Last year we had tentatively planned to start procurement of the Improved HAWK in FY 1968. This system, which includes a new acquisition radar and a higher performance missile, promises significantly increased effectiveness. However, the project has encountered some development problems and the program has slipped. Meanwhile, we will go ahead with production preparations, using the funds provided in FY 1967 and those requested in FY 1968 for production engineering and production prototype missiles.

Three types of operational gun/CHAPARRAL battalions are being formed: a fully self-propelled battalion for the armored and mechanized divisions; a modified self-propelled version (including one towed gun battery which can be airlifted) for the infantry divisions; and an all-towed version for the airmobile and airborne divisions. We may field some of the gun batteries before the CHAPARRAL missile is ready, since the gun itself (& VULCAN 20mm) is a formidable air defense weapon even when deployed alone.

2. Army Procurement

The

The revised FY 1967 Army procurement program now totals $5,863 million, of which $2,130 million is included in the Supplemental. 1968 program totals $5,881 million. The details of the Army's procurement program are shown on the classified table provided to the Committee.

The FY 1967-68 Army aircraft procurement program is designed to meet projected Southeast Asia attrition replacement needs together with the planned build-up in the Army's aviation force structure. The FY 1967 program now totals $1,202 million for 2,697 aircraft, of which $533 million is included in the Supplemental request. The FY 1968 program includes $769 million for 1,479 aircraft. The aircraft to be procured include the UH-1B/D (IROQUOIS) tactical utility transport helicopter, the AH-1G (COBRA) armed helicopter, the CH-47 (CHINOOK) transport helicopter, the OH-6A observation helicopter, the CH-54A heavy lift helicopter, the U-21A administrative support aircraft, the OV-1C (MOHAWK) fixed-wing observation aircraft, as well as a large number of training helicopters.

Funds are also requested for the procurement of long lead time components for the AH-56A Advanced Aerial Fire Support System (AAFSS) to permit early initiation of production, when development warrants such a decision.

Army missile procurement (including spares) will total $561 million in FY 1967 and $769 million in FY 1968. The FY 1968 program provides for: ground support equipment for the Quick Reaction Alert PERSHING battalions deployed in Europe; LANCE missiles and related ground support equipment;

initial procurement of the TOW missile system; a large quantity of SHILLELAGH missiles; and REDEYE and CHAPARRAL air defense missiles; and ground support and training equipment for the HAWK missile system.

The revised FY 1967 program for weapons and combat vehicles totals $589 million ($83 million in the Supplemental request), and $554 million is included in the FY 1968 Budget request. These funds will provide for: completion of the planned procurement of the M-139 (HS-820) 20mm gun; substantial quantities of the 20mm VULCAN air defense gun and the 5.56mm rifle; and additional 81mm mortars and self-propelled 155mm howitzers. The funds requested will also provide for procurement of the M-578 light recovery vehicle, the General Sheridan armored reconnaissance and airborne assault vehicle, the M-113 armored personnel carrier, the 81mm and 107mm self-propelled mortars, the M-577 command post carrier and the M-548 cargo carrier. We have also included funds for M-60s with the 105mm gun, M-60s with the SHILLELAGH/152mm gun, the armored vehicle bridge, and the combat engineer vehicle, all of which use the M-60 chassis.

Development of the Main Battle Tank, a joint project with the Federal Republic of Germany, has encountered some delay, with the result that its introduction into the operational inventory has slipped somewhat. Consequently, $8 million of the $10 million provided in FY 1967 for advance production engineering will be applied to other programs. In FY 1968, advance production engineering for the Main Battle Tank will require $11 million. Additional funds will be required for the U.S. share of the development costs.

The revised FY 1967 program for trucks and other non-combat vehicles totals $653 million ($154 million in the Supplemental request). For FY 1968, $483 million is requested for a variety of these vehicles. Included in the FY 1968 program are 1/4-ton, 1-1/4 ton (M715), 2-1/2 ton and 5-ton trucks of all types. For the five principal vehicles in this category (the 1/4-ton, the 1-1/4-ton (M715), 2-1/2 ton, and 5-ton trucks and 10-ton tractor), the FY 1967-68 procurement quantities, together with trucks funded in prior years, will nearly meet our overall inventory objective.

For communications and electronics procurement, the revised FY 1967 program provides $617 million, ($303 million in the Supplemental request) and the FY 1968 request totals $550 million.

