Episode #78: The Army’s Manufacturing “Rodeo”: Stress-Testing the Defense Supply Chain
In this episode of US Manufacturing Today (powered by Veryable), host Matt Horine explains the Army’s planned “manufacturing rodeo” to stress-test the Defense Industrial Base (DIB) and Organic Industrial Base (OIB) supply chain to find where it breaks, noting most affected firms are small manufacturers. He defines the DIB and the Army’s OIB depots and describes the Army’s OIB transformation toward manufacturing, emphasizing both form one integrated supply chain. Horine outlines new federal tools and capital, including the Smaller War Plants Commission prioritizing 10 defense-critical NAICS codes and an SBA fast track, plus a Pentagon Economic Defense Unit process to connect small manufacturers to SBA financing and potential equity investments.
Links
- Matt Horine on LinkedIn
- Veryable Is Revitalizing U.S. Manufacturing
- Sign Up on the Veryable Platform
Timestamps
- 00:00 Welcome to the Show
- 00:41 Army Supply Chain Stress Test
- 01:22 DIB vs OIB Explained
- 02:32 Manufacturing Rodeo Preview
- 03:20 Where Operations Break
- 03:48 New SBA and Pentagon Tools
- 05:31 Platforms and Support Resources
- 06:47 Your 30 Day Action Plan
- 07:33 Flexible Labor for Surges
- 08:18 Final Takeaways and Wrap Up
Episode Transcript
Matt Horine: [00:00:00] Welcome back to U.S. Manufacturing Today, the podcast powered by Veryable, where we talk with the leaders, innovators, and change makers shaping the future of American industry, along with providing regular updates on the state of manufacturing, the changing policy landscape, and more.
This is a solo episode today and a timely one whether you sell to the defense base or not.
This week, the acting Secretary of the Army stood up at the Association of the US Army's annual meeting and said the Army is going to stress test the supply chain and the manufacturing processes and quote, "See where it breaks." Not where the industrial base is strong, [00:01:00] but where it breaks. And most of the companies the Army is going to learn about are small manufacturers, like machine shops, fabricators, electronics assemblers, many of you listening today.
So today, we're going to talk about the DIB, the OIB, what this manufacturing rodeo is and what it could be, and the new tools from the SBA and the Department of War, and what you can do in the next thirty days to prepare. So let's get into it. The DIB, which is the Defense Industrial Base, is the private sector, mostly the thousands of suppliers underneath primes.
According to the SBA, small businesses make up more than seventy percent of the defense industrial base, and ninety-eight percent of US manufacturers are small businesses. So when Washington says defense industrial base, it is mostly talking about shops like yours. The OIB, on the other hand, which stands for the Organic Industrial Base, is the government's own.
For the Army, that is about twenty-three depots across the country, arsenals and ammunition plants, places like Red River in Texas or Anniston in Alabama. Historically, maintenance shops, they fix things, they [00:02:00] overhaul them, and they send it back to the units. But that is changing fast. In April, Army leadership signed an OIB transformation strategy that moves those sites from maintenance Towards manufacturing.
Hadrian, which we've talked about on this show before, is building an advanced manufacturing facility at Red River, and the location at Tobiana, Pennsylvania opened a production facility for small drone systems. So here's why that matters to you. The OIB and the DIB are not two systems, they are one supply chain.
A depot builds nothing if the private side parts of the equation don't show up. Which brings us to the rodeo and the stress test. On October twelfth, the acting Army Secretary, Adam Tell, announced the Army's first ever manufacturing rodeo, which he described will be a race between our industrial partners.
The goal is to strain the organic industrial base, stress the wider supply chain, and find out exactly where it breaks. He said the Army will learn by doing, not by, and in his words, "sitting around postulating at the Pentagon." It is planned for early next year. Beyond that, the details are [00:03:00] pretty thin right now, but there are no published rules and no entry process yet.
So there's nowhere to go sign up, but the intent is the real story. The secretary gave one example every operator should sit with. The Army needs to make millions of one-way attack drones. It may look simple, he said, but it is a flying supply chain. Motors, boards, wiring, batteries, everyone is a small supplier somewhere.
So think about what a rodeo actually tests. Not, it's not gonna test your best day or your best performance. It's not gonna test your surge. Orders double, the timeline gets cut in half, and quality will still have to hold. Where does your operation break first? Is it a machine or a supplier, or in, in most plants that I walk, it generally has to do with labor.
Not enough trained hands on a certain shift when the volume shows up all at once. That is the question the Army is about to ask the whole industrial base. So ask it for yourself first. There's also a lot of new toolkits coming up that are worth discussion. Washington is not only planning to stress, the manufacturing base, but it's also putting capital and tools on the table through two agreements you should know about.
