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ID-82-6 1 (1981-11-17)

handle is hein.gao/gaobabcth0001 and id is 1 raw text is: e;' UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 INTERNATIONAL DIVISION 1 N OV 1981 B-205382 RELEASED ........-e...ne.a. ....~~~ f..., he General ~ ~ ~ ~ ~ ~ ' a . , . • ... Proval The Honorable Robert S. Walker House of Representatives Dear Mr. Walker: Subject: Request for Update of Shortfall Projection of Industrial Fasteners (ID-82-6) In your letter of October 19, 1981, you requested an updated projection of the shortfall in supply of industrial fasteners in the event of a general mobilization and suggested the method and assumptions for making this projection. The outcomes of the math- ematical calculation using your method and assumptions are shown !in the enclosure. A similar calculation was presented to the Con- gress by Mr. Robert J. Blinken, Chairman, United States Fastener Manufacturing Group, during oversight hearings on U.S. Trade Policy !before the Senate Finance Subcommittee on International Trade and the Senate Banking Subcommittee on International Finance and Mon- ;etary Policy. We believe it is necessary to note that this calculation can be challenged as an inaccurate quantification of the problem be- cause it (1) is based on an old Department of Defense war scenar- io and dated assumptions regarding essential defense and civilian requirements for industrial fasteners, (2) uses dated assumptions regarding the loss of access to foreign supply of fasteners, and (3) estimates the projection of the shortfall caused by limited capacity in the entire industrial fastener industry by taking the 1977 estimate as the base and adjusting it Only for the 28 per- cent loss in domestic production of nuts, bolts, and large screws reported by the U.S. International Trade Commission (ITC) to have occurred since 1977. A fully developed updated study can be best prepared by the agency which prepared the original study (the Federal Emergency Management Agency, successor to the Federal Preparedness Agency). Alternatively, such a study could also be prepared by the Depart- ment of Commerce in response to a Section 232 (Trade Expansion Act of 1962) investigation. Our checks with these agencies showed that they are not planning any updates of the previous study. Necessary input for an update would include the current war scenario, an up- dated estimate of requirements for essential defense and civilian needs, information on both foreign and domestic production capacity, III 111 ~III II(483352) 117106

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