For ammunition the Army's revised FY 1967 program includes $1,361 million ($584 million in the Supplemental request). For FY 1968, $2,224 million is requested. Ammunition procurement will continue to increase in FY 1968 in order to meet the projected needs of Southeast Asia. Among

the major items are: small arms ammunition (5.56mm, 7.62mm, and 30 caliber); 40mm ammunition; 81mm, 105mm, 106mm, 152mm, 155mm, and 4.2 inch cartridges; and 2.75 inch rockets.

The revised FY 1967 program for other support equipment (road graders, tractors, etc.) totals $608 million ($247 million in the Supplemental request) and $437 million is requested for FY 1968. The revised FY 1967 program for production base support totals $272 million, ($220 million in the Supplemental request) and $95 million is requested for FY 1968.

D. NAVY GENERAL PURPOSE FORCES

The Navy General Purpose Forces proposed for the FY 1968-72 period are shown on the classified table provided to the Committee. Except for the Vietnamese-related forces, the major changes from the program planned last year concern the anti-submarine warfare forces, the guided missile ships, the amphibious ships, and the minesweepers. There is, however, one general problem in this area which deserves special mention, and that is the dolorous state of the American shipbuilding industry.

It has become increasingly apparent in recent years that our shipbuilding industry, both public and private, has fallen far behind its competitors in other countries. Not only does it cost twice as much to build a ship in this country, it also takes twice as long. The reason for this highly unsatisfactory situation is not simply the difference in wage rates between the United States and other nations, or the inefficiency of American labor; other American industries, notably automobile, aircraft, and computers, have been more than able to hold their own against foreign competition. The root cause of the trouble is much more fundamental despite the efforts of several shipbuilding firms to modernize their facilities the American shipbuilding industry is generally technically obsolescent compared to those of Northern Europe and Japan.

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This is a startling development in view of the fact that the United States is the most highly industrialized nation in the world. It is even more startling when we realize that the modernization of the European and Japanese yards has been achieved by applying, on a massive scale, U.S. automobile and aircraft manufacturing technology to shipbuilding. Let me read you two paragraphs from a report prepared by Assistant Secretary of the Navy Bannerman and the Chief of Naval Materiel, Admiral Galantin, following their visit to a number of North European shipyards:

"The first obvious improvement was in the handling of new materials. Steel plate and shapes, stocked near the plant, are moved on to rollers and the processes of cleaning, shot blasting, priming, cutting and frequently shaping and welding are done automatically, as remotely controlled machine operations, with an amazingly small number of people, and with a minimum crossing as material moves to the assembly area. The assembly of each major sub-section is done in a fixed position indoors wherever possible. Significantly, these subdivisions are very large (up to 600 tons), thus minimizing individual handling operations. As a major subsection is assembled indoors, piping, ventilation, wiring and work normally considered as outfitting are incorporated as much as possible and they are then moved into place on the building ways where the remaining structure is joined. This latter concept is in being or planned in most of the modernized yards.

"Important improvements have been made in the use of computers. Given the significant basic design parameters of a proposed ship, several yards had programs whereby their computers provide the required hull dimensions, lofting, weight of steel, power requirements, optimum compartmentation, etc., with great flexibility in casting up changes as needed by the specific requirements of individual ships. Depending upon past experience with the design, computers supply tapes which can be directly employed for programming and scheduling the work flow of all production and outfitting throughout the building cycle and for numerical control of the burning and welding processes in the shops. Through automatic drafting machines, these computers turn out production drawings without the use of draftsmen. The simplification and savings in labor in comparison with conventional manual methods are enormous. Some of the above improvements are in use in some U. S. yards today and some are in trial stages. However, it is believed that no U.S. yard has developed the completely integrated controls and production processes that we saw in northern Europe."

Unfortunately, public discussion of the shipbuilding problem in this country has been focused on what is actually the minor part its relationship to the Merchant Marine problem. I can well understand why the American Flag Line operators should wish to sever the present interlocking relationship between the Merchant Marine and the shipbuilding industry; they could buy ships abroad at half the price and get delivery in about half the time. But while this divorce might solve the problem of the Merchant Marine, it would not solve the problem of the Defense Department. The U. S. Merchant Marine provides only a few hundred million dollars of work per year to the shipbuilding industry; Navy work amounts to between $2 and $2 billion a year. Thus the Defense Department, and the taxpayer, has a stake in the American shipbuilding industry which goes far beyond the immediate problems concerning the Merchant Marine.

Obviously, the more fundamental solution is to revitalize the American shipbuilding industry. Although we may never be able to overcome completely the wage rate differential, there is no reason why the American shipbuilding industry should not be, in a technological sense, as good as the best any other country has to offer. We have the technology and the manufacturing "know how"; what we need to do is to find some way in which they can be applied to the American shipbuilding industry and some way to finance the relatively large investments that would be required.