The first [00:04:00] came on August twenty-fifth, when Secretary of War Pete Hegseth and SBA Administrator Kelly Loeffler signed the memorandum establishing the Smaller War Plants Commission. Its job is to map the industrial base, find the supply chain gaps, and steer capital and contracts towards small manufacturers.
The most practical piece is that the commission prioritized 10 defense critical industry codes for better access to loans, investment programs, contracting, and grants. They cover ammunition, missiles and space vehicles, aircraft parts, navigation and guidance instruments, electronic components, steel mills, machine shops, fabricated metal products, and shipbuilding.
In September, the SBA added a fast track for applicants in those specific NAICS codes, and of nearly 4,000 active firms, only 47 use one of those codes as their primary registration. So it's a pretty wide-open lane. The second agreement was signed this past week, and it is about money. The Pentagon's Economic Defense Unit will identify small manufacturers that need [00:05:00] financing and refer them to the SBA, the Small Business Administration, which then connects them to its lenders and backed funds.
It also opens the door to potential Department of War equity investments in companies that are deemed critical. Add the tools already on the shelf, the Made in America loan guarantee with a 90% federal guarantee for domestic capacity, a $20 million Critical Suppliers Prize competition for chokepoint suppliers, and $50 million SBA awarded to technical schools, community colleges to train workers for small manufacturers.
There are three more things to quickly bookmark as part of this update on the DIB and OIB. The first is the LINX platform, and that is the Department of War's platform at linxconnect.io. Not the software company with a similar name if you go to Google it, but LINX is built for small and non-traditional suppliers with real technical capability but limited defense contracting experience.
You build a profile, take a readiness assessment, and it generates a roadmap into the defense market for you. It's a great tool that got published just over the past [00:06:00] year. I've checked it out, and it's certainly worth investigating for your organization. The second recommendation is your local APEX Accelerator.
They used to be called PTACs. They operate under the Defense Department's Office of Small Business Programs and offer no-cost help with registration, certifications, finding opportunities, and preparing bids. Pair that with your state's Manufacturing Extension Partnership Center for the operational side, or what's more commonly referred to as an MEP.
The third recommendation is a correction to a date you may still be seeing. The Civilian Manufacturing Reserve Corps Phase 2, the third-party cybersecurity cer- certification was supposed to start in November. In July, the department suspended it pending a review, and no due date has been announced. But Phase 1 self-assessments are still in effect, and existing contract cyber obligations still apply.
It's paused, but it's not canceled. So what do you do with all this information? That's a lot. There's a lot going on the national policy scene. There's a lot coming out from the federal government. But here's a 30-day list to think about. The first thing is to check your industry codes against the 10 that I mentioned or look them up online to see if it's [00:07:00] something that applies to you.
If you run a machine shop or a fab shop, you're closer to this than you think. The second would be to go to linxconnect.io and take the readiness assessment. It is the fastest, honest look you will get at where you stand. The third thing is to check in with your APEX Accelerator. It's free, so you should use it.
And the one thing I would spend the most time on, run your own rodeo before the army does or you enter into this process. Pick your highest volume part and what happens if demand doubles for ninety days. What is the first constraint? Is it a machine, a supplier, a shift, or a skill? For most plants, labor shows up on that list fast.
You cannot hire and train a permanent second shift for a contract that may surge and then settle or not go through at all. And you cannot run your core crew on mandatory overtime for three months without paying it for turnover, quality, safety, and dealing with other operational problems that you see every day.
That is exactly the problem Veryable solves for manufacturers every day. Your full-time crew stays on the core skilled work and a labor pool of vetted operators you have already selected and trained flexes up when volume surges and back down when it settles. [00:08:00] Labor becomes a variable cost that tracks your output instead of surge headcount you carry all year.
The capital coming out of Washington can buy the machines, but a flexible labor pool is how you know how to staff them and when the orders actually land. Do you want to pressure test your surge plan? It's a conversation our team has with plant managers every week. So here's the takeaway. The rodeo is coming.
It's an exciting prospect from the policymakers that are connecting with the manufacturing sector and doing real-world things. The army is going to find the weak links in the industrial base, and most of those links are small manufacturers. The capital, the fast tracks, and the platforms are on the table right now.
The shops that win will not be the ones waiting for an invitation. They will be the ones who find their own weak link first, and they fix it. So thanks for spending some time on this today. We'll update this on future episodes of the show. We have some exciting episodes coming up talking about these processes and more about the defense industrial base and the OIB.
And to stay ahead of the curve and to help plan your strategy, please check out our website and under the resources section titled Trump 2.0, where you can see the framework around upcoming policies from the administration and how they will impact you as a manufacturer.
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