July 21, 2017 / 4:12 PM / 2 months ago

Trump orders review to strengthen U.S. defense industry

U.S. President Donald Trump attends a "Made in America" event on pharmaceutical glass manufacturing at the Roosevelt Room of the White House in Washington, U.S., July 20, 2017. REUTERS/Carlos Barria

WASHINGTON (Reuters) - President Donald Trump signed an executive order on Friday initiating a government-wide review of the U.S. defense industry and suggest changes to strengthen it.

The review is intended to identify and address potential weak points in the defense manufacturing base including companies that could go out of business and leave gaps in the supply chain for U.S. weapons systems, said Peter Navarro, the White House National Trade Council director.

The executive order asked for recommendations on possible legislative, regulatory and policy changes that would improve and support the defense industry, calling it a “significant national priority”.

“America’s defense industrial base is now facing increasing gaps in its capabilities,” Navarro said. “There’s just one company in the U.S. that can repair propellers for Navy submarines,” he added in a briefing with reporters.

Defense analyst Howard Rubel of the investment bank Jefferies & Co said the free market has so far done a reasonably good job. “We don’t want to invest in buggy whip suppliers just because there is only one (supplier).” He added that it is important to recognize that the United States can sometimes buy more cheaply from its allies.

The review mandated by the executive order will be led by the Pentagon and conducted in concert with the Department of Labor and the Department of Homeland Security as well as other government agencies.

Skilled labor is also a big part of the huge military buildup Trump has promised to project American power. Industry has already shown initiative in addressing the skilled labor shortage, including in the metals trades, Navarro said in his remarks.

Reporting by Mike Stone and Ayesha Rascoe in Washington; Editing by Chris Sanders and James Dalgleish

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