Mexican Risk Identification and Remediation By
Gordon Housworth Intellectual
Capital Group LLC
Capital Group LLC (ICG) predicted the disruption and criminalization of Mexico
in late 2006 and made this outlook public in 2007.Seen as alarmist -- even unbelievable -- at
that time the projection was vindicated by 2010 updates that reported
accelerated criminal activity. ICG flagged extortion as Mexican business supply
chain risk in 2010.Mexican entities'
consistent denials of this risk are not supported by facts on the ground.
headlong industrial investment into Mexico by OEMs and large tier one and tier
two suppliers belies real and growing supply disruption.In fact OEMs and upper tier suppliers already
have unidentified risks in their Mexican supply chains.
Unremediated risk rises from
information gaps between
a corporate investment or sourcing decision and on-the-ground local
consequences for affected companies in Mexico. Examples:
Fearing retribution Mexican firms and their
management deny or underreport violence. Maquiladora plants and their employees
have long been victims of robbery, extortion and abduction
yet underreport for fear of criminal retribution and upper tier de-sourcing.
Firms with extensive Mexican operations
quietly curtail movement of visiting and expat personnel.An OEM client asked a tier one electrical
supplier to accompany its staff on a multi-facility benchmarking effort
including Mexican facilities.The
supplier declined noting that they no longer send US staff to Mexico due to
risk of criminal harm.
operations can suffer reduced quality and/or increased costs as long as these under-reported risks remain unresolved. There are solutions that mitigate
these risks but these remedies must be tailored and monitored to be
effective.A one-size-fits-all approach
would be needlessly expensive and cumbersome and would overlook site-specific
risks to plants and personnel.
protective responses that adapt to emerging and changing threats exist and are
best performed early, even at the supplier/site selection stage. Protective
responses performed at a later date will have to accommodate legacy risks in
site selection, hiring, and contractor selection. While the second condition is
the industry norm, in all cases a cost-effective preemptive security response
(Assess value of the facility, process, personnel to be protected which is
needed to estimate an appropriate cost of protection. If the protective cost is
too high or the target is too vulnerable the function may have to be
Assessment (Specific nature and scope of the threat(s) which is essential to
design the minimum effective protective response.)
Assessment (Assess vulnerability of the target(s) to attack.)
Assessment (Assess risk from each threat actor or group, the likelihood of
attack and the likely damage of an attack.)
Management (Continuous management of pertinent threats and appropriate
Mexico's Low Cost
Country (LCC) Position
has long recognized Mexico is a low cost country (LCC) in terms of total chain
cost, as opposed to many Asian piece part costs that are not low cost when
total chain costs are considered. While this view is vindicated by the
inclusion of Mexico in backshoring (repatriating
manufacturing) to the "US local" region (defined as the US, Canada and Mexico),
conditions on the ground in
Mexico have deteriorated to the point that even the industrial heart of Mexico is at
risk. Disruptions in Nuevo Leon (Monterrey) are proof that all of Mexico faces
these risks. Investor optimism
regarding crime as a temporary problem is unsupported by the Mexican trade and popular press.
firms often conceal risk for a variety of reasons such as extortion threats to
Mexican employees and their families, desire to keep the parent firm from
pressing organizational changes at the Mexican firm, or to shield local
Mexico's Rising Cost
only a few years ago, small and medium-sized companies "operating in and around
Monterrey in 2011 were spending 5 percent of cash flow on security." From If Monterrey falls,
Even if manufacturing is showing some
resilience, security costs are growing, while moving goods up to the U.S.
border and to neighboring states is getting riskier.
Small and medium-sized companies operating in
and around Monterrey are spending 5 percent of cash flow on security, a cost
that was negligible just five years ago, while firms selling GPSs, alarms,
locks and cameras in Monterrey have seen a 20 percent jump in annual profits in
three years, according to Monterrey's commerce, retail and tourism chamber.
"If you look at the figures, companies
are still investing, but there's a lot of evidence that the money is being
diverted into security, not into research and development... This is money
that's going into barbed wire fences, not solar panels and that is going to
hurt competitiveness in the long term."
extreme circumstances, such costs can go much higher, rising to 40+% of the
operating budget as happened in high threat periods in Africa and the Americas.
costs are far lower when remediation is commenced early, before criminals have
come to perceive the company as a target.
Blackouts Do Not Imply Improvement
for example, has receded from the headlines without a significant reduction in
crime. On the ground, the Gulf Cartel with the assistance of the Sinaloa Cartel
reasserted control over significant areas of the city and substituted a less
violent but equally aggressive control.
new arrangement coupled with a government mandated reduction of crime related news
and redirection (such as claims that
violence was geographically bounded; that most deaths were linked to organized
crime members - none of which were correct) largely removed Monterrey from the
US mainstream press.
crime does its part by intimidating and
journalists. Dozens were killed during the Calderon
Hinojosa administration's actions against cartel leaders. Intimidation and
horrific crimes against the press have continued under the Pena Nieto
administration, primarily in northern
along the US border. The result is self-censorship among Mexico's regional news
election of Pena Nieto and the return of the PRI accelerated the PR campaign without
significantly altering the national level of violence. The government stopped
announcing arrests, seizures, and operational details of security policy, while
deflecting the public agenda onto topics such as the automotive sector (the
"new Detroit") and export growth.
The Risk Tree
A ranking of least risk to greatest risk
would typically contain this vulnerability hierarchy:
1.Global investors.[Least Risk]
2.Corporate or group level management.
3.In-country expat management.
4.Tier 1, 2, 3... tier N suppliers.
5.Employed local nationals.
6.Local nationals in industries and services outside the
top tier and its suppliers.
7.Citizenry of the region. [Greatest Risk]
The issues that routinely confront Mexican
citizens and most of its industries are either unknown to, have no effect upon,
or do not enter into the risk calculation of the more insulated and least risky
parts of the hierarchy (typically groups 1. And 2.).Friedman's "How Mexico Got Back
in the Game" states an opinion typical of US/EU
corporate decision makers that will elect to produce in Mexico. At their remote risk/high
reward level, Mexico makes perfect sense.
Mexican companies immediately adjacent to US/EU companies can have very
different risks. A company's size, skill and location in the tier supply chain often
make a substantial difference in its threat posture. While large manufacturers
do consider their immediate risks they often do not take into account the
susceptibility of their supply chain to predation and interruption.
Capacity at tier (from top tier or OEM down
to smaller, isolated tier suppliers) is an important factor generally
overlooked in risk analysis because there is no single security or risk rating for
all companies in a state or region.A
major supplier may have the size, revenue, processes and training to better protect
its commodities, personnel, plants and finished goods.
An example would be a large supplier's
ability to assemble a convoy of vehicle transporters escorted by vetted, paid
Mexican federal police officers. Yet a smaller supplier that may be physically located
next door to the larger supplier is vulnerable precisely because it lacks those
resources.Furthermore, hourly workers at
these lower tier suppliers are completely vulnerable to criminal predation at
work, at home and in transit.
While criminal elements can strike both expat
and Mexican nationals of US/EU firms, attacks against expats generally occur at
much lower frequency, are opportunistic or simply a result of accidentally "being
in the wrong place" events.Thefts of
inbound commodities and outbound finished goods are increasing in Mexico. In addition,
both contraband (usually narcotics) and counterfeit goods are being inserted in
shipments bound for the US.
Mexican industry and local suppliers fare
worse as criminal elements attack wide tiers of industry and society.Criminals have long troubled
maquiladora plants with robbery, extortion, abduction and murder of maquiladora
workers and family members. Extortion payments by maquiladoras are rising
despite silence from the victims of these crimes.Lower tier suppliers remain silent for fear that publicity will result in retaliation
by criminal elements and/or upper tiers will resource their business
automotive parts are candidates for criminal extortion intended to choke
vehicle production. Manufacture of wiring harnesses for North American assembly
have been highly localized in Mexico.Criminal
interruption to this wiring harness nexus would impact a significant portion of
US vehicle production.
of these many variations the risks to a particular supplier and that supplier's
appropriate remediation strategies must be analyzed on a case by case basis.
Extortion Is Now a Pervasive National Threat
Extortion [extorsion], also called "illegal protection" [proteccion ilegal], is now rampant in Mexico.
Extortion includes activities that
imply coercion of the victim by an agent distinct
from the state. Successful extortion demands that said agent demonstrate a
reputation for the use of force against those who refuse to pay for their
services. High levels of violence coupled with participation of police confer
impunity on the extortionist.
Extortion is economically
depressive, a production-less crime, i.e.,
criminals have only to tax without having to produce and sell a product. Long
present in Mexico, extortion has surged as part of criminal diversification
beyond narcotics into extortion and kidnapping, costing Mexico one percent of
GDP. We call it an unsustainable
societal tax that continues to grow, in part, because it is so easy to raise
incremental demand without risk or cost to the attacker.
Mexican assets are highly vulnerable
to predation despite denials from the Mexican side of the supply chain that a
problem exists. There is immediate loss, possibly death, to the victim;
retribution to both the victim and his/her family members for any corroboration
or public comment; and forced induction of locals into the criminal apparatus.
Mexican statistics are supremely
underreported as individuals refuse to report extortion as the police are
either directly running the extortion, or managing gangs running the extortion.
Businesses and individuals pay as long as they can, then close or are harmed
when they cannot.
The breathtaking penetration of
Mexico's commercial sector has allowed the narcotics trade to diversify their
revenue streams and reduce their net organizational risk while the economic
loss to Mexico continues to rise.
Supply Chain Vulnerabilities
Mexican supply chains are notable for
insider threats (co-opting/threatening employees), supply chain threats
(takeover of labor providers, sub-suppliers and shippers); and expropriation
(forced sale/turnover of companies and assets).
Primary extraction industries
(mining, petroleum, timber) have been a staple of Mexican criminal interest,
from hardwood timbering on native lands in the south, to illegal
bunkering/skimming of PEMEX petroleum in the east, to silver, gold and iron mining
in western Mexico.
The dining, bar, brothel, and
storefront sector - virtually anything with a fixed address for customers - has
already been brought under monthly extortion or driven out of business (as
testified by the thousands of shuttered businesses).
The focusing of criminal predation
against the Mexican side of the supply chain is good business because:
Targeted employees and families are
local, accessible and defenseless.
The cost of predation is low while the
reward is high.
Local predation does not attract
significant US political and police attention.
Mexican authorities compound the
problem by limiting access when US assets make inquiries against local
Extortion's Rising Disruption
Extortion, theft and contraband
continue to increase in the Mexican supply side. Extortion risk is already
present to maquiladora employees and the maquilas themselves. We have already
seen limited jumps to the US/EU side in areas of transport, power interruption
and contraband insertion into parcel carriers and corporate shipping containers
(especially damaging to C-TPAT suppliers as it may negatively
impact their expedited customs clearance).
The US/EU side of the supply chain
strives at all costs to have no appearance of unreliability to its upper tiers
and investors alike. Being seen as a potentially unreliable supplier is to
invite a resourcing review by an upper tier and/or see the company's share
price suffer. As a result the US/EU side of the supply chain is willing to
under-report the risks.
We see the entry point for extortion
shifting in the automotive supply chain. Initially it was Mexican tier
suppliers but has now expanded to Mexican employees of US/EU firms. Mexican
nationals are desperate not to talk about these threats for a variety of
reasons, e.g., personal threats, termination/reassignment and fear of driving
an upper tier supplier to resource.
As a result, it is difficult for Mexican
firms to execute genuinely rigorous security assessments as too many points are
open to compromise.
US/EU supply chains in Mexico will
face greater risk from compromised firms and individuals on the Mexican supply
chain side. Crossover will occur as one or more criminal groups become more
aggressive vis-a-vis its peers, more acquisitive for revenue, and
simultaneously less fearful of US response. Once the Mexican chain side is
consumed (offers no further share growth), there is only taking market share
from competitors and entering new markets such as the US/EU suppliers.
Unfortunately most commercial firms
have a defensive (target) mentality that prohibits seeing themselves through an
attacker's eyes. Gaining the potential to influence outcomes demands an ability
to see into the attackers' assessment of risk and uncertainty.
Tailored Solutions Under a Governing
companies select risk to accept by design. The unprepared or poorly advised company
blindly accepts risk by default. Such firms will continually put their assets
and personnel at risk.
for such eventualities means that needed security measures are identified and quickly
put in place to ensure that the company is operating with a layered defense
against current and emerging threats.
means that the company will be able to demonstrate its commitment to a genuine
preemptive protection of its employees, dependents and suppliers. Risk
assessment and mitigation must be performed without triggering reprisal by adversaries.
and international press disclosures need to be managed as the company reduces
security risk without raising uncertainty or concern on the part of any
customer or partner.
commences with real world risk assessments and recommendations followed by
implementation and subsequent review of what succeeded and what requires
correction. Successful risk resolution implies business and supply chain continuity,
thus company managers are co-participants in the assessment and implementation
Over Confrontation to Minimize Risk
the high threat
in certain areas, operations must be conducted with the highest level
of control and security in all phases, as both Mexican security forces and
operating criminals can be expected to be on high alert for any
groups in Mexico can deliver more firepower than most companies are willing to
sustain. A corporate response that confronts or challenges such criminal groups
invariably draws unacceptable reprisal against staff, facilities and product.
lower cost, lower risk responses focus on deflecting hostile attention without
confrontation. Criminals make a risk-reward
just as businesses do. Effective security must drive up their level of
uncertainty, thereby moving them onto a more docile or unprepared victim.
must be performed in a highly compressed timetable to address existing and
needed security risk mitigation efforts in the critical areas of key personnel
(including dependents), facility operations and transport of commodities and
must focus on specific and actual security risk management matters that will
need the company's immediate, short term and medium term attention. The initial
assessment should serve the company as an extendable regional template that can
be applied to security risk management across the company's operating
managers and staff must be taught tools and skills so as to understand what has
been working, why it has worked, what should be changed and how urgently this
needs to occur. Skills training is needed to build core competencies in key
areas of operating risk management specific to security and safety risks.
protection program must be designed for the actual threat environment in a
specific location, and must produce a security risk mitigation effort that will
generate assessments, briefings, decision points, implementation plans and
immediate effectiveness reviews.
this immediate scope, company personnel must gain a broader ability to ensure
continuity of operations in any deteriorating security environment and provide
the company a basis for balancing resources while ensuring effective security
Each of these areas, singly and in combination, are best examined
by Design Basis Threat (DBT) process
(originally created to protect nuclear facilities and weapons) to define and
adjust specific responses to specific threats. This Threat Analysis entered the
mainstream in the wake of the Khobar Towers bombing in Saudi Arabia.
As the threats change so must the protective responses change. DBT
is adaptive, can be taught and embedded in normal business operations to be
monitored by company personnel. As security is embedded, there is no added
organizational layer for security.
level steps in this dynamic process are:
Value Assessment (Assess value of the facility, process, personnel to be protected
which is needed to estimate an appropriate cost of protection. If the
protective cost is too high or the target is too vulnerable the function may
have to be relocated.)
Assessment (Specific nature and scope of the threat which is essential to
design the minimum effective protective response.)
Assessment (Degree of vulnerability of the target(s) to attack.)
Assessment (Assessment of risk from any actor or group, the likelihood of
attack and the likely damage of an attack.)
Management (Continuous management of pertinent threats and appropriate
Necessary Risk Remediation Activities in Mexico
In potentially high threat environments such as Mexico, all associated
surveillance must be performed by skilled personnel in a completely
non-alertive manner as many criminal groups will assume that an unknown person
or group is a hostile competitor to be immediately eliminated.
Affected firms will need a partner that can perform a thorough threat
analysis and a calibrated response that includes:
Actionable intelligence at national, regional and situational
Outreach to authorities and relevant entities
Facility protection and upgrade steps
Transportation protection of raw materials and finished goods
Vetting employees and contractors to reduce insider threats
Each step must be executed with precision and with continuous monitoring
of any changes that alter the inbound threats.
#Mexico #SupplyChain #Risk #Extortion #Corruption
Thomas L. Friedman, "How Mexico Got Back in the Game", The New York Times,
February 23, 2013:11.
It is an axiom at our shop that "items at the edge of technology" are often unrecognizable or unidentifiable by inspectors unfamiliar with the technology. Two characteristics most contributed to a lack of recognition, robbing the viewer of visual cues as to function:
Miniaturization - a reduction of size and form.
Integration (often a handmaiden of miniaturization) - the combination of functions of multiple items into a single item, itself often miniaturized.
Defenders too often fail to recognize miniaturization and integration as crucial components in risk evaluation. The emergence of Micro-Electro-Mechanical Systems (MEMS) that exhibit both miniaturization and functional integration are already complicating timely identification of risky items. (Also see Berkeley Sensor & Actuator Center and search the domain for "mems".)
We expects fluid conditions as defenders expand their screening focus beyond larger, more recognizable items to include a proliferating class of smaller, cheaper items:
Unexpected, innovative and non-traditional methods will proliferate, finding broad applicability.
Targets will have changing vulnerabilities, technological abilities and associated risks.
Attackers' tactics will evolve in methods and operational activities from internal technological "lift" and as a response to changes by their targets.
Short of nation state confrontations, conventional operations will draw less interest as adversaries will look to escape retaliation and the cost of investments required to underwrite an overt effort.
Unless we design with the asymmetrical adversary in mind, such adversaries will continue to find ways to bypass our defenses and exploit our vulnerabilities. Such asymmetric operations will have common characteristics:
Small-scale high-impact operations.
Operations performed with greater efficiency and effectiveness, both to minimize footprint and discovery and to conserve organizational resources, in order to achieve maximum results.
Rise in operations taken to address ideological causes and this applies equally to fringe Muslim fundamentalists and single-issue groups such as Earth Liberation Front (ELF).
Creating a generalized risk assessment hierarchy
Done for the US Defense Logistics Agency (DLA),a pilot Miniaturization Threat Impact (MTI) system capable of classifying threats from miniaturization and integration was developed.
Risk characteristics spanning easily known toinsufficiently known tootherwise unknown items were captured in a generalized risk assessment tree (from least to greatest risk):
Primary function is identifiable from life experience and general training.
Primary function is identifiable from specific industry/technology experience.
Dual use/unintended use is ascertainable from specialized training and added knowledge-base.
Miniaturization (function no longer evident) becomes difficult to defeat.
Functional integration (embedding multiple functions by virtue of miniaturization) is difficult to defeat.
The relative ease or difficulty of identification scaled appropriately (from easy to most difficult):
IDENTIFICATION WITH EASE
Generalists were good at #1, generally poor at all others.
Specialists were good at #1 and #2, generally poor at all others.
#3 much harder as it requires understanding of function(s) and the ability to transfer those characteristics to new objects, especially for a "good enough" capacity.
Highly skilled and frequently retrained specialists might address #4 on an irregular basis.
Miniaturization and Integration #5 were effectively undefeatable in the short to medium term.
IDENTIFICATION MOST DIFFICULT
Capabilities difficult to automate
The author's ability to identify dual-use capability (can be used for both civil and military use) and "unintended use" capability (can be used for unintended or unimagined applications) proved difficult to transfer to existing staff without extensive retraining. Existing staff were eitherGeneralists good at #1, or modest Specialists good at #1 and #2. Staff were, in effect, being asked to perform a role for which they had no prior experience.
Implications going forward
The glide slope to the desktop that brings increasingly greater capacity in smaller form factors at lower cost to the lay user orasymmetrical attackerwill continue. Capability and/or lethalitywill rise even as components shrink.
Google Glass as an example in transition
"Wearables" (properly named the wearable computing market) has moved beyond early adopter status, but its three segments have varying degrees of acceptance:
Complex accessories - "operate partially independent of any other device, but fully operate when connected with IP-capable devices".
smart accessories - similar to complex accessories but allow users to add third-party applications.
smart wearables (notably Google Glass) - "function with full autonomy, independent of any other device except to access the Internet".
While it is now said to be a question of "when" and not "if" the wearables segment extends into the enterprise, aggressive miniaturization and integration continues to drive social unease - with more women than men in the negative. Google might benefit from flooding trusted segments with subsidized Glass, e.g., physicians, essential technicians, police and military. From Pew:
[P]ublic attitudes towards ubiquitous
wearable or implanted computing devices are the most positive, or more
accurately, the least negative. Although 53% of Americans think it would
be a bad thing if “most people wear implants or other devices that
constantly show them information about the world around them,” just over
one third (37%) think this would be a change for the better
The glide slope to the desktop will continue to accelerate as Google has already received a patent for smart contact lenses with built-in cameras and other sensors such as infrared. The technical, police and military implications are staggering.
Today's Google Glass will by then have ceased to be an issue as people look carefully at your eyes to see if you are reality augmented. I would expect a certain class of detectors to emerge to detect wearers of such contacts. And they will be mounted in contact lens, or embedded in the wearer's biologic eyes.
Journalists contact us from time to time, too often to make a story on the back of our disclosing proprietary research to them. In fewer but welcome cases, they want to get terms straight to educate their readers.
Do you have any insight into how best to define a car bomb versus a bomb in a car? I ask [as] it’s my impression that we haven’t really seen a proper car bomb in Mexico yet – not on the scale of the ones I saw in Iraq or other places. But what’s the right definition? When do we know the cartels are looking to get such a device?
Where do you think they got it? is that common on the international criminal market, or is that just what might be locally available [from] the mining industry in Chihuahua?
Each of the recent spate of vehicle explosions is a Vehicle Borne Improvised Explosive Devices (VBIED) and the groups employing them are coming up the experience curve.
What makes a VBIED
First, slowly deconstruct VBIED, i.e., a vehicle borne IED.
In effect, a VBIED is both a shrapnel pack and a delivery mechanism for an IED described as:
They are unique in nature because the IED builder has had to improvise with the materials at hand. Designed to defeat a specific target or type of target, they generally become more difficult to detect and protect against as they become more sophisticated.
Almost anything that blows up will do, from grenades to plastic explosives to leftover mines. The most everyday of electronics -- a cell phone, a garage door opener, a child's remote-control toy -- can be recast as a trigger. And the hiding places for these handmade bombs are everywhere: in the ground, aboard a truck, even inside an animal carcass
Though they can vary widely in shape and form...
Once the perps understand fuzing and vehicle transport, they will quickly scale the explosive content.
Second, the size and brisance of the Mexican explosions in relationship to Iraq and Afghanistan
The size and brisance of the current Mexican VBIEDs are not on the scale of devices being encountered in the Mideast and SW Asia. From a private note:
Cheap escalation, expect both IEDs (Improvised Explosive Devices) and VBIEDs (Vehicle Borne Improvised Explosive Devices) to increase in volume and lethality as actors build larger charges.
IEDs and VBIEDs in Iraq, Afghanistan and other high tempo war zones are constructed from UXO (unexploded ordnance) abandoned or captured on the battlefield or looted from former state magazines.
By contrast, Mexican devices are currently utilizing blasting explosives [Tovex] that have far less brisance than military explosives. (In lay terms this has to do with the velocity of the radiating shock waves; blasting explosives are designed to fracture rock rather than pulverize, so explosive mixtures are tuned accordingly.)
Mexico's powerful drug cartels have long been experimenting with explosives. In the northern state of Durango in 2009, more than a dozen masked gunmen stole 900 cartridges of Tovex water gel explosives from a warehouse run by the U.S.-based Austin Powder Company. Mexican authorities recovered the stolen material, but the theft underscored how easy it can be to get explosive material in the country, where armed men also have attacked transport vehicles carrying such substances.
The ATF has helped investigate several events involving improvised explosive devices around Mexico, including a roadside bomb in March at a gas station in the northern state of Nuevo Leon. That bomb, which didn't injure anyone, consisted of two large cylinders filled with nails and possibly black powder, another substance that is readily available on the black market.
The ground situation will rapidly escalate when one or more of the criminal groups begin to add military explosives (Semtex or C4) to their global shopping lists. As I noted in The reality of Mexican drug cartel weapons sourcing:
[The] cartels could easily rise above the squad subordinated weapons (assault weapons and light machine guns) currently in use to include antitank missiles and larger ordnance. Beyond the demands of ego and attempts to demonstrate superior area control, there are not enough viable targets to justify the added expense. Be certain that when the need or desire is there, so will be the weapons...
Improvised Explosive Devices (IEDs), Unexploded IEDs, Hand Grenades, Indirect Fire (mortars, rockets, and unidentified indirect fire), Rocket-Propelled Grenades (RPGs), Small Arms Fire (SAF), Vehicle-Borne Improvised Explosive Devices (VBIEDs), and Complex Attacks. The most common attacks along Route Irish are IEDs, VBIEDs, and SAF.
IEDs [continue] to evolve. Current techniques are:
Explosives positioned alongside guard rails. The large number of guard rails on the road make these devices difficult to detect and relatively easy to emplace by staging equipment in vehicles or near overpasses, and, in a matter of minutes, having the IED armed and in the desired location.
Explosives wrapped in a brown paper bag or a plastic trash bag. This is a particularly easy method of concealment, easy to emplace, and has been used effectively against Coalition Forces and civilians along Route Irish.
Explosives set on a timer. This technique is new to the Route Irish area, but is being seen more frequently.
Use of the median. The 50 meter wide median of Route Irish provides a large area for emplacing IEDs. These can be dug in, hidden, and/or placed in an animal carcass or other deceptive container.
