Mr. HOPKINS. Your being the expert and certainly possessing more expertise than we, we have to respect the fact that you as an expert, as head of this agency, are not comfortable with the trend that is being set.

Mr. CHIESA. That is right, sir.

Mr. HOPKINS. Again reflecting back on your expertise, what would you recommend we do if we could exchange seats and you were sitting here making the laws and determining what could be done to reverse this trend? Your having the expertise, what would you recommend?

Mr. CHIESA. Sir, my recommendation would be limited to my area of expertise, even though you offered me a hypothetical change of seats. I would limit myself to my area of expertise and would attempt to develop industrial capacity required to meet the military needs through improvements in manufacturing technology within the industry. We try to incentivize our supplies to improve their manufacturing technology.

Mr. HOPKINS. Would you consider the closing down of imports? Mr. CHIESA. I think I should confine myself to my area of expertise, sir.

Mr. HOPKINS. That would, I think, be within the realm of your expertise. It certainly is what is causing our plants to close down across the country. Would you consider the shutting down of imports or in some way closing out their incentive to sell to our country? Would that be within the realm of your authority and expertise?

Mr. CHIESA. No, sir, it is not. I am not prepared to give you an answer that would be very useful to you on this particular subject. Mr. HOPKINS. Who do you think would have that answer? Who should we search for?

Mr. CHIESA. I do not know, sir. I feel your question is one that would be addressed to an economist.

Mr. HOPKINS. That is all I have, Mr. Chairman.

Mr. NICHOLS. Mr. Spratt.

Mr. SPRATT. Thank you, Mr. Chairman. Let me second what Mr. Hopkins has said and thank you very much for convening this hearing. I just have a couple of questions.

First of all, as I scanned your testimony here, it seemed to me you have found noticeable diminution in the base between fiscal year 1985 and fiscal year 1986.

Mr. CHIESA. Yes, sir.

Mr. SPRATT. In just a 1-year period of time.

Mr. CHIESA. Yes. We showed in a 1-year span between 1985-86, and 2 years, between 1984 and 1986 and 1985 and 1986.

Mr. SPRATT. Can you quantify that? Can you put it in percentage terms? I was finding it difficult to aggregate a few conclusions from the testimony you have given. To what extent has the base itself diminished in percentage terms of capacity over the last 2 or 3 fiscal years?

Mr. CHIESA. In the case of the textile base-and, looking only at those members of the textile base that either manufacture items for DLA or agree to participate in industrial preparedness planning with DLA-I believe the report showed that we lost 21 sources

and that 15 either eliminated or seriously curtailed their finishing capability.

In the textile commodity we have 99 planned producers, and we write contracts with about 55 of them. These companies have 95 different locations. I can give you some similar statistics on the cutmake-and-trim if you are looking for the apparel industry's base. In the apparel industry we noticed we lost 80 suppliers.

Mr. SPRATT. Eighty out of how many?

Mr. CHIESA. We have a total number of 505 planned producers, people who actually engaged in mobilization planning with us, and the number we have contracts with in fiscal year 1985 was about 265. However, the 80 compares to the 505.

Mr. SPRATT. Do you have any policy, if I can follow what Mr. Hopkins said, other than to monitor this, or is it simply one of watching the trend and hoping you do not have to mobilize?

Mr. CHIESA. No, sir. Our policy is to continually monitor. When we find an item or a class of items where we cannot respond to mobilization requirements, we then apply industrial preparedness measures. We can do a number of things: for example, stockpile the item, which is not always an economic thing to do. Another example is to provide incentives to our contractors for modernization of a manufacturing facility to be able to speed up production. Therefore, we would be better able to respond in case of mobilization. These are the types of measures we would look at. We would react to each of them when we detected a weakenss.

Mr. SPRATT. For the sort of mobilization you plan for, what sort of percentage of base capacity do you think would be needed to meet the surge of a mobilization?

Mr. CHIESA. The numbers that we have would be different, obviously, for each item, for each category of item, and I do not believe I can give you a very useful number. If I estimated that we would double or triple our peacetime requirements, I think that would be like averaging a number of averages, and I am not sure that would be a very useful answer to you.

