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Commerce Dept. seeks data on industries affected by Katrina.

The Commerce Department has set up an Internet web portal for defense industry to report specific production or supply problems resulting from recent hurricanes. Of particular concern is the damage caused by Hurricane Katrina to liquid hydrogen plants, which could affect defense suppliers in the space and munitions sectors.

In the aftermath of Hurricane Katrina in early September, the Commerce Department's office of strategic industries and economic security (OSIES) was made responsible for identifying defense supply or production issues being experienced by industry, particularly those companies that are located along the Gulf Coast.

OSIES has established a special e-mail address (Katrina.defenseindustry@bis.doc.gov) to receive reports from affected companies. Firms are asked to provide a written description of the specific damages and the impact on production and delivery.

Under the Defense Production Act of 1950, the president can request that certain supplies and services be redirected from commercial to military or government customers in support of national defense and energy programs.

Regulations known as "Defense Priorities and Allocations System" provide guidelines for reassigning industrial resources in national emergencies. DPAS must ensure a rapid industrial response during a national emergency and also attempt to minimize disruptions to normal commercial activities. DPAS ratings are given to 300,000 Defense Department contracts. Those ratings are used to set priorities for delivery of supplies and raw materials in the event of a crisis.

After Katrina hit, a group of officials from the Commerce and Defense Departments, as well as the Department of Homeland Security, concluded that the hurricane potentially would affect production of key materials used in military equipment.

Katrina marked the first time that the Defense Priorities and Allocations System was implemented in a domestic crisis not attributed to a military conflict. "The magnitude of the area affected and the potential impact on defense industry" warranted the decision to enforce DPAS, said William J. Denk, director of the defense programs division at the Commerce Department's office of strategic industries and economic security.

Among the top concerns are liquid hydrogen supplies. Liquid hydrogen is an essential commodity for the steel and petrochemical industries and public utilities, as well as NASA and the Air Force.

The area smashed by Katrina is home to 25 percent of the North American industrial base for liquid hydrogen production. Liquid hydrogen is used by the space industry to fuel rockets that launch military satellites, and also is employed in munitions manufacturing.

NASA has a large supply of liquid hydrogen, which it has agreed to temporarily share with the Defense Department until the Gulf Coast area can recover.

The New Orleans Air Products liquid hydrogen plant alone represents 31 percent of North American industrial hydrogen production, according to GlobalSecurity.org. About 44 percent of North America's liquid hydrogen supply had been lost because of a previously scheduled shut down of the company's hydrogen plant in Sarnia, Ontario, Canada. That left Air Products with one operating liquid hydrogen plant in Sacramento, Calif., with a capacity of only 2.3 million standard cubic feet a day, reported GlobalSecurity. The New Orleans plant can produce 26.8 million cubic feet, while the Sarnia facility can make 11.5 million cubic feet.

The Army Corps of Engineers began repairing the New Orleans facility Sept. 5. Air Products reported that it has been able to secure additional hydrogen supplies from other sources.

Another supplier of liquid oxygen, Praxair, was operating its four plants at 75 percent capacity before Hurricane Katrina. These facilities--located in Alabama, California, Indiana and New York--are now running at full capacity, said GlobalSecurity. The four facilities have a combined capacity of 46.5 million standard cubic feet a day. The increase of approximately 12 million standard cubic feet a day will only partially offset the loss of 26.8 million cubic feet per day from the New Orleans plant, which supplies 50 percent to 60 percent of the total hydrogen consumed by the steel industry.

The Stennis Space Center uses 70 percent of all the liquid hydrogen acquired by NASA, noted GlobalSecurity. The agency relies on super-cold liquid hydrogen as the fuel to power the space shuttle's three main engines during the ascent phase of flight, ground testing and propulsion development. Liquid hydrogen also acts as the propellant for the shuttle's onboard fuel cells.

"One of the most significant lessons from Hurricane Katrina is the potential vulnerability of critical infrastructure and the consequences of losing unique national assets," said Daniel Gourd, a military analyst at the Lexington Institute, a defense industry and policy think tank.

The Ingalls shipyard at Pascagoula, Miss., which is responsible for the production of Navy surface warships, will be operating at reduced capacity for months to come, noted Gourd. "The military industrial base is one infrastructure sector that is particularly vulnerable to such single-node failures. Most military equipment is produced or assembled at a single facility. A natural disaster or terrorist strike in one part of the homeland could negatively impact national security on a global scale."

A case in point is small arms ammunition, Gourd wrote in a policy brief. The military relies on a single production facility, the Army's Lake City Ammunition Plant, a government-owned facility run by Alliant Techsystems. The Army plans to add a second supplier that will be geographically separated from Lake City.

"The value of a second source for ammunition geographically separated from the primary production site should be obvious to everyone after Katrina," Goure said.
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Title Annotation:UPFRONT
Author:Erwin, Sandra I.
Publication:National Defense
Date:Nov 1, 2005
Words:906
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