Surface laid explosives. The enemy will drop a bag containing the explosive onto the highway and exit the area on an off-ramp with the detonation occurring seconds or minutes later depending on the desired time for the explosion.
Explosives on opposite sides of the median. Devices have been found along both sides of the median that were apparently designed to work in tandem, to counter Coalition Force tactics to avoid the right side of the highway while traveling Route Irish.
Explosives hidden under the asphalt. Insurgents pretend to do work on the pavement, plant the explosives, and repair the surface. These are usually remote-detonated devices.
Vehicle-Borne Improvised Explosive Devices (VBIEDs) contain two types of car bombs, e.g., when the vehicle is moving (suicide) and when the vehicle is parked and stationary. Both can be either command or remote-detonated:
Multiple suicide vehicles. The first vehicle either creates an opening for a second, more powerful vehicle, or acts as bait to draw other personnel, such as medics and other first responders, into the kill zone of the first vehicle. As people respond, the second VBIED engages the responders.
Suicide VBIEDs are typically used against convoys, Coalition Force patrols, or Coalition checkpoints where they can achieve maximum damage. Such vehicles will rapidly approach the convoy from the rear and attempt to get in between convoy vehicles before detonating.
Stationary VBIEDs are typically parked along main supply routes, like Route Irish, and often have been found near known checkpoints. These are usually remotely operated and may be employed in conjunction with a suicide VBIED.
Mexico demands what is called situational awareness of its citizens and visitors. While the violence in the border towns is reaching epidemic proportions, Monterrey and Acapulco (aka Narcopulco) now increasingly have what amounts to squad level firefights in the central business/tourist district.
Criminal co-optition will accelerate as groups jocky for product, plaza control, security and supremacy.
These negative events are paralleling Mexico’s betterment of the China Price, and may well deprive Mexico of added legitimate revenue and infrastructure build-out.
By early 2008 the Gulf Cartel had “begun acquiring more military-grade weapons, including FN Herstal P90 submachine guns, FN Herstal 5.7 x 28mm pistols, M72 LAW (light anti-tank weapon) rocket launchers, AT4 anti-tank rockets, RPG-7 rocket-propelled grenade launchers, MGL 37mm grenade launchers and fragmentation grenades.”
The use of Vehicle Borne Improvised Explosive Devices (VBIEDs) has started and I would expect that to accelerate with even more paralysis of Mexican judicial and police asset that US forces suffer in Afghanistan.
Missing from this first effort: Secondary and tertiary detonations, often waves of parallel ignitions, against massed first responders and receiving hospitals. The Chechens and Iraqis have perfected this progression, but for the foreseeable future these secondary detonations will be IEDs and VBIEDs and not suicide vests. As time progresses: Multiple targets, simultaneous attacks, multiple vehicles per target and armed assault/breaching cadres to clear security personnel and gain access to the primary target...
Last week's Mexico car bomb in the border town of Cuidad Juarez killed three. It is the first known use of a car bomb against authorities and marks a troubling new level of violence in the country's brutal drug war.
From my vantage point, Mexican violence is merely trending towards a truly epic level of systemic violence. Despite the sad drumbeat of killings in Mexico chronicled by Frontera List, that nation has yet to experience the savagery that Africa has found itself awash.
My wildcard is the US and various US-based groups. While such groups vary widely in their intent, some would appear to go so far as to support a false flag event against the US with the intent of forcing the legitimate government to move assets into Mexico.
Misreading the patterns
We believe that it is a misleading of the data to believe that:
The government's crackdown "has achieved significant results as far as breaking up the leadership, financial, logistical and operational structures of organized crime"...
The informe [Calderon's annual report] lists more than two dozen top-ranking or local drug bosses taken down since last September. The most significant were kingpins Arturo Beltran Leyva and Ignacio "Nacho" Coronel, both killed by Mexican troops.
The sudden spate of captures of high level operators from various competing groups begs attention as coincidence does not exist for an intel analyst. Always possible we say, but unlikely and only accepted after all other avenues have been exhausted. (And only accepted once as twice is a pattern.)
By leaking information to selected (or neutral) authorities, these groups, who are likely corrupt themselves but not a partner to the personages being surrendered, gain leverage and advantage without having to endanger themselves or make themselves a target for retribution.
As the arresting agency has been selected on the basis of their tolerance to, or payment by, the leaking criminal group, those agency members will get a handsome bonus for removing the leaker’s competitor.
We long ago dispensed with the DTO (drug trafficking organization) label as the binary fiction of criminal cartels against honest government has been replaced by what we define as criminal groups:
Corrupt groups comprised of traditional organized crime, corrupt state and federal police, corrupt military and corrupt politicians who compete against one another in a fluid Co-Opetition [cooperative competition] in which only those at the top of their game survive.
In this operational environment the 'intelligence' cited by various parties is very likely not coming from a single legitimate sovereign source but rather from a series of interested parties seeking to damage another of the parties.
There is a yet to be written analysis of intelligence and counter-intelligence operations of Mexican criminal groups against one another.
All data from Mexico is suspect
Mexican statistics, especially those regarding criminal matters, are supremely suspect. As Molloy has diligently noted regarding this WSJ comment:
Each side of the US-Mexican border has its myths; one shared by both is the preponderance of weapons used by the drug cartels are US sourced and transited south to Mexico. Between deserting Mexican military selling their weapons, weapons harvested from armories further south in the Americas, and purchases made on international arms markets, the cartels can acquire whatever they desire from a price/performance level.
In other words, the cartels could easily rise above the squad subordinated weapons (assault weapons and light machine guns) currently in use to include antitank missiles and larger ordnance. Beyond the demands of ego and attempts to demonstrate superior area control, there are not enough viable targets to justify the added expense. Be certain that when the need or desire is there, so will be the weapons:
A 40mm grenade launcher capable of firing up to six grenades in 30 seconds and a disposable projectile launcher are among the South African weapons seized recently from Mexican drug traffickers...
Other weapons being stored at the warehouse include AR-15 and AK-47 assault rifles, different types of grenades – including Israeli-made grenades – and .50-caliber Barrett rifles capable of penetrating armor and downing helicopters at a distance of two kilometers (1.2 miles)...
The Mexican states where the largest number of seizures of these types of weapons has occurred are (in order): Baja California, Michoacan, Chihuahua, Coahuila, Tamaulipas and the Federal District (Mexico City). Drug-trafficking gangs and other organized crime groups are known to operate in those jurisdictions...
Obama would have been correct to say that 90 percent of the guns submitted for tracing by Mexican authorities were then traced to the U.S. The percentage of all recovered guns that came from the U.S. is unknown.
The 5,114 figure is simply wrong. What Newell said quite clearly is that the number of guns submitted to ATF in those two years was 11,055: "3,312 in FY 2007 [and] 7,743 in FY 2008." Newell also testified, as other ATF officials have done, that 90 percent of the guns traced were determined to have come from the U.S...
Fox News reporters William La Jeunesse and Maxim Lott note, quite correctly, that Mexico doesn’t submit all the guns it recovers to the U.S. for tracing. Furthermore, Fox News reported, this is "because it is obvious from their markings that they do not come from the U.S." And it quoted a law enforcement official as to why:
Fox News, April 2: "Not every weapon seized in Mexico has a serial number on it that would make it traceable, and the U.S. effort to trace weapons really only extends to weapons that have been in the U.S. market," Matt Allen, special agent of U.S. Immigration and Customs Enforcement (ICE), told FOX News.
If that’s true, then the guns given to ATF for tracing constitute a badly biased sample of all crime guns seized in Mexico...
Given the bribery rife in Mexico, my assumption is that both criminal elements and corrupt politicians would prefer to mask the source, at best, of their weapons or, at least, distract the lay reader from ground truth.
The vault nestled in a Mexican military base is the government's largest stash of weapons... The warehouse [in] northeastern Mexico City [is] surrounded by five rings of security. There are two military guards at the door and five more are in the lobby. Inside, another 10 soldiers sort, clean and catalog weapons. Some are dismantled and destroyed, a few assigned to the Mexican military... The security, bolstered by closed-circuit cameras and motion detectors, makes the warehouse practically impenetrable, said Gen. Antonio Erasto Monsivais, who oversees the armory...
But the process of getting, keeping and identifying weapons bound for, or in, storage is fraught with peril, and can lead to weapons, and their records, being lost and recycled back into criminal hands:
"Many of these rural municipalities that may come into a gun seizure ... may not even know anything about tracing guns,"... A police officer in Mexico submits a description, serial number and distinctive markings of the gun. The weapons are then turned over to the military for storage in one of a dozen armories such as the one in Mexico City.
When U.S. investigators need additional details, as they often do, the request goes back to the original police officer, who must retrieve the gun from a military vault — sometimes hundreds of miles away... Many mistakes are made because of difficulty translating technical terms about firearms...
Mexican police must ask permission each time they need to look at a stored gun... Even if that permission is granted, the investigator cannot go past the metal fencing separating a reception desk and the shelves holding the guns. A soldier has to bring out the requested weapons...
Given my interviews and research on cartel weapons sourcing, I find this statement difficult to believe:
But [General Monsivais] said that despite the type of weapons in the possession of the drug-trafficking gangs, their firepower still does not exceed that of the Mexican armed forces and police.
My opinion is that the only reason that this and similar warehouses are not thoroughly penetrated is that it is cheaper and easier for cartels to source new weapons, paid for with drugs, en masse from overseas.
With a grounding in chemistry, most notably to understand which reactions will generate sufficient heat to precipitate cook off, basic mechanical engineering, and model rocketry, coupled with access to a machine shop and painful attention to process detail, I can attest to the relative ease of constructing asymmetrical devices. As a teenager with access to EOD/UXO (Explosive ordnance disposal/Unexploded ordnance) manuals dealing with WWII German anti-handling and anti-tampering devices installed in ordnance dropped on England, I started to build booby trapped training devices with anti-handling features for the local bomb squad to train officers. While the 'detonator' in those devices was the now old fashioned flash bulb sticking out the side of the devices, a parallel interest in chemistry led to product, which drove the interest in rocketry. DISCLAIMER: I was fortunate. I had mentors who offered guidance. Some of my efforts took on a 'class project' level of general interest. Access to the internet is NOT a substitute for skilled laboratory practice. I categorically do not recommend trying this at home.
Good transnational border bomb design
If Palestinian master bombers are any guide, militant groups should be able to produce basic device architecture and BOM (bill of materials) with variants tailored for local conditions. (For example, being able to substitute and wire a CDMA phone in lieu of a GSM phone.) These plans could be accessed electronically and implemented locally. It addresses what colleagues have spoken to me as the ‘holy grail’ of an attacker coming in clean, then building the device locally from locally sourced components that do not attract attention.
Short of this, I concur with the assessment that reliable device construction that neither detonates prematurely or fails to detonate on target is not easy:
Skills needed can include the refrigeration or heating of chemicals to a precise temperature, mixing chemicals to an exact proportion, or understanding the degree of concealement needed to smuggle a substance through an airport scanner.
[It] was far more difficult to get something to "go boom" for the average untrained person than people think. "This is why, for example, training for construction of explosives and explosives devices in terrorist training camps has historically taken up to two years, as opposed to the usual basic training where people are trained how to 'use' explosives instead of how to build devices"...
"It is an ongoing problem for militant groups. This is why some [groups] often sent the detonator or a key part of it back with those it was deploying to carry out attacks, especially for the more sophisticated attacks."
Current state of militant designs
Too many gloat over the ineptitude of the Times Square bomber. With a better designed device - amateurish was appropriate to describe that one - and/or an actor that was willing to die rather than escape, much of what followed would be post blast forensics.
The Time Square failure is even more remarkable in that improvements to the basic design of the 2007 London car bomb outside the Tiger Tiger club in Haymarket, and a second car a few hundred yards from the first, were not disseminated among the faithful. See diagram and image.
Remember that they go to school on us. All details noted in the Times Square and other attempts that document both the failure of the device to function and the perp’s identification and capture will be added to their playbook. Example:
Investigators found that the vehicle identification number (VIN) on the dashboard of the 1993 Nissan Pathfinder had been removed. But that's not the only place to find the VIN. According to AutohauzAz.com it can be found: Left side of dash (thru windshield), front left floor panel, right inner fender, right strut housing, firewall, and engine block.
I decided to bet that I could capture a working preparation library for explosives, incendiaries, igniters and basic device constructions in less than 30 minutes. The goal was to have sound operational materials that with a modicum of laboratory practice and mechanical and electrical skill would produce operational devices. The process took less than 20, and that was with citation documentation.
Start with likely keywords or phrases, or if you know anything about the field, start with a classic: FM 5-25 Explosives and Demolitions. FM 5-25 is devoted to placement technique as opposed to manufacture, but wherever FM 5-25 appears there will be fertile ground. My paper copy is 1971; subsequent changes are minor.
Second search tip is to limit searches to PDF documents as most manuals are rendered in PDFs on the web.
Third search tip is, when you find a promising item, rerun your search limiting your search to that domain.
Leaving aside the many Torrent feeds and the occasional scribd.com sources, you will soon have PDFs of all that you need for technical preparation from ordinary materials as well as mechanical fabrication and placement. The citations noted here are representative, but not exhaustive. Some sites could be, or should be, honey pots. Other than Cryptome, most English sites represent themselves as patriot, militia, or survivalist stock.
The items cited in Preparer Resources below are but a sampling of technique available on the web.
The next question was why, with these materials easily available, weren't the jihadist community producing better device designs for export.
Questioning the lack of tradecraft in recent militant devices
Despite the volume of information that is publicly available, mercifully much of which is wanabee, actual fabrication has been poor in many recent devices in the US, UK and Europe.
Readers may think that, 'It is only a matter of time. They cannot stay stupid forever,' but the truth is that the necessary information has been in jihadist, paramilitary, and patriot right hands for decades. My only surprise is that so much tradecraft appears to have been lost in jihadist training over the past decade.
The documents — including student notebooks, instructor lesson plans, course curriculums, training manuals, reference books and memorandums — show that one tier, by far the busiest, prepared most of the men who enlisted in the jihad to be irregular ground combatants... The other provided a small fraction of the volunteers with advanced regimens that prepared them for terrorist assignments abroad.
American military instructors who reviewed the documents said the first tier of instruction was sophisticated in a conventional military sense, teaching, one said, "a deep skill set over a narrow range" that would reliably produce "a competent grunt." The second tier was similarly well organized, albeit with more sinister curriculum.
Implicit in the split levels of training was the Islamic groups' understanding of the need for different sets of skills to fight on several, simultaneous fronts: along trench lines against the Northern Alliance in Afghanistan; against armor or helicopter assaults from conventional foes in Chechnya; as bands of foot-mobile insurgents in Kashmir, Central Asia or the Philippines; and as classic terrorists quietly embedded in cities in the Middle East, Africa, the former Soviet Union and the West.
To instill these diverse lessons, the schools applied ancient forms of instruction — teachers pushing students to copy and memorize detailed tables and concepts — to modern methods of killing. [in effect, using] "Islamic pedagogy to teach Western military tactics."
Evident as well in the documents, which were translated for The Times, were signs that in developing martial curriculums, the groups were cannily resourceful in amassing knowledge. Some lessons were drawn from manuals from the former Soviet Union. Others, the use of Stinger missiles or Claymore mines, were derived from instruction underwritten by the Pentagon and the Central Intelligence Agency in the 1980's, when Washington backed the Afghan resistance against Soviet occupation.
In the years after the Soviets withdrew and American money evaporated, the groups aggressively cribbed publicly available information from the United States military and the paramilitary press. Ultimately, American tactics and training became integral parts of the schools.
One camp, used by the Islamic Movement of Uzbekistan, gave instruction in movements by four-man fire teams that was modeled after formations used by the United States Marine Corps... The Uzbeks also used reconnaissance techniques long taught at the Army's Ranger School in Fort Benning, Ga. Other documents show that jihadi explosives training covered devices and formulas lifted from a Special Forces manual published in 1969.
While these materials are available through open sources, from on-line booksellers to rural gun shows, military officials said it was a feat to digest far-flung sources, translate them into Arab and Asian languages and assemble them in an orderly way. Bomb-making instruction, for instance, combined the electrical engineering necessary to make detonation systems with Vietnam-era Army formulas for home- brewed explosives, then was translated into Arabic, Uzbek and Tajik. "It indicates a tremendous amount of filtering and organization to get to that," an American military instructor said.
Moreover, notebooks from several camps demonstrate that even in courses taught in different languages and hundreds of miles apart, many lessons were identical, sharing prose passages, diagrams and charts. This was an important achievement, military officials said, as it created compatibility between members of what essentially became an Islamic foreign legion.
It also marked a significant advance beyond training that the United States sponsored for Afghans in the 1980's.
"One of the problems we had against the Soviets was getting the mujahedeen to be uniform," said an American official familiar with that movement. "We couldn't get them on the same page. When you went to one valley, they fought one way. When you went to the next, they fought another. To the extent these guys were able to level the training and make it consistent, they were on the right track."
But officials also noted that the breadth of the camps' curriculum search resulted in uneven quality. Some material was well- chosen, some not... Officials also said even useful references could be problematic. One said that while cautious handlers could use some Special Forces bomb recipes, others would endanger themselves. "People have had to be scraped off of their ceilings after trying these things," he said.
The jihadis seemed to know this. One notebook warned: "Make sure that first aid kits are available at all times in order to deal with any mishaps that might result from the performance of this experiment."
Whatever the shortfalls, the two tiers of training worked.
The value of interrupted training sanctuaries without asset predation
The military models gathered, perfected and delivered to successive jihadist classes in the late 1990s required time, place and human resources for both instructors and qualified students:
Law enforcement officials have described a multivolume set of terrorist instructions, dubbed the Encyclopedia of the Afghan Jihad, as a sort of master guide for the camps. Parts of the encyclopedia were found by The Times at four training sites, and officials said parts of its explosives section were incorporated into classes at the camps.
But records from students and teachers also show that most jihad courses lasted several weeks to a few months and that rather than covering the encyclopedia's breadth, stayed intensely focused on small sets of skills. To create those classes, the groups relied heavily on an array of sources obtained from the West: military training manuals, American hunting magazines, anarchist manuals, popular action movies, chemistry and engineering textbooks, and Web sites hawking James Bond-like tricks.
Signs of this collection effort are sprinkled throughout their documents. American military trainers who reviewed the jihadi students' notes quickly identified lessons from their own playbooks, including Islamic Movement of Uzbekistan reconnaissance techniques also used by Army Rangers, or four-man weapon deployments and formations — wedges, columns, echelons, lines — that are the Marine Corps standard.
One senior military instructor noticed a familiar streak of professionalism in class schedules, a carefully selected mix of lectures, demonstrations and practice. "Wherever they got this, it was modeled after somebody's program"...
Again, why isn't the current jihadist community able to produce better device designs for export? I believe that answer lies in both denial of sanctuaries and predation on jihadist human resources. In other words, the number of skilled instructors was severely reduced with the balance redirected to operational roles. Likewise, the traning infrastructure was degraded, reducing the available training syllabus and hands-on field work.
That will change once they absorb the lessons of the master bomber.
The Islamic groups training recruits in Afghanistan managed to standardize their lessons, bridging ethnic and linguistic divides to ensure that all the soldiers had a similar base of knowledge. The student notebooks, taken from different camps and safe houses, show nearly identical diagrams in lessons like map reading, compass training, basic demolition and weaponry, as in the sight for a rocket-propelled grenade, explained here in Uzbek, Tajik, Arabic and Urdu.
The Jihad Files: Al Qaeda's Grocery Lists and Manuals of Killing
When the USSR was the bipolar peer nation state to the US, it could, and did, press Japan over its commercial and military partnership with the US, but unlike China, the USSR never had control of US supply chains. The rare Russian exception besides energy stocks has been US manned access to earth orbit.
Legacy constraints in supply chain inertia
Wayne Hall, former head of the space shuttle program, now NASA's deputy associate administrator for strategic partnerships, penned a small masterpiece on the importance and the inertia of supply chains in attempting to resuscitate the shuttle. It must be noted that Hall's comments apply generally to many defense systems in current inventory:
It is nice to have eloquent oratory and high flown philosophical statements, but the real way that real programs are really controlled is through the money.When the logistics and supply budget is stopped, the program is over.Momentum and warehoused supplies can carry on for a short period, but when those are exhausted, its time for the museum.
Starting four years ago, the shuttle program in its various projects made "lifetime buys".That is, we bought enough piece parts to fly all the flights on the manifest plus a prudent margin of reserves.Then we started sending out termination letters.About two years ago, we terminated 95% of the vendors for parts for the external tank project, for example.Smaller, but still significant, percentages of vendors for SSME, Orbiter, and RSRB have also been terminated.
A lot of things that go into the shuttle build up are specialty items.Electronics parts that nobody makes any more (1970's vintage stuff).Hey, if it works, why invest money in certifying new parts?Certifying new ones would be even more costly!Specialty alloys to meet the extraordinary demands of space flight, parts that are made by Mom and Pop shops mostly in the LA basin are norm rather than the exception.You might think that simple things like bolts and screws, wire, filters, and gaskets could be bought off the shelf some where, but that thinking would merely prove how little you know about the shuttle.The huge majority of supplies, consumable items, maintenance items, they are all specially made with unique and stringent processes and standards.
Our shuttle history tells us that when we try to cut corners, trouble results.Small, even apparently insignificant changes have caused big problems... There is a long and arduous process to certify a vendor to produce the logistical parts for the shuttle.Not many companies do this work... A lot of them have been there from the beginnings in the middle 1970s.So when a Mom and Pop specialty shop gets a termination letter from the shuttle program after 35 years of production and they have other customers, guess what happens?...
Where does the money come from?Where do the people -- who should be working on the moon rocket -- where do they come from? We started shutting down the shuttle four years ago.That horse has left the barn.
It appears that neither of the current US presidential candidates has read Hale, but to be charitable, one or both may have wisely decided now is not the time to educate voters on logistics and the fact that a nominal five year gap till Orion/Constellation makes the US dependent on Russian Soyuz systems to put men in orbit.
Given the changing political landscape, the problem is so severe that NASA has begun to study flying the shuttle beyond its 2010 retirement despite the April 2008 testimony by NASA Administrator Michael Griffin before the Senate Commerce, Justice, and Science Appropriations Subcommittee:
"Everyone's deeply concerned about the gap," [committee chair] Mikulski told Griffin, referring to the often-discussed five-year gap between the scheduled retirement of the space shuttle in 2010 and NASA's new Orion and Ares system that will fly in 2015... Mikulski asked Griffin if this gap could be reduced with additional funding. Griffin replied it would cost at the rate of a $100 million to shorten the schedule by a single month. It would be impossible to shorten the schedule to be earlier than the late fall of 2013, "given the water over the dam behind us," he said...
Mikulski told Griffin: "there are some Members in the House who are raising the concept of extending the life of the shuttle until 2015." Griffin replied, "the shuttle is an inherently risky design," with NASA calculating that if the shuttle was flown twice a year for an additional five years "the risk would be about one in twelve that we would lose another crew. That's a high risk." He added, "To fly the shuttle after the space station is completed for any significant length of time I believe would incur a risk I would not choose to accept on behalf of our astronauts." It would, Griffin said, cost around $3 billion a year keep the shuttle flying. If this $3 billion came out of NASA's budget, it could delay the launch of the Orion and Ares system, at a rate of a month's delay for every $100 million that was redirected. "You extend the [five-year] gap, if you fly the shuttle longer," Griffin told Mikulski.
[Mikulski replied] "So what you're saying is there is no silver bullet. There is no magic motion available to close the gap." Griffin agreed.
The presentation proceeds to describe what I call the Richter 15 to 30 event - the interruption of Taiwanese Original Design Manufacturers (ODMs), including their plants on the Chinese mainland. Unless readers are embedded in the ODM electronics segment, they are generally unaware of the centrality and magnitude of Taiwan in the global electronics market for computers, telecommunications, and modular components. For background, this 2005 pair remains useful:
Writing of Silent Hands Behind the iPhone in 2007, I noted it was a good "primer to the Taiwanese presence in our electronics backbone. Now reconsider the implications of a major earthquake in Taiwan. Then generalize that to any interruption to, or redirection of, this segment":
"The iPhone is a great example of where Taiwan is still strong: reliable sourcing, leading technology and complex integration."... "It's not a surprise that the iPhone would be made here because the food chains for Apple's notebooks and iPods are already in Taiwan... It's a natural progression."...
Taiwan's rise as a communications workhorse is part of a decade-long transformation under way on this Chinese Nationalist-controlled island south of the mainland. Already the world's biggest producers of computer components, Taiwan companies like Compal Electronics, in addition to Hon Hai and Quanta [both of whom make iPhones], have used their expertise to branch out into new markets that use many of the same products.
The strategy of repackaging - finding new uses for computer components - has paid dividends... By harnessing the ability to cut costs, churn out products quickly and work flexibly with customers, the Taiwan companies have become top makers of cellphones, smartphones, broadband modems, wireless routers, global positioning devices, networking equipment and other gear. They, like companies elsewhere, have also made deep inroads into China, where many of their factories are...
Taiwan's evolution from [boards to telecommunications] has gone largely unnoticed in the [US] because companies here make most of their money as made-to-order manufacturers, not sellers of their own brand products. But Taiwan's industrial makeover has helped its companies remain competitive in a world increasingly dominated by low-cost Chinese assemblers and by Japanese and South Korean companies with strong footholds in high-end components like flash memory chips.
A colleague shared this in 2005:
Quanta (biggest customer is Dell), Mitac (builds notebooks, Sun servers, the iPaq for HP, etc), and Inventec (biggest customer is HP) have been somewhat schizophrenic about stepping out of the "tell us what you want and we will build it" ODM model.Quanta made a bunch of Silicon Valley investments at the height of the boom, mostly for naught.Inventec is probably the most conservative, [but with] their booming HP business, they are sounding like they will try to chase more ODM business (essentially OEM as known in the auto business but they invest in reference designs that can be mass produced) rather than the IDM (Integrated design/manufacturing) approach ("We designed this really cool product. It has these features, it is better than these competitors, and we can do some customization to fit your requirements")...
But all of these manufacturers are constantly looking at ways to expand their business and cut their dependency on Dell, HP, and IBM.
My recollection is that Hi Lin Lee, senior vp and co-founder of Quanta went to MIT. [In 2002 an] Apple iBook and the Mac with the dome base... were in his office. Of the later he said with obvious pride "That is my product." As I have said before the growth in manufacturing capacity fueled by the Chinese investment credits goes on for some time.
Quanta is not the only one with senior guys with strong connections in the US. Mitac is run by Mathew Miau.Matt moved to the US as a young teen, worked for Intel as an engineer.He designed the USART which was a pretty famous and very successful product.He negotiated a package to transition out of the company by opening Intel Taiwan and had a big role in launching the Taiwan PC manufacturingindustry. With his Intel option proceeds, and his father (who had made a fortune in raw materials if my memory is right) bought a small PC company (Mitac) and turned it into a powerhouse. Synnex, a major us high tech equipment distributor is under the Mitac group.Matthew is as comfortable (and as well connected) in Silicon Valley as he is in Taiwan... [email]
A year ago my friends at Inventec, who built the iPods [said] they enjoyed the volume, but weren't making anything on them.The Taiwan ODMs are now operating on 5+% gross margins, which would be more tolerable if they weren't spending some much on engineering of their customers' products gratis in order to win the manufacturing business. In general the margins are so thin that the manufacturers have to provide high quality products because a few warranty returns can wipe out any profits. [email]
The king is dead. Long live the Taiwanese princes. The top tier chain is collapsing but the great OEM/ODM chains are vibrant. I had friends in DEC Asia who were leaving for these early princes, even before [DEC's acquistion by] Compaq. The topic of conversation was 'Do we stay invisibly in place with no name show through or do we go direct? If yes, how?' The opinions appeared to come down on the side of: 'We have no distribution channel. We are not strong enough to challenge Dell, or HP, etc.' That has changed. [email]
Chinese quest for technology independence
The Chinese have ceased to be content to stuff components and fabricate assemblies for Taiwanese ODMs. The CCP has made indigenous chip set production a national priority; they want to create a peer competitor to both Taiwan and Intel:
[The] objective for China is to take control of the design and manufacture of vital technology. "Like America wants to be energy independent, China wants to be technology independent...They don't want to be dependent on outside countries for critical technologies like microprocessors, which are [now] a fundamental commodity." Federal laws also prohibit the export of state-of-the-art microprocessors from the United States to China, meaning that microchips shipped to China are usually a few generations behind the newest ones in the West.
Despite its late start [China was slow to support microprocessor R&D], China is making rapid progress. The [Institute of Computing Technology] ICT group began designing a single-core CPU in 2001, and by the following year had developed Godson-1, China's first general-purpose CPU. In 2003, 2004, and 2006, the team introduced ever faster versions of a second chip--Godson-2--based on the original design. [Each] new chip tripled the performance of the previous one... [The Godson-3 chip was unveiled in August 2008.]
The technological imperative is not limited to electronics:
The government is backing the drive with a two-pronged approach: using incentives to encourage companies to innovate, but also moving to discourage low-end manufacturers from operating in southern China. That step would reverse one of the crucial engines of this country's spectacular economic rise...
Chinese firms are expanding into (or buying companies that work in) software and biotechnology, automobiles, medical devices and supercomputers. This year, a government-backed corporation even introduced its first commercial passenger jet, a move Beijing hopes will allow it to some day compete with Boeing and Airbus...
China has "a lot of technology locked up in the military, and now the government is reducing budgets and pressing agencies to privatize... So suddenly, a lot of technology people thought didn't exist has come out from behind the curtain."...
There are still plenty of obstacles here, including weak intellectual property rights enforcement and a culture of copying or stealing technology from foreign companies or joint venture partners...
Predicting the Second Chinese Exclusion Act
What I have come to call the Second Chinese Exclusion Act will exact great commercial hardship on Western firms as China moves to expel foreign firms. The Chinese Exclusion Treaty (1880) and the Chinese Exclusion Act (1882) were racist low points in US history, exacting great hardship on Chinese already in the US and those attempting to enter. The Second Act will be no more palatable to its recipients.
Senior Chinese have, in small groups, stated an intent to:
Absorb Western technology through joint venture (JV) and partnering strategies.
Slowly make JVs less attractive by progressive tariff and currency policies.
Force Western partners from Chinese market.
Multinational offshoring has had two purposes, the second not as well discussed as the first:
Given Chinese performance to date, multinational access will be limited, perhaps to a third on the market and then decline as China reclaims the then maturing market. The mechanism for expulsion is elegant: standards and administrative edicts. The strategic use of standards, notably indigenous standards, will:
Free China of foreign royalties.
Create standards which Chinese products can meet but foreign products cannot.
Reverse the royalty stream.
Create price/volume advantage for global Chinese goods that overwhelm offshore local production.
Targeted Richter effects on US/EU supply chains
I often hear that the Chinese would not interrupt the trans-straits ODM traffic, but we know from experience that events that threaten the CCP or the state are dealt with immediately and firmly regardless of collateral impact or personal distress.
If the PRC is presented with conditions it finds intolerable and can degrade a key adversary by non-military means and thereby escape or reduce damage to the mainland, they will do so. Supply chains under Chinese control can be slowed or terminated to prevent the US from commencing or maintaining the ops tempo of a future Desert Storm against any adversary. Many of these interruptions can be cloaked as commercial actions, thereby offering China plausible deniability. In other words, China has become a governor on US actions.
The US and, and to a lesser degree, Europe have lost control of their defense and commercial industrial supply chains. Exporting capability rather than capacity, the US has increasingly retained only a top tier or integrator role while exporting its tier 2-tier n base. Worse, the US cannot realistically define discrete and net risk as the chains are too opaque for identification and there is decreasing ability to direct sourcing to less risky tiers.
The loss has not come without warning, especially in the seminal analyses of the mid-1980s to early 90s (much of which is cited here) and near-disaster supply chain bottlenecks that nearly sidelined front line equipment during Desert Storm (1990-91).
Having surveyed four decades of research on globalization impacts, we can state that there are virtually no metrics in open source. There are drivers and characteristics but there are no actionable metrics of sufficient robustness to pass the test of falsifiability. At a macro level we are secure that we and some others have the compass right, but actionable information about a specific chain condition and greatest risk at component at tier in the chain is fuzzy at best. Given our supply chain analytic experience, we can see the tracks of bland assumptions without the understanding of how supply networks actually work. Defense and commercial sides of the house share the same problem - insufficient granularity of analysis which if they get there they find that they do not have accurate and timely data. At this point the commercial side generally gives up. The defense side can't so spends much time in Rommel's Wolkenkuckucksheim (Cloud-Cuckoo-Landafter Aristophanes). Striped of politeness, almost everyone is guessing although they shroud it in tech speak which pacifies the unknowing.
The US manufacturing loss is staggering in its sweep as it includes:
Technology (Research Testing Development and Evaluation - RTD&E)
Industrial base (tier base capability , knowledge gaining, performance curve and price/volume)
Availability (conversely product unavailability, product as hostage, withheld or not surged in time of national need)
Supply chain (chain complexity masks risky sourcing and possible interdiction)
Education (learning citadels clustered to engineering and production centers)
Having reviewed analyses of manufacturing globalization for both the defense and commercial sectors, this analyst is of the opinion that the risk to the US has become so great that it should study itself as a reasonable target of economic sanctions (also here), hence the inclusions of citations on that topic. (The Chinese have studied means of countering economic sanctions; can we do no less?)
Before globalization there was 'NATO-azation'
The issue of dealing with the effects of globalization on US commercial and defense industries has been with us for decades. The 1985 Strategic Materials: Technologies To Reduce U.S. Import Vulnerability, whose advisory panel an Air Force logistics colleague advised me "looks like a 'Who's Who' for the defense department in the 1990's.Lot of them went on to very senior DoD positions," stated the problem and its complexity well:
Crafting a workable policy[regarding dependence on foreign sources, NATO allies included, for defense material and technology] will be a tricky job.
There are three basic policy choices:
demand that anything that goes into defense equipment be built in the U.S. from U. S.-sourced components, taking whatever measures are necessary to ensure that all the necessary industries are alive and well in the United States;
let the market dictate which industries will be healthy in the United States and look only for the best deals wherever they can be found worldwide; or
choose some industries that have to be located in the United States, take appropriate measures to ensure that, and let the rest go with the market.
The first and third require some sort of intervention in the international economy, either supporting the international competitiveness of U.S. companies or protecting, supporting, and subsidizing U.S. companies that cannot otherwise survive. Another approach is to design nothing into U.S. defense systems that cannot be domestically sourced. But this cuts off a great deal of modern technology, a Western strength. In making these choices, the United States will have to decide how dependent we can afford to be, and how much independence we are willing to pay for. If the United States demands self-sufficiency without taking measures to keep U.S. companies alive and competitive, the list of technologies available for defense systems is likely to decrease as time goes on.
It will be necessary to decide how to treat dependence on various nations. There are significant differences in being dependent on Canada (already defined as part of the North American industrial base), Britain, our other NATO allies, Mexico, Japan, Korea, etc... Other nations are much less tightly tied to the United States.
The high-technology economy is an international one and responds to international market forces. These forces are likely to continue to move industries offshore despite U.S. efforts to will (or legislate) them to stay. In the vast majority of cases, defense business is far too small to provide the necessary clout, particularly when faced with other nations that manipulate their civilian markets to keep their companies healthy. Competition comes from Japan, the smaller Asian nations - Korea, Taiwan, Singapore, etc - and Western Europe...
The US chose the second path by a combination of default and design augmented by partial regulation; Private industry sought performance and integration coupled with higher margin and lower costs. Our current globalization impasse is its direct descendent.
By 2000, the challenges facing the US Air Force were typical of an increasingly globalized and consolidated industrial base:
Between 1990 and 1998, a horizontal and vertical integration took place across all segments of the U.S. aerospace industry. [Driven by a dramatic decline in military aircraft procurement budgets as well as overall defense authorizations since the end of the Cold War,] The number of credible U.S. prime contractors for integrating fighters and bombers fell from seven to two; the number of U.S. missile manufacturers from fourteen to four; and the number of space launch vehicle producers from six to two. By the end of the 1990s, the European defense aerospace industry had also begun to experience a dramatic cross-border consolidation and restructuring. This growing consolidation of defense prime integrators and subsystem suppliers has resulted in increased numbers of strategic and product-specific alliances, international teaming and joint ventures, and cross-border mergers and acquisitions (M&As) among defense firms, together with heightened interest in foreign exports and foreign lower-tier suppliers.
From foreign source to dependency to vulnerability
As early as 1987, US Industrial Base Dependence/Vulnerability. Phase 2. Analysis, had defined three elements of foreign sourcing: (1) a foreign source is a source of supply, manufacture, or technology that is located outside the United States or Canada, (2) a foreign dependency refers to a source of supply for which there is no immediate available alternative in the United States or Canada, and (3) foreign vulnerability, related to foreign dependency. refers to a source of supply whose lack of availability jeopardizes national security by precluding the production, or significantly reducing the capability. of a critical weapon system. While the US has yet to suffer a sustained foreign supplier cutoff "either in peacetime or war," the military and economic balance has now shifted against the US, making it increasingly plausible that the PRC or Russian Federation could directly or indirectly influence 'just-in-time' availability:
One potential scenario simply posits disagreement by the foreign supplier with US policy... Problems such as strikes, political unrest, or natural disasters within the supplier's country are all plausible. Cutoffs might also be created by the supplying nation giving priority to ventures more profitable than DOD contracts, or giving priority to the supplier's home country needs over the United States, especially in times of crisis. Countries external to the supplying country could also create cutoffs - by threatening the supplier, by an overt blockade, or by war. One US study done prior to the end of the Cold War, reminded readers that Japan was within easy bombing distance of the Soviet Union, and thus the USSR could easily cut off critical components for US weapon systems... The USSR test fired two sea-launched ballistic missiles into the Sea of Japan at a time coinciding with Mikhail Gorbachev's April 1991 visit to Japan. Some analysts described the test firings as a "muscle flex" and a "political message for Tokyo." The message, however, has ramifications for the United States also - sources of certain critical supplies are vulnerable to hostility, a situation that creates a possible domino effect on US weapon systems.
Given the shift in manufacturing key component categories from Japan to China, were the US to incur the ops tempo of a second Desert Storm or OIF level endeavor not to Chinese favor, the issue of shortages would not be 'if' but rather 'how many and how soon.' (Nothing has to overt; polite expressions of regret coupled with 'work to rule' responses and the need to service current customers would attenuate/terminate supplies of many critical parts and assemblies needed to sustain the ops tempo.):
Despite the successes of US military weapon systems that used foreign high technology components during the Gulf War, there were moments of uncertainty as to whether the United States would be able to get requested "rush" orders filled for needed components on a timely basis. [On] "nearly thirty occasions, the Bush administration had to call upon foreign governments for help to get delivery of crucial parts for the war effort."... "foreign manufacturers often were reluctant to put the Pentagon's purchase orders ahead of their regular customers' without prompting from their governments, according to officials at embassies here and at the Commerce Department." Of special concern were Japanese suppliers... "The Japanese electronics companies - whose identities have not been publicly disclosed - reportedly said they could not curtail existing commercial contracts, such as orders from VCR, television, and automobile manufacturers, to meet the needs of the US forces in the Gulf." Experts on Japan [also] speculated that Japanese suppliers, in a society geared toward avoiding any military involvement beyond national borders in the post-World War II era, "may have been afraid of domestic political ramifications of favoring military over commercial customers." [An] interview with an unnamed Commerce Department official revealed that the US government "had to 'jump through the hoops' and that the department took the unusual step of asking Japanese government officials at the embassy in Washington for help in prodding Japanese suppliers."
Said of Japan in 1991, the following applies with greater intensity to China. As a calibration, consider a US air and naval intercession on behalf of Taiwan in the Formosa Strait. Leaving aside the likely effort by the Chinese to sink a US carrier battle group, thereby shocking the American populace, one can assume that the entire component supply chain would shut down. Whatever ops tempo the US envisioned would have to come from inventory or alternate supply. Lesser scenarios should have less chain disruption, but a degree of disruption remains high:
The potential for crisis, however, certainly existed and only a common political objective shared by top levels of the US and foreign governments averted more serious problems. The bond between most governments during the war was created by nearly-unanimous outrage over Iraq's aggression; such a bond was both unprecedented and delicate, thus it may be tough to duplicate in the future. Had there not been a common political objective or had the Japanese government, for instance, been more inclined to bow to domestic calls for avoiding contributions to the war effort (and there was considerable pressure within Japan for noninvolvement), it is quite likely the United States would have had to look for other sources to obtain necessary components. Without pre-planning for alternate supply sources, the probability of a favorable resolution would have decreased significantly.
As we do quite a lot of supply chain analysis, we know why it so often fails, namely the OEM or top tier cannot get the data from their immediate tier who are loath to reveal their chains. Data is shielded, normalized, changed without notification, fictionalized either by surrogate data or simple commercial misrepresentation. Counterfeits add yet another layer on the problem set.
From electronic/electrical chain examples we have at hand, many are PRC at tier 2 to tier 5, others are Taiwanese ODMs which means PRC for almost all tiers save design, Japanese chains have PRC, Korean and Singaporean tiers. There are many cases where the OEM or top tier believe that a certain part comes in at tier x in its entirety, but the reality is that a goodly portion comes in PIA down to tier x+3. The PRC presence, either as source or influencer, is overwhelming.
Our commercial experience has repeatedly shown that the OEMs don't know what, from where, is in their chains. A common experience is that as the OEM or top tier develops the algorithms of granularity needed to be effective, the data becomes too difficult or costly to obtain. If the OEM demands an identified tier x validate volume and pricing as stated by the purchasing tier (tier x-1), the tier x will validate lest they run afoul of their purchasing tier.
China is well into the process of creating a mercantile, rather than fungible, market for raw materials that is expressly grounded on the inability of the US or US allies to interdict it. (China's growing mercantile net is of keen interest to this author, but lest I be accused of China bashing, items of equal weight are a Russian kleptocracy class armed with the energy weapon and the implosion of the US Pre-K through 20+ education structure.) See:
Chinese mercantile highlights of interest to this author are:
Strategic plan creates mercantile structure that secures energy stocks, raw materials, and crops.
Cannot be interdicted by the US or its allies.
Delivers export markets for commercial and military production, redirects regional elites to study in China, and extracts diplomatic obedience.
Sends large groups of diplomatic and consular agents that meet counterparts at each level of the target country's bureaucracy.
Promotes infrastructure projects using Chinese firms, creating a camouflaged posting for People's Liberation Army (PLA) assets.
Veiled PLA works have common pattern: tidewater port presence offering partial or complete opaqueness connected by a strassendorf (street city) style of satellite towns connected by new roads to a processing plant at the primary extraction asset, e.g., coal, oil, minerals, timber, etc.
Taken together with China's regional economic might, the PRC is demonstrably capable of building the regional relationships needed to eject the US and in the process become the dominant mercantile center of an Asian trading block that includes Asia's "most vibrant economic sub-region" (China, Hong Kong, Taiwan, South Korea, and Japan).
While I freely admit this macro level view lacks granularity and has yet to be submitted to the test of falsifiability, I do not believe it can be removed from a discussion of sustained supply chain access.
A unitary threat exceeding combined prior Soviet and Japanese threats
Economic power is the foundation of military power. The most important single indicator is GDP. Like defense budgets, however, GDP provides only a limited picture of power. It says little about the composition of the economy, such as whether it is spearheaded by leading sectors or dominated by old and declining ones. Other important variables include human capital and technology. The best readily available measure of human capital is the average year of educational attainment. For technology, the best indicator is per-capita expenditure on research and development.
The US now faces a potential threat of chain disruption from the PRC greater than that presented by combined Soviet espionage efforts directed against the US technology base, military, dual-use and commercial, and Japanese commercial inroads against a wide range of commercial products, notably electrical and electronic systems, that were conceived in the US:
In the case of the Japanese, the US had an exceptionally strong commercial competitor periodically balanced by a pro-US government that recognized its privileged place under a US defense umbrella which allowed it to devote its GNP to commercial pursuits; when it was essential to US interests, Tokyo would intervene on our behalf. See Refining a China forecast. (It was an unwritten rule of the Nixon administration that the Japanese were to be allowed to dominate electronics markets in return for their unwavering support of US diplomatic initiatives.)
I submit that the PRC will continue to strengthen the independence its own strategic supply chains, a condition that the US/EU have aided by seconding wholesale the manufacture, now design, and in the offing, unique product standards, to the Chinese. A current example of this effort is the gaining of indigenous, as opposed to Taiwanese owned, semiconductor device fabrication capacity from wafer fab through deposition, removal, patterning, and properties modification.
As for the US/EU, the de facto 'sole sourcing' of much of the US and elements of the EU industrial base to China has already rendered its manufacturing base into Chinese hands at multiple tiers, many of which, as noted above, are opaque to the top tier, integrator and ultimate buyer. Similarly, the export of much of its design process for future products to China-based R&D hives have increased the potential for IP predation and the appearance of peer Chinese competitors before the US/EU products reach market.
Just as the Soviet Union pointedly pressed Japan over its commercial and military partnership with the US, so will China both direct its domestic suppliers to comply while pressing Taiwan, Japan and Singapore when any of those states significantly work against Chinese Interests.
I submit that both the US government and private industry would find it instructive to receive the equivalent of the Russia's gas embargo to the Ukraine who surprised all by continuing to tap their allotment, thereby plunging the EU into shortage. European energy sourcing directions shifted in the moment with reliable sourcing and self-sufficiency rising in relation to cost as prime issues.
I further submit that the US needs to adopt the Toyota/Denso model of retaining the capacity to design and manufacture a portion of the annual buy of everything that they purchase. Toyota/Denso is the only significant automotive OEM to retain that capacity which also gives Toyota leverage with its suppliers by its understanding the technological, design, manufacturing, component pricing and supply chain tier structure of what it procures.
This process was proposed, at least for the defense sector in the 1980s but was not acted upon. In the interval, the US, much like the other automotive OEMs has already surrendered much of its process technology in the form of joint ventures, outsourcings and tier manufacturing, leaving the Chinese only to target mathdata and key design efforts not sourced to the tier base.
Chicken Little's sky may be falling but it is does not fall uniformly
If at a macro level it is plausible that the US/EU are subject to systematic supply chain interruption/embargo by the PRC at the commercial and dual-use level, what is the status for defense items given the near misses of Desert Storm? How do we validate (falsifiability) and prioritize investigation in order to identify the most essential chain elements? Even the salient works of the 1980s-early 1990s were imprecise on granular means of analysis. DoD has been providing guidelines "for evaluating, on a case-by-case basis, the need for Government action to preserve industrial capabilities vital to national security" for some time. Witness the 1996 Assessing Defense Industrial Capabilities handbook. The problem was then, and appears to remain, one of data, rigorous trigger thresholds and chain transparency below the DoD vendor.
It is with some interest that DoD appears to believe that its key systems are intact. A three year 2006 National Research Council effort on Critical Technology Accessibility attempted to answer two questions:
What products/components/technologies currently being solely procured from foreign suppliers could significantly disrupt U.S. defense capabilities if access to them were denied (through conflict, embargo, treaty, etc.)?
What emerging technologies/products that, if the United States chooses not to pursue domestic production, could significantly disrupt U.S. defense war fighting capabilities if access to them were denied?
In which the NRC Committee:
looked for but did not find an existing, exhaustive database of foreign products/components being procured by the Department of Defense (DoD) and decided to not attempt to develop such a database on current foreign sourcing across the vast numbers of DoD systems. Nor did the committee assess, for each foreign component, the impact of denial on operational capability or try to understand the particular mitigation opportunities and consequences. Finally, it did not develop a collective assessment of the technological and industrial trajectories of emerging technologies that promise to be key to our nation's security. The size and scope of such an effort would have exceeded the time and resources available to the committee, and it became clear from the information provided to it and from its deliberations that this was not the right approach.
Without intending to flip, they guessed, or as you prefer, SWAGed. Without data, chain transparency, metrics and algorithmic analyses, how could they do better? We find Fortune Fifty firms in similar predicaments with their supply chains.
Despite these limitations, the NRC Committee was confident that:
If the ]US] were to become strategically dependent on a foreign industrial base for items that are critical or for which the regeneration of a U.S. industrial base would take a long time, the risk would be unacceptable. The committee does not see any signs of that at this time, but the possibility should be taken into account when determining what the U.S. industrial base needs to be for defense purposes. The committee identified four areas of future technological and industrial advancement that warrant discussion: (1) information technology (IT) components; (2) IT services, which include many forms of the capability to manipulate, store, and exploit data and information; (3) nanotechnology; and (4) biotechnology. The committee also identified another area of concern, systems integration capabilities.
The 2006 NRC Committee text strongly echoed, and possibly accepted the findings of, a 2004 Study on Impact of Foreign Sourcing of Systems that "contacted a total of 806 prime contractors and first and second tier subcontractors in order to collect and evaluate information" for systems:
shaped by the recent experiences in Operations Enduring Freedom and Iraqi Freedom. Those operations were conducted largely as "come-as-you-are" conflicts with the combat platforms already deployed to our forces; and they consumed significant quantities of precision guided munitions. As a result, this study is focused on those items that were or would be in high demand and/or consumed during similar future operations.
In the absence of rigorous means and metrics coupled with our case work in supply chain analysis, we question the findings of that 2004 effort:
Foreign sources provide limited amounts of materiel for the identified programs.
Utilization of these foreign sources for these programs does not impact long-term readiness.
Utilization of these foreign sources does not impact the economic viability of the national technology and industrial base.
In most cases, domestic suppliers are available for the parts, components, and materials provided by the foreign sources.
The results of this study are consistent with recent related studies.
This voluntary survey went down to tier two, identifying a total of "73 first, second, and third tier foreign subcontractors" from Austria, Belgium, Finland, France, Germany, Israel, Italy, Japan, Malaysia, New Zealand, Netherlands, Russian Federation, Singapore, Spain, Sweden, Switzerland, Turkey, and the UK. (DoD has been habitually comforted by UK subs, after that NATO and friendlies.) This analyst is pleased that the questionnaire went to tier two, but the report seems to treat 'tier two' (from any country) as the edge of the world after which one needs to look no further.
Also the test characteristics seem vague, looking to the past ("Supply disruption is not likely since the current suppliers have demonstrated reliability in the past..."), rather than to the future. There was also a repeated implication that if the dollar amounts were small that the risk was low as opposed to cessation of component access regardless of cost. ("Collectively, foreign subcontracts represent about four percent of the total contract value and less than ten percent of the value of all subcontracts for these programs.")
The report did not reveal or imply any further granular analysis. Based upon our supply chain analysis, this analyst would want more rigorous analysis, look at lower tiers and other chain characteristics before issuing a similar pronouncement.
Returning to the 2006 NRC report, its recognition of the changing nature of the supply base harkens back to the good works of the 1980s:
The impact of component denial is not a static estimate. The risks entailed in depending on a foreign-produced component are embedded in the strategy of supply management and the diversity of the impacted operational system or force. The size and power of the globalized commercial marketplace are such that we must find a way to exploit the marketplace's value for our security. The risks and benefits of this exploitation are at least as much an issue of acquisition and logistics strategy as they are of estimating foreign intent. The viability of the future assured domestic supply of critical components for the DoD is dependent on the health of the U.S. industrial base in these sectors.
Its recommendations to Under Secretary of Defense for Acquisition, Technology and Logistics (USD(AT&L)) and DIA are interesting, although some are unworkable while others are likely to be ineffective:
[D]evelop a system for monitoring the risks of component unavailability within the procurement and operating elements of DoD... [ICG comment: Having not worked before, and with no better tools and metrics on offer, how will it work now?]
A self-certification approach by USD(AT&L) should direct the services and defense agencies to annually prepare a product and supply chain assurance report that identifies important vulnerabilities, potentially significant operational consequences, and recommended mitigation actions... [ICG comment: Self-certification rarely, if ever, works as bureaucracies are loathe to mark themselves deficient; even less likely without clear means and metrics.]
[A]nalyze these annual reports to identify DoD-wide vulnerabilities that might not be detected by the individual services and agencies and to warn of worrisome trends in the integrity of the supply chain, ensuring it is not compromised by foreign supply sources... [ICG comment: Unlikely to work as the certifications are suspect, and no metrics are proposed.]
[ICG comment: There are, however, some useful questions which could lead to metrics:
Where there is a lack of war reserves or stockpiles.
Where a weapon system is uniquely in the U.S. inventory and therefore cannot tap into worldwide depots.
Where developing an alternative source of supply requires significant lead times.
Where the DoD has developed sole-source, single-solution capabilities.
Where critical technologies have migrated offshore or been developed there in their entirety.
[D]evelop a system for monitoring U.S. industrial health in strategically important global commercial market sectors that are critical to the availability of components for DoD... [ICG comment: Fine, but how and by what means and metrics?]
[O]organize a systematic method of assessing the health of military systems integration in and for the DoD as well as that of potential coalition partners and adversaries...[ICG comment: Again, how and by what means and metrics?]
The foreign dependency analysis that this analyst would like to see is a Joint Logistics Commanders' 1986 report, A Study of the Effect of Foreign Dependency, summarized in GAO/NSIAD-90-48, that "reviewed 13 DOD weapon systems and found dependencies1 on foreign sources in 8 of them with severe problems in 6. According to the study, these dependencies could result in a total cut-off of the production of these items as early as 2 months into a war mobilization effort for a period lasting from 6 to 14 months.":
To obtain information regarding the lower subcontractor/vendor levels, for 12 of the 13 weapon systems reviewed, the project team performed a limited survey of the market structure supporting the systems. That is, for each of the 12 systems, program officials were asked to identify 5 subsystems and components at the next lower production tier meeting certain criteria2 and this identification continued through the lower production tiers down to the level of basic materials. For the other system, the Sparrow missile, a complete vertical tier analysis was done.3
1 A foreign dependency, as defined in this study, is an immediate, serious logistics support problem that affects the combat capability of the United States because of the unavailability of a foreign sourced item.
2 Each subsystem or component had to be (1) complex enough so that the program officials were unable to categorically state that it did not contain any foreign manufactured items and (2) critical enough to production, and complex enough to produce, so that its loss would pose serious problems in meeting production schedules
3 A vertical tier analysis identifies critical items acquired from foreign sources for an individual weapon system down through the tiers of suppliers and evaluates possible production constraints at each level.
Going forward, RAND's effort to assess industrial impacts identified a typology of "cross-border business relationships and activities" then, and still, prevalent in the defense aerospace industry:
Cross-border shipments of finished platforms, systems, or major subsystems
Foreign Military Sales (FMS) coproduction
All five were supported primarily by "prime/subcontractor [by far and away the leader], marketing agreement, team, joint venture, and parent/subsidiary" structures while the latter three usually involved "relatively greater level of collaboration among participating firms."
RAND also segmented USAF objectives relevant to globalization into three categories (economic-technological, political-military and national security-viability) and identified
program characteristics it said showed "the most promise for promoting the potential military-political and economic benefits of globalization." This analyst notes that those same characteristics also made it possible to individually and incrementally transfer the US technology base. Note that the primary driver is the defense firm not the government; all other drivers follow:
This author found Leech's approach of sufficient interest to post a fair use excerpt of the GeoJournal piece, with footnotes, dealing with its Foreign Vulnerability Index (FVI). I believe it reasonable to say that Leech believes that:
The King and Cameron approach, as with many engineering approaches, will not pass the test of falsifiability.
Moran's 4/4/50 rule, which states that if four foreign firms or four nations control more than 50 percent of an international market, that market is considered "vulnerable" and should be monitored, might be a Herfindahl threshold value.
The essential problem of assessing the potential for 'concerted effort' in the anti-trust realm is analogous to the essential problem of assessing 'concerted effort' by nations and their industries to deny the US access to their products, services or technologies.
Vulnerability is a narrow consideration having to do with tightly defined markets for products and services.
It remains to be seen if Leech's approach falls victim to the problem we frequently see in supply chain analysis, namely that the complexity issue is so great that cost effective, perishable data is not available. I fear that may well be the case, hence the value of inserting a Design Basis Threat (DBT) analysis as we must have actionable values in a low data environment and be able to defend them. See:
Leaping forward to the present, we see aviation/aerospace, industrial, sporting goods and automotive driving a robust market:
Over the last several decades, the global market for carbon fiber has grown about 12%. Industry experts expect this market to reach $0.9 billion by the year 2010 (around 50 million lbs), with the market for finished carbon fiber reinforced composites parts growing to $9.9 billion. The price of carbon fibers is expected to reach around $5/lb in 2008, a significant reduction in the $150/lb price in 1970 when the market was only around several million lbs.
In this thriving environment, the last principal US producer of Acrylonitrile (AN or ACN), the precursor to Polyacrylonitrile (PAN) (See carbon fiber value chain) which is the basis for allaerospace/high end carbon fiber, has passed into foreign hands.
Apocryphal stories to the contrary, frogs are smart enough to jump from water whose temperature is elevating; in this skill of self-preservation, frogs are smarter than governments, corporations and self-interested political elites who will stay in the water until it is too late. Once again, low cost has proven not to be low risk.
Bibliography Note: While the following list of citations is not exhaustive, I submit that they reasonably constitute a four decade record on globalization and are a good jump point for further investigation.
As part of my work revolves about inverting toys, technical gadgets, and industrial "found objects" into asymmetrical weapons, I was attracted to Noel Sharkey's presentation at RUSI's The Ethics of Autonomous Military Systems as well as his earlier efforts in venues such as Robot Wars and Techno Games. I have come to see Sharkey inhabiting the intersection of engineering, the application of engineering and ethics of application:
Most robots currently in combat are extensions of human fighters who control the application of lethal force. When a semi-autonomous MQ-1 Predator self-navigated above a car full of al-Qaida suspects in 2002, the decision to vaporise them with Hellfire missiles was made by pilots 7,000 miles away. Predators and the more deadly Reaper robot attack planes have flown many missions since then with inevitable civilian deaths, yet working with remote-controlled or semi-autonomous machines carries only the same ethical responsibilities as a traditional air strike.
But fully autonomous robots that make their own decisions about lethality are high on the US military agenda. The US National Research Council advises "aggressively exploiting the considerable warfighting benefits offered by autonomous vehicles". They are cheap to manufacture, require less personnel and, according to the navy, perform better in complex missions. One battlefield soldier could start a large-scale robot attack in the air and on the ground.
"How long is it going to be before the terrorists get in on the act? With the current prices of robot construction falling dramatically and the availability of ready-made components for the amateur market, it wouldn't require a lot of skill to make autonomous robot weapons." Sharkey said a small GPS-guided drone with autopilot could be made for about 250 pounds ($490).
Writing to Sharkey:
I support your contention and submit that it will happen sooner that the high street press assumes and, if previous al Qaeda operational practices are any guide, robots will come in swarms to both confuse and overwhelm defenders and maximize target damage. [email]
I cited a trio of short weblog items I wrote in April 2004 in pursuit of Commercial-Off-The-Shelf (COTS) fleet of attack and surveillance UAVs (Unmanned Aerial Vehicles):
Price, performance and accessibility have only accelerated since. Subsequent to my articles, the Israeli IDF was astonished when Hezbollah launched a reconnaissance UAV over Israeli territory, recovering it without incident. Despite Israeli drone and UAV flights over Lebanon, Israel had not been paying attention to asymmetrical UAV development - publicly stated in many cases to rise from commercial radio-controlled (R/C) model aircraft versions. They should not have been surprised; Hezbollah is a resourceful adversary.
Constructing, in some instances assembling, a semi-autonomous "killer robot" is all too easy. Remember this effort to construct a COTS fleet of attack and surveillance UAVs was early 2004:
Nose video cameras that could superimpose imagery over a heads-up cockpit display based on telemetry sent back from the bird. If the ground pilot was properly trained, it was possible to fly something onto the target just like the big boys...
Smoke systems intended for demonstration flying are intriguing as a dispersal mechanism for other agents. Certain smoke pumps use one TX-RX channel to toggle on/off...
If the intent is to surveil or deliver/spray a payload, then an R/C aircraft can be launched, perform its mission, and subsequently be recovered -- if for no other reason than to forestall discovery of the means of an attack or that an attack had occurred. The cost of the systems is low enough and simple enough that it could be produced in a quantity that would satisfy the redundancy needs of groups like al Qaeda.
These small UAVs can have enormous consequences beyond delivery of conventional explosives. Our research into the feasibility of producing asymmetrical small volume, "off scope" organophosphates (nerve agents), i.e., agent production using easily purchased materials and not the more rarified "Australia Group" components, showed that production was not limited to sovereign state actors. See:
Some of our findings: If you are going to make and use an organophosphate product in less than a year, standard stainless steel components will suffice before corrosion degrades the system, inadvertently venting product. Toxic byproducts of production can be exhausted directly into a sealed running water stream, sending it off for the sewer system to absorb. Use of microreactors and microfactory components vastly lower production risks while improving weaponization and delivery.
An article is forthcoming on criteria for an asymmetrical air force that would be within the means of a number of entities, criminal and terrorist.
The global submarine fiber optic network almost perfectly mimics the global electricity grid in its inability to mount any reasonable defense against attack. (I say 'almost' as the fiber optic industry is far less aware of its being a target than is the electricity grid.)
Here is Richard Clarke in 2000 speaking of cyberwar as "a threat that US government cannot defend solely by federal means":
Unless power companies are required to do [this] by the federal government, they will never do it, because they're now in competition with each other. They're all willing to do it if they're all forced to do it... no one has competitive disadvantage by proving security...
We, as a country, have put all of our eggs in one basket... It could be that, in the future, people will look back on the American empire, the economic empire and the military empire, and say, "They didn't realize that they were building their whole empire on a fragile base."
Spot on. My read surfaced few public analysts that spoke systematically and realistically about the threats to submarine cables. Of those, fewer identified their unprotected "landing stations" - where the cables come ashore - as a high vulnerability. (This analyst found it interesting that landing stations highlighted in discussions of telecom cooperation with federal eavesdropping were forgotten in assessing the cable threat.)
A simple search on "submarine cable landing" will produce a List of international submarine communications cables as well as 983 locations where undersea cables come ashore, most all of them in rural to remote areas. There are so many ways to identify landing points. Bluewater sailors know where cables congregate to come ashore as they are clearly marked on their nav charts.
The Eyeball series highlights the landing stations along the US East Coast. (Scroll down past the text to the paired aerial photo-highway maps for the landing stations. But note that the text you skipped over cites sources for these locations. My point is that it is a trivial problem. My compliments to Cryptome for flagging that triviality.)
Separating hysteria and excessive calm from legitimate risk
It appeared that the only procedural rigor at play among amateur reporters was to repeat Auric Goldfinger's line that, "Once is happenstance, twice is coincidence, three times is enemy action" and then assign multiple, geographically dispersed cable breaks to enemy action, usually Jihadist, without further investigation.
The relatively uncomplicated sovereign state environment in effect when Neal Stephenson wrote Mother Earth Mother Board in 1996 is now complicated by the emergence of the stateless aggressor against whom retaliation is difficult:
There is also the obvious threat of sabotage by a hostile government, but, surprisingly, this almost never happens. When cypherpunk Doug Barnes was researching his Caribbean project, he spent some time looking into this, because it was exactly the kind of threat he was worried about in the case of a data haven. Somewhat to his own surprise and relief, he concluded that it simply wasn't going to happen. "Cutting a submarine cable," Barnes says, "is like starting a nuclear war. It's easy to do, the results are devastating, and as soon as one country does it, all of the others will retaliate.
There are more than one stateless aggressors that will be pleased to sever submarine cables or other communications services in the pursuit of their aims. (Mother Earth Mother Board is otherwise still worth the read.)
Christopher Rhoads does a yeoman analysis of the structure of the fiber sector, much of it still dark since the bust of the late 1990s fiber boom. (Unfortunately, the unused dark links are often not in the areas of current demand.) A useful summary of cable maintenance, grappling and repair is here. It was amusing to hear FLAG Telecom state a new third cable, the FLAG Mediterranean Cable, between Egypt and France would be "fully resilient" against cuts as it was taking "a different route from the severed cables." FLAG knows that the cables emerge in shallow water to terminate at the same landing points.
As to the comments from Egyptian authorities that no ships were operating in the restricted area where the breaks were said to occur, and thus had no opportunity to drag an anchor, I say anything is possible in a land where a bureaucrat will accept payment to look the other way. This comment from a diver is useful:
Ryan Singel nicely outlined the "Cable cut fever" racing about the web. But when Johna Till Johnson answered "Is it likely the cable cuts were intentional? And more importantly, are we at the dawn of a new era of "cable terrorism," in which malcontents try to disrupt global communications via cable cuts?," she got the first right and, overlooking shallow water and the landing stations, got the second quite wrong:
In deep waters, cable cuts are rare... 60% of all cable cuts occur in waters less than 100 meters deep. Of all cable faults, roughly three-fourths are due to "external aggression," the bulk of which is accidental human activity, namely, fishing, anchors, and dredging...
Intentional sabotage [is] probably more feasibly done in shallow waters than deep, and cable security in shallow waters is only modestly more practical. Clearly, undersea cables are a ripe target for those with an interest in wreaking havoc on international communications, whatever their motivation. Another consideration is that undersea cables have been used for submarine/surface surveillance purposes as far back as World War II, with the cooperation of private industry...
And here a scent of Clarke:
It is not enough to have multiple independent operators of ring- or mesh-based networks, with built-in restoration capabilities, optical equipment and power redundancy, multiple redundant links between cable stations and city gateways, etc. Physical security from deliberate human attack or sabotage must also be considered. If ports, railways, gas pipelines, and other types of networks are being secured against possible sabotage, we must similarly increase the security of undersea optical highways. Guaranteeing reliability is impossible, but an improvement on the current hands-off approach is long overdue. The economic cost of losing, or even just slowing down, international communications is extremely high. This risk has to be factored into the calculations behind the investment level and design of undersea optical networks.
Technical assist: For those struggling with unfamiliar communications vocabulary in a subsea cable network, a nice pictographic introduction of general data communications in any medium can be found here (actually the introduction to a data communications course).
RAND highlighted the landing station vulnerability as least as early as 2000; the problem has only grown more critical while commercial cable firms remain obtuse:
[W]iring companies have focused on redundancy as an important aspect of the cable network. While early fiber optic cables were "point-to-point" systems, modern systems are configured as loops, connecting two landing stations - at least 100 kilometers away from one another - in one country to two in another. Because it would be unlikely for an isolated nautical event - a sudden shift in the seabed on which the cables rest, for instance, or an inadvertent break caused by a fishing net or a ship's anchor - to affect both cables, the systems are thought of as secure...
The results of this "stacking" [can be seen in ten cable systems terminating in New Jersey. Of the ten] six terminate in only one of the same three cities, Tuckerton, Manasquan, and Manahawkin, New Jersey. One - a self-healing loop - terminates in both Tuckerton and Manasquan. A sixth terminates in both Manasquan and Charlestown, Rhode Island. Theoretically, an attack on two or three of these sites - at the point where the cables come together in the undersea trench before coming ashore - could cause enormous damage to the entire system...
Similarly, all submarine cables but one terminating in the south of the United States terminate at one of three points in Florida: Vero Beach, Palm Beach, and Hollywood.
[The US is less isolated than other states]- some transmissions could be rerouted through systems in Canada and South and Central America. However, given that the vast majority of transatlantic and transpacific cables terminate in the United States, the prospect of a concerted attack on these cables is troubling.
[However, a state such as Taiwan, unlike the US,] would be unable to depend on a vast overland information infrastructure beyond its borders in the event of damage to its fiber optic lifelines. A [then] recent example of the chaos potentially caused by communications outages is that of Australia. One cut cable in the SEA-WE-ME-3 network leading from Australia to Singapore caused Australia's largest Internet provider - Telstra - to lose up to 70 percent of its Internet capacity...
Pulsing the system as part of an information gathering exercise
I do not rule out an effort by state or nonstate assets to pressure the network, forcing the defender to enable comm links that normally remain dark. We often probed Soviet air defenses with aircraft flying a possible penetration profile, hoping to force the Russians to turn on defense in depth assets normally used in combat. These two comments to Schneier's post on the Middle East cable failures speak to my point:
These entities do likely own warehouses full of real world netflow data, but only for more or less regular operation of the global network. To be really sure, that their virtual attack scenarios can be trusted, they need real world feedback for their own "interactions" with those networks. Now think about the interesting load of data you can collect when cutting undersea cables: number of nodes immediately offline, congestion on alternative routes, average response times of responsible institutions, measures taken by those institutions, unexpected backlash, general short, mid, and long term effects, on and on... Endless highly interesting parameters...
Submarine cable operators: the sitting duck on the pond
The group that seems oblivious to asymmetrical threat risk appears to be the subsea fiber optic cable operators. An effort to locate robust risk analysis practices in general and this threat in particular went dry. The best was Cook's Risk Management which had the core of a useful method but it seemed more a proposal that evidence of sustained practice. A Marine Survey & Cable Routing short course for "a safe and economic route" cited the principal hazards as:
Pre-Survey Route Position List (RPL)
Seafloor Morphology and Geology
Natural Hazards e.g. Seismic events, submarine volcanism
Oceanography and Meteorology
Human Activities e.g., mineral extraction, oil & gas, fishing
Man-Made Hazards e.g. anchoring, dredging
Other cables/pipelines/lease blocks
Its detailed Cable Route Study (CRS) had more to do with visiting local landing station authorities and other industries operating in the area, permits and regulatory issues, and cultural and environmental issues than asymmetrical or sovereign threats.
A forward leaning Blips on the Radar Screen for future cable capacity mentioned no threat profiles. In the search period where I should have found a working threat assessment model, I found none.
Writing in 2000, RAND noted a gap between the defense community and commercial cable operators that has not been closed:
In most industry publications, however, little attention is given to the possibility of deliberate attack on the fiber optic network. Indeed, one of the few discussions of the possibility says simply that "while undersea cables could be cut, the practice of burying the in-shore segments makes this difficult; the mid-ocean portions are hard to find without a map and help from shore-based monitoring stations"...
Given the above, however, it is clear that more attention should be paid to the potential for deliberate attacks on the global fiber optic cable network... Currently, for instance, shore authorities have positioned radars and occasionally scheduled flyovers for areas in New Jersey that might be targeted...
Areas of high cable density are common: expect more multiple outages
"Cairo has become a communications hub to the Middle East..." The Suez Canal and the new overland "electronic Suez canal" comprise one of the globe's highest cable densities with massive fiber projects on the way:
The nine fiber projects planned across Egypt's Sinai desert compare with a total of four built over the past 20 years. "We call it the electronic Suez canal," says [the] Egyptian telecom regulator, likening the country's emergence as a communications hub to its importance last century for shipping by virtue of its Suez canal.
Suez in not unique in its high density of laid cables; The seabed offers many points where geography conspires to group submarine cables, thereby increasing the potential of cascaded damage. Take, for example, the Luzon Strait where the 2006 magnitude 7.1 Hengchun earthquake created "one of the largest disruptions of modern telecommunications systems. Nine submarine cables in the Strait of Luzon, between Taiwan and the Philippines, were broken thus disabling vital connections between SE Asia and the rest of the world."
Terrorist efforts aside, it is clear that the major powers have a sustaining interest in the seabed, fiber optic cables and deep diving submarines.
As to subsea cables, Bamford notes:
[NSA] taps into the cables that don't reach our shores by using specially designed submarines, such as the USS Jimmy Carter, to attach a complex "bug" to the cable itself. This is difficult, however, and undersea taps are short-lived because the batteries last only a limited time. The fiber-optic transmission cables that enter the United States from Europe and Asia can be tapped more easily at the landing stations where they come ashore. With the acquiescence of the telecommunications companies, it is possible for the NSA to attach monitoring equipment inside the landing station and then run a buried encrypted fiber-optic "backhaul" line to NSA headquarters at Fort Meade, Maryland, where the river of data can be analyzed by supercomputers in near real time.
Tapping into the fiber-optic network that carries the nation's Internet communications is even easier, as much of the information transits through just a few "switches" (similar to the satellite downlinks). Among the busiest are MAE East (Metropolitan Area Ethernet), in Vienna, Virginia, and MAE West, in San Jose, California, both owned by Verizon. By accessing the switch, the NSA can see who's e-mailing with whom over the Internet cables and can copy entire messages. Last September, the Federal Communications Commission further opened the door for the agency. The 1994 Communications Assistance for Law Enforcement Act required telephone companies to rewire their networks to provide the government with secret access. The FCC has now extended the act to cover "any type of broadband Internet access service" and the new Internet phone services - and ordered company officials never to discuss any aspect of the program.
As to deep diving submarines. RAND produced an interesting 2002 monograph on the requirements for a successor to the NR-1, a deep-diving nuclear research submarine built in 1969. A small vessel (12 foot diameter, 150 foot length, 400 ton displacement and crew of seven), the NR-1 is set apart from other research submersibles and SSN submarines by its "prolonged (30-day) operation [limited only by its food and air supply] on or near the sea bottom [2,375 foot operating depth] at a speed of up to 4 knots" as well as its viewports, manipulators to "handle small objects... two retractable rubber-tired wheels that support it on the ocean bottom [and] thrusters to maintain depth without forward movement, to move laterally, and to rotate within its own length."
NR-1 missions "included support to national agencies, which had found other assets limited in their ability to complete such tasks as mapping the Challenger debris field despite inclement weather or locating important forensics information from the Egypt Air Flight 990 disaster... support of maritime archaeology, scientific research, and military operations." Command of the NR-1 does appear to be a career enhancing billet. Admiral Edmund Giambastiani commanded NR-1 earlier in his career.
Based upon NR-1 performance and expected NR-2 capability, a "military expert group" identified seven "core missions" for the NR-2 as part of an analysis of highest priority "military and scientific missions [for] their deep-diving research submarines":
Selected Covert Operations
Protection of National Assets on the Seabed
Intelligence Preparation of the Battlespace (IPB)
Expanded ISR [Intelligence Surveillance and Reconnaissance]
Offensive Information Operations
Defensive Information Operations
The NR-2 would require "magnetic and acoustic" quieting and enhanced endurance and should be able to operate under three support environments:
Operation in consort with an SSN [with] SSN transport/tow to an AOI [area-of-interest] and escort/protection within an AOI as desired...
Operation in consort with a surface support vessel [for] extensive logistics support... tow and communications support... and enable transfer and offload of objects...
Interestingly, little is written of the NR-2 despite the fact that the navy 'anticipated' "that the NR-1 will require [a third] refueling or replacement by 2012." There is an interesting oblique reference in a comment about a LTJG nuclear engineer with the Advanced Submarines Division at Naval Reactors Headquarters who:
In sum, subsea fiber optic networks are more vulnerable than the electricity grid. Fiber is not so much a case of raising security standards as it is introducing the concept of security. Richard Clarke's admonitions ring loudly.
Web Disruptions Persist Overseas Cables Could Take Weeks to Fix, Pressuring Business in India, Mideast By MARIAM FAM in Cairo, CHIP CUMMINS in Dubai, JACKIE RANGE in New Delhi, and CHRISTOPHER RHOADS in New York WSJ February 1, 2008
Earthquake in Taiwan Status Report No: EQT-1 CAT-i, Guy Carpenter Date: 26 December 2006 Time: 12:26:21 UTC (20:26:21 local time) Position: 21.819N, 120.543E Depth: 6.2 miles (10 km) Magnitude: 7.1 Region: Taiwan Region
Mother Earth Mother Board The hacker tourist ventures forth across the wide and wondrous meatspace of three continents, chronicling the laying of the longest wire on Earth. By Neal Stephenson Wired Issue 4.12, Dec 1996