Part 3
Chapter 11

by Lord Ismay

Secretary General
of NATO

(1952-1957)

Development of defence production

The story of the development of NATO defence production is that of a tremendous expansion achieved in the face of difficulties which at first seemed overwhelming. The magnitude of the expansion can be illustrated by some total figures (expressed for the sake of uniformity in terms of dollars) of the size of national defence budgets, and of the amounts allocated to defence production, in 1949 and 1953. The aggregate of the defence budgets of all the NATO countries, including Greece and Turkey, amounted to $ 18,503 millions in 1949. By 1953 it had risen to $ 62,773 millions. Within these totals, the amount devoted to the production of arms and equipment rose from less than $ 3,000 millions in 1949 to about $ 25,000 millions - or nearly 40 per cent of the whole -by 1953. These figures are based on conversions at present exchange rates, and therefore conceal some differences in the true relative value of currencies. In the case of such countries as France, the United Kingdom and the United States, they include expenditures for defence commitments outside the NATO area. Nevertheless, the figures are impressive evidence of the effort which member countries are making in the production of arms and equipment for the defence of the free world.

The increases are the more remarkable if we consider the circumstances in which they were achieved. As a result of the Second World War, the armament industries of most countries of Western Europe had almost ceased to exist; the plants and factories had been destroyed, damaged or switched to civilian production. The economic situation of these countries made it impossible for them to devote a large proportion of their resources to defence production. They were, in particular, experiencing very severe balance of payments problems, which meant that they had considerable difficulty in supplementing their domestic production by imports of arms and equipment. The situation has gradually improved as a result of an easing of world economic conditions, and of aid from North America; but shortages of foreign exchange are still an obstacle to rational programmes of arms production.

In these circumstances, it was of supreme importance to the Atlantic Alliance that the vast resources and industrial power of its two North American members could be used through programmes of mutual aid. This aid took the form of 'end-items' (i.e. finished articles of military equipment) to equip the armed forces of countries whose armament industries could not deliver the vast range and quantity of material required. It also included offshore procurement orders and the provision of dollar grants and raw materials to help in recreating the European defence production industries. (1)

An example: aircraft production

The development of aircraft production in Europe is a good example of the results achieved by co-operative efforts. Apart from work on a few prototype machines, there was in 1948 virtually no production of front-line aircraft in continental Europe. No jet engines of any type and almost no aeronautical instruments were being manufactured. Only in the United Kingdom were production lines still active.

The formation of Western Union provided the stimulus which set the European combat aircraft industry in motion again. Under a joint Benelux production programme, begun in 1949 and financed by national funds, Belgium undertook to manufacture Derwent jet engines for installation in Meteor aircraft to be built in the Netherlands. Furthermore, France undertook to build Vampire aircraft, to develop a fighter of her own design, and also to manufacture Nene jet engines. Appropriate licensing arrangements were negotiated with British firms. In the United Kingdom, production of Meteors, Vampires, Canberras and jet engines was stepped up.

From these beginnings we have advanced to the programme for the production of interceptor day-fighters, and certain other types of aircraft, for which contracts were signed in April 1953. Under these contracts, more than $ 550 millions worth of combat aircraft are being built in five countries of Western Europe, and about half the necessary funds will be contributed by the United States under offshore procurement arrangements. (2) The principal features of the programme are the production of Hawker Hunter and Vickers Supermarine Swift aircraft in the United Kingdom, of Marcel Dassault Mystere aircraft in France, the joint production of Hunter aircraft in Belgium and the Netherlands, and the assembly of American F. 86 all-weather fighters in Italy.

The beginning of production planning in NATO

In the broadest sense, NATO, and Western Union before it, were the inspiration and driving force behind this considerable effort in rearmament. But NATO has also made a direct contribution. In the first place, national arms programmes have been co-ordinated in such a way that larger and more rapid deliveries can be achieved with the limited funds available; secondly, member nations have been brought together at the technical level in joint studies and in the interchange of information.

For rather more than the first two years of NATO, the work of defence production planning was carried out under a committee system. The Military Production and Supply Board (MPSB), established in November, 1949, was the first of these NATO committees. It closely resembled the former Western Union Board and worked in a similar way. The heads of national delegations to the MPSB met in committee at frequent intervals and each head of delegation made members of his staff available for ad hoc study groups. When highly technical studies were required, each delegate obtained qualified representatives from his country to serve on special sub-committees. This was the beginning of the system of 'groups of experts' to which further reference will be made later.
It soon became clear that this committee system did not permit sufficient continuity, a proper division of labour, or effective forward planning.

Delegations had to represent not only their own national point of view but also an impartial corporate international point of view. The duality of their functions meant that collective recommendations might not always be entirely objective.
Accordingly, in December 1950, the MPSB was dissolved and replaced by the Defence Production Board (DPB). The earlier committee system was strengthened in two ways. First, arrangements were made whereby heads of delegations to the new Board were continuously available for meetings in London; secondly, an international staff was created under Mr. W. R. Herod, (USA), who was a member of the Board and had the title of Co-ordinator of Defence Production.

The first proposals for production drawn up by the DPB were based on studies conducted by certain 'Task Forces'. These comprised nine teams of senior production specialists from all countries concerned which, under the auspices of the MPSB, had visited NATO producing countries in the second half of 1950, conferred with national authorities and examined facilities. They had then drawn up a series of objective reports recommending means of increasing production in fields where deficiencies were greatest. The proposals, as they emerged from the DPB, covered artillery and infantry support weapons, tanks, transport vehicles, engineering equipment, escort vessels and minesweepers, and recommended production additional to that already planned by the countries themselves.

These proposals were referred to the Financial and Economic Board in Paris who, after exhaustive discussions, came to the conclusion that proposals for additional expenditure on defence production could not be considered in isolation. The situation was that the requirements in all fields including arms and equipment, as stated at that time by the military Commanders, raised acute financial problems for national governments. As explained in Chapter V, this was one of the reasons which led the Council at Ottawa in September, 1951, to set up the Temporary Council Committee, charged with the responsibility of submitting proposals for reconciling these military requirements as a whole with the capabilities of NATO countries for undertaking defence. The review conducted by the TCC, and subsequent Annual Reviews, have been designed to this end. These reviews, by evolving a balanced NATO defence plan, have made the important difference that NATO production planning is now carried out within the total funds made available by governments for production. Examination as to whether those funds are sufficient is decided in the course of the Annual Review. The frustration of preparing detailed production programmes which could be executed only in part or not at all has thus been avoided.

Planning after 1952

After the move of NATO to Paris in April, 1952, the Production Division of the International Staff, under the Assistant Secretary General for Production and Logistics, carried on the activities of the earlier production agencies, and profited by their experience. The aim is to use available resources to the best possible advantage by correlating the production programmes of the member countries multilaterally at the planning stage. The activities of the Production Division fall into three main parts:

1. long-term production planning;
2. acting as the expert broker for the exchange of information, and guiding technical studies;
3. participating in the Annual Review, which involves analysis of equipment requirements and resources for current and future years.

The Division works closely with national delegations, and each of these has a defence production counsellor who sits in the Defence Production Committee (set up in 1954) which now advises the Council on policy matters.

Progress in production planning has been both more rapid and more tangible, largely due to the growth of United States offshore purchases. This planning covers 'major' items of equipment which are of military importance, expensive to produce, and needed in large quantities. Because the production of such equipment usually raises complex engineering problems and involves heavy capital costs, co-operation between member countries can be most rewarding. Conversely, studies are not extended to simpler items like uniforms or quartermaster stores, since they can easily be produced locally. The recommendations made to governments between January, 1953 and July, 1954 cover production to the value of more than $ 2,000 million. Apart from aircraft, which have already been discussed, the recommendations cover selected items of small-arms, field and anti-aircraft artillery, army wireless sets, anti-aircraft radar, combat vehicles, escort vessels and minesweepers, together with substantial quantities of ammunition.

The actual process of correlated production planning, as this has now developed, involves meetings of national experts and the NATO staff to look at proposals of individual NATO countries and to suggest practical measures to extend the joint production effort and to make it more economical and efficient. The type of solution recommended varies considerably from item to item. For example, in medium tank production, it is simplest for one or two NATO countries to meet the needs of all. In other instances, where it is necessary and desirable to produce a particular ^tem in a number of countries, correlation studies are designed to ensure that production is on a standard pattern or, at least, that the number of models is reduced to a minimum. Examples from current programmes are light anti-aircraft guns and army wireless sets.
The correlation of production is not an attempt to revolutionise overnight the whole existing structure of defence production in Europe. This would disrupt vital supplies of equipment and could give rise to severe economic and social problems. The present efforts should be regarded as a beginning of a long-term task, involving gradual evolution of the production pattern.

The main studies on correlated production in Europe are accompanied by others in specialised fields, but hardly of less importance; notably, studies for the development in Europe of facilities for the production of spare parts for American equipment. This equipment is now held in considerable quantities by the NATO forces of European countries, and use of local production sources will save dollars and simplify maintenance of equipment in case of war. Despite the complexity of this task, a good measure of success has already been achieved. For example, it is now possible to procure in Europe a wide range of spare parts for the three most important types of transport vehicles, representing between them about 90 per cent of the total holdings of transport vehicles of United States origin in European countries.

Similarly, efforts are being made to ensure that equipment employs interchangeable components where this is useful and possible. Examples may be taken again from the vehicle field, where specifications for interchangeable sparking plugs, batteries, rims and tyres, lamp sockets, towing hooks and other components are being evolved.

Progress in co-operation

The co-operation between member countries in defence production matters has increased to a degree which ten years ago would have seemed unbelievable. It has now become the accepted practice for groups of experts, nominated by the various governments, not only to discuss their plans and problems around the table, but also to visit one another's factories and examine in the greatest detail technical processes and methods of production. Thus the benefits of the latest advances can be shared by all. To take two examples, experts in the manufacture of steel for weapons have now visited plants in all the major producing countries;

while the expert group dealing with the techniques of electronic valve design and their standardisation has made an extensive tour of plants in Italy and the United States. In addition, members of the International Staff, as part of their day-to-day work, are constantly visiting national production ministries, arsenals and factories to keep abreast of the latest developments and to consult with, and advise, countries in all problems of defence production. Of course, nations have research and development secrets which they are not at the present time ready to share with others. The risks which are inherent in the wide circulation of any piece of information may outweigh the advantages of its early dissemination :
but NATO is striving to reduce, so far as reasonable, security restrictions on the exchange of information.

More should perhaps be said about the groups of experts, since in the long run these may prove to be one of the most important developments which NATO has fostered in the field of defence production. Several were created in the days of Western Union; new ones have been set up as the need arose; some have finished their task and been disbanded. At present there are over twenty groups in existence. The groups may be broadly divided into two classes. First, those which have a continuing responsibility for surveying a field of production, e.g. air defence radar equipment or spare parts for vehicles; secondly, those which are convened to undertake a specific study and which are dissolved when they have completed their report and made recommendations for adoption by governments. For example, there are groups on conversion of engineering drawings, on the manufacture of steel cartridge cases, on the methods of producing gun steels, and on specifications for propellants and explosives. The group on the conversion of drawings has drawn up a procedure whereby United States drawings of spare parts for weapons, vehicles and ammunition can be converted to European scales and measures. The work of the group on steel cartridge cases has already proved outstandingly successful in encouraging the development of steel cartridge case production, with its large potential savings of copper in wartime, in the majority of the member countries.

In the groups of experts, as in the wider defence production activities of NATO, the intangible advantages flowing from the close and friendly contacts achieved between individuals at the working level must be added to the concrete results achieved.

Future prospects

The procedures and activities which have been reviewed are all experiments in an entirely new field of co-operation between sovereign countries, and they will be extended, modified or discarded in the light of experience. The basic aim will remain to increase the quantity and effectiveness of NATO defence production and to place it on a firm long-term basis, with due regard for special needs that may arise in the event of war. Particular importance is attached to building up in Europe a sound industrial base from which output of military equipment could be rapidly expanded in an emergency. The idea is that production by each member nation should form part of a correlated whole, designed to put all available resources to the most effective use in the common interest.

This Chapter has described defence production in NATO during a period of intensive build-up of the armed forces. In future, defence production programmes are likely to be directed increasingly towards (a) keeping up to strength existing holdings of conventional type weapons and equipment, replacing these as they wear out by models of improved design and performance; and (b) the production of new weapons, many of which are still several years on, and all of which are likely to raise formidable problems of cost and industrial technique. The range and volume of spare parts required will also increase. If the problems of the future are to be solved, there will be an even greater need for the wise measures of mutual collaboration and assistance which have been so successfully developed over the last years.

• Expenditure by NATO Countries for Military Equipment

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