ILMA Compoundings May 2017 - 20

Photo by Petty Officer 3rd Class Zackary Landers
Photo by Petty Officer 3rd Class Kelsey Adams

The Arleigh Burke-class guided-missile destroyer USS Wayne E. Meyer (DDG 108)
transits the South China Sea.

military specification fluids in its shipboard hydraulic and
propulsion systems, including petroleum-based fluids, synthetics, phosphate esters, silicone-based fluids and waterbased fluids, plus various military specification greases. Add
in the Navy's high demand for lubricants, hydraulic fluids
and turbine oils for their warplanes, helicopters and support
aircraft, and it's apparent why the Navy is heavily dependent
on the lubricant industry. Under sequestration, decreased
inventory levels and forward stocking location cutbacks have
left the fleet vulnerable to lubricant issues. "Trump's increase
in military spending is perceived to improve the Navy's
overall fleet readiness," said Finch.
Trump's proposed increased military spending hasn't come
without pushback - even from Trump himself. In December 2016, he threatened to cancel a $4 billion order with
Boeing for two new Air Force One aircraft, and he criticized
Lockheed Martin for cost overruns in the new generation
F-35 Joint Strike Fighter program. Both companies' contracts had been underway for some time.

ARMY NEEDS LUBE Like the Navy, the Army has

also announced ambitious plans. Troop levels shrank under
Obama from 540,000 soldiers at the beginning of 2013 to

MAY 2017

| COMPOUNDINGS | ILMA.ORG

470,000 at the end of November 2016, the smallest number
of soldiers since before World War II. Obama's plan to cut
the Army down to 450,000 by fall 2018 was stopped with
a provision in the National Defense Authorization Act that
directed the Army to grow to 476,000 in 2017.
In a recent interview, Maj. Gen. John G. Ferrari, the
Army's director of program analysis and evaluation, said that
the Army is "shovel ready" for growth because of the way it
downsized. For instance, instead of completely ending the
manufacturing of platforms like the M1 Abrams tank, the
Army continued to purchase them in small quantities and
was therefore able to keep open its main production plant
in Lima, Ohio. "We really looked at how we were going to
scale down so we could scale up again," Ferrari said.

PUTTING TIRE TO TARMAC AND SAIL TO SEA

The real question is, how does this all get done? Trump's
defense spending proposal would be $10 billion above
budget caps set for fiscal 2017, and it is also unclear how
Congress plans on handling Trump's proposal. At press time,
Congress was to have passed a bill (by April 28) to fund the
government or face a shutdown. Democrats are saying that
they won't vote for a spending bill that includes funding for
Trump's border wall. They will also likely balk at changing
the budget cap law to increase defense spending while other
programs they consider to be of higher priority are cut. Currently, the Pentagon, along with most of the government, is
operating on a stopgap spending measure Congress passed at
the end of the last session.
As the political aspects of increasing military spending at
a prolific rate take center stage, we can assume sharp political debate on the impact to the national deficit and those
programs that are centerpieces of each political platform.
In the near-term, the president's initiatives for the U.S.
armed forces should increase lubricant demand if only on
the basis that many aircraft, ships and other systems are not
fully functional in support of the U.S. war fighter because
of current budget constraints. This alone should raise the
call to action on the part of Congress and move the political
process forward. If passed by Congress, Trump's proposed
increase in military spending and bolstered defense budget
will bode well for the lubricant industry.
As of April 30, Congressional negotiators reached a federal
funding agreement that would increase military spending
but not include spending for a border wall. The full House of
Representatives must still approve the bipartisan agreement,
along with the Senate.

Damiani is the CEO of Radco Industries Inc. and a member of the ILMA
Board of Directors.

http://www.ILMA.ORG

ILMA Compoundings May 2017

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