Mr. SPRATT. Can you give it to us in the categories you work with, for the record. What are we talking about when we say surge capacity? To meet the mobilization you foresee, that you base your plans on, what over base capacity do we need to be able to rev up to?

Mr. CHIESA. I have described our peacetime requirements that we buy as approximating 1 percent of the industrial output of the country in textiles and clothing. I will, for the record, attempt to quantify what we would be talking about in terms of base. I will qualify that to show you to what extent those figures are meaningful and useful.

[The following was received for the record:]

MOBILIZATION CAPABILITY

Data is not available to precisely describe the portion of the U.S. Industrial Base which would be utilized to fill textile and apparel defense requirements in the event of mobilization. However, as an indication, we know that for textiles we have 99 planned producers out of a total U.S. Base of approximately 5,000 firms; in apparel we have 505 planned producers against approximately 15,000 firms in the U.S. In

dustrial Base. The assumption is that we would be able to enlist as many companies as necessary to satisfy the military needs.

Mr. SPRATT. We provided some money-not much-in the R&D title of our defense authorization bill 1 year ago, fiscal year 1985, or maybe it was in the bill last year, for developing a module for manufacturing apparel. Are you familiar with that program?

Mr. CHIESA. I am familiar with one in 1986. In 1986 we are developing modules for use as a display at universities so small businesses can look at the machinery and its capability before deciding to commit funds.

Mr. SPRATT. What is the stage of that project?

Mr. CHIESA. We have completed the procurement package with all its technical requirements. The procurement will be handled by one of our centers.

Mr. SPRATT. When do you expect to have the displays finished? Mr. CHIESA. I do not have a good date for that. May I furnish that for the record?

[The following information was received for the record:]

DEVELOPING MODULES FOR MANUFACTURING APPAREL

We have two contracting actions in the Military Sewn Products Automation Program. DLA is currently negotiating a contract with North Carolina State University. The award is expected to be made in late August 1986 and manufacturing modules will be used to produce military garments 18 months after award.

The second contract action is designed to increase the use of commercially available, advanced manufacturing equipment by our suppliers. This will be accomplished through the creation of demonstration sites which will be run by a coalition of universities, apparel manufacturers, and equipment vendors. The technical specification has been completed and sent to our buying center for competitive award. The forecast award date is the First Quarter, Calendar Year 1987, with the first demonstration 10 months after award.

Mr. SPRATT. Do you have any other projects like this that would foster the development of textile machinery, knitting, for the apparel manufacturing industry?

Mr. CHIESA. Yes, we do have in 1986 and in 1987, money to pursue what we call manufacturing technology projects, and they do run the entire range of the problems that you see in the report. A great many of them are focused on items of chemical protective uniforms because they are very difficult to manufacture, and there is no commercial base for them. We are trying to find ways to speed up and improve the quality of sewing.

Mr. SPRATT. How much money are we putting into those technologies?

Mr. CHIESA. We have about one-I will get those numbers for you, sir. We have a total of about $12 million in fiscal year 1987 and $32 million in the President's budget for fiscal year 1987. Mr. SPRATT. Thank you very much.

Mr. NICHOLS. Mr. Stratton.

Mr. STRATTON. Thank you, Mr. Chairman.

Mr. Chiesa, I came in late. Perhaps this matter has been touched upon already. But I find it rather astonishing that you should say that there is a shortage in textiles when we have just passed an overwhelming bill to prevent all textiles from coming in from out of the country. What is it that we are short of? Is it all highly separated types of fabrics? Are we short on woolens? Why are we com

plaining about this flood of imports and, if there is some kind of material that the military requires, and they usually wear the same kind of things we do as civilians, what is the problem? I cannot understand how we can complain about this flood of imports; people who want to manufacture clothing for Americans; and yet you say we do not have enough around to equip our soldiers in the event of war.

Mr. CHIESA. I will try to clarify that, sir. You are right in this respect-I am buying in DLA a very small percentage of the U.S. industrial output in textiles and in cut-make-and-trim, and that is about 1 percent. There were-and this may be what you are referring to-there were some seven items identified in the study, seven items where we had a shortfall in our planning. We knew how many of these items we would use in the event of mobilization, and that part of the industry that would agree to plan with us could not furnish those projected requirements. I can go over those seven items and tell you what the end use is. They are items that are used exclusively or primarily by the military, sir. Whatever you prefer.

Mr. STRATTON. One of the things that we are missing is, if we are complaining about the Koreans and everything that you see is made in Korea, if you need something, why don't we let the Koreans produce it if you are short of that particular item?

Mr. CHIESA. Well, it is a very troublesome thing. One of the reasons for our problem is that on these items that I am talking about our peacetime requirement is very small; and, again, if the only customer is the U.S. Government or the primary customer is the U.S. Government, there is very little incentive for anybody to maintain the type of capacity or capability that we would need in the event of mobilization.

Some of the examples are melton wool that would be used primarily in a Navy pea coat, the wool that is used in the blanket that we manufacture and issue in the Department of Defense, the material that is used in our woodland camouflage, battle dress uniform, the poplin that is used in that woodland camouflage uniform. I think it is a combination of the fact that the peacetime requirements are very low and not a great incentive for anybody to prepare to meet these increased requirements and the fact that the mobilization requirements are very high. Our job is to try to, in some way, get some additional sources that can support military requirements or some improvements in manufacturing technology that will enable us to meet those requirements.

Mr. STRATTON. Have you tried to find out whether the Korean textile industry would be glad to grind out pea coats?

Mr. CHIESA. No, sir.

Mr. STRATTON. I am sure they could turn them out. I think the Japanese Navy has the same kind of pea coats that the U.S. Navy has. There should not be any great problem. The Japanese can produce practically anything.

Mr. CHIESA. We have not planned with anyone other than domestic sources.

Mr. STRATTON. This is like saying we do not have enough food to feed our people, but nobody is willing to pick the apples or the vegetables or the fruit. The idea that there is a shortage seems to

be a little strange. If we need something that we do not have, I would think we would certainly want to turn to some friendly source in order to get it.

Mr. CHIESA. As I mentioned in my opening remarks, in clothing and textiles we are precluded from doing that by law.

Mr. STRATTON. When did that happen?

Mr. CHIESA. For items of clothing and textiles, as far back as 1953 that I can assure you, sir, there has been a restriction in the Appropriations Act. As long as I have been in the business we have been precluded from buying items of clothing and textiles from off shore businesses.

Mr. STRATTON. Well, it would seem to me if that is the case then we certainly should try to eliminate that kind of legislation. This is protectionist legislation presumably; but apparently the people who put it in have not kept up to date with changes in requirements. Is that about what it is, although we have already passed what is supposed to be a heavily devastating piece of legislation in the textile bill that the President vetoed?

Mr. CHIESA. I have no comment.

Mr. STRATTON. What does that bill do to the Defense Logistics Agency? Does that make it tougher for you to get what you need? Mr. CHIESA. The Appropriations Act restriction, sir? Is that what you are talking about?

Mr. STRATTON. The textile bill. That was the first emphasis on the part of the Congress, to point out that we are concerned about the trade imbalance.

Mr. CHIESA. I am not prepared to give any testimony on that bill, sir.

Mr. STRATTON. It seems as though the right hand does not know what the left hand is doing or vice versa.

Mr. NICHOLS. Mrs. Byron.

Mrs. BYRON. Mr. Chairman, I have no questions. I am interested in the testimony of the other witnesses.

Mr. NICHOLS. I have one final thing I would like to inject into the record.

Excuse me, Mr. Hopkins.

Mr. HOPKINS. You go right ahead.

Mr. NICHOLS. I have a letter to a member of the committee from Hon. Richard Ray who has just returned from a fact-finding trip in Nicaragua. May I read the first three paragraphs of it, particularly in view of the fact that I had understood from your earlier statement that we were precluded from buying off shore, including tentage, including rