Private Economic Stockpiling as an Alternative to Mineral Import Vulnerability

The defense industry and essential civilian industry of the United States has grown dangerously dependent on uncertain foreign sources of strategic and critical materials. The corresponding increase in vulnerability to shortages or cessations in supply has generated new interest in alternatives for reducing the vulnerability. As prime users of many of the strategic and critical materials, 30 of the top 100 Department of Defense contractors for fiscal year 1984 were surveyed on their acceptance of creating privately owned and operated economic stockpiles as one alternative fo reducing imported mineral vulnerability. The contractors were also asked to rank, in order of preference, seven possible financial incentive programs that might induce defense contractors to consider establishing private stockpiles of strategic and critical materials. Results from personal interviews with Material Managers of the selected defense contractors shows that the private stockpiling alternative is not considered acceptable by the sample of contractors surveyed. The cost associated with developing and holding excess inventories was cited as the prohibitive factor. Of the seven incentive programs offered, use of 'guaranteed multiyear procurement contracts' was more influential to the contractors than were the direct financial incentives offered. Stabilized procurement and production planning was emphasized by the contractors.