade of the 21st Century with habits and mores engendered early in the 19th Century. We have applied sticking plaster to that model as it sprung age induced leaks for the interim.

We do as well as we usually do because of really good people making it work away from the flagpoles. A number of those good people are carrying less good people in odd places because of endemic overstaffing and poor personnel policies (and for those who scream workload, I say Parkinson's Law...).

We need to cease minimal fixes, realize that DoD and most of the Services are (as entities) excessively bureaucratic and only marginally or adequately functional. The whole structure needs a major overhaul. A truck driver or electronic equipment repairman at a base in Conus is paid the same base pay and most allowances (In themselves a poor way to compensate...) as Joe humping the hills near Shkin. Makes no sense.

The only way we can reward any of them for an outstanding effort is to promote them -- and if they stick around and don't get in trouble, we'll likely promote them whether or not that should happen and do so repeatedly until the Peter Principle takes hold.

We do not educate and train leaders, we teach conformity. We do not foster initiative and trust, we stifle both -- often inadvertently. Part of that is at the behest of Congress but they have help in shades of Blue and Green. We now say we do not want to teach people "...what to think but rather how to think." That,<b>if</b> it occurs will be a welcome change.

Fortunately, for many years most people in the services have been quite competent at how to think. So poor instruction not withstanding, they know how, the problem is that they are seldom allowed to. I've seen nothing addressed to fixing <i>that</i> little problem.

Part of the adjustment problem is societal, we are reflections the excessively risk averse society that breeds us; part is systemic and part is inertia -- all those thing are known entities and we have enough smart folks to provide work arounds for all that and the myriad other impactors.

However, in the end, we will probably piecemeal everything -- but I'll bet when all is said and done, the number of Flag Officers is reduced little if at all.



Sat, 10/08/2011 - 7:27pm

As always, it will be the people that fought the wars that are punished the most.

Jack Gander

Mon, 10/10/2011 - 10:44am

In reply to by Dayuhan

Unfortunately it is the “tail” portion that has the ability to make the recommendations on what to cut.

Mr. Haddick – you missed a similar report from the Defense Business Board on applying lessons from Corporate Downsizing to the DoD. One interesting fact the report brought to light, is that in order to do this type of mission smartly, a team needs to be created with people committed to downsizing – if executives aren’t on board they're fired. I think Gates gave a valiant effort last year to reduce overhead but was thwarted by the bureaucracy. I would love to see a few Generals/Admirals/SES given their walking papers if they try to defend the status quo… it would clearly send the right message that it’s time to get serious about the budget reduction process.

I actually looked at that title with some optimism, thinking perhaps there was some move to downsize the Pentagon per se, not the military generically. Budget cuts are never fun, but surely with all that tail there is something that can be significantly streamlined without disabling the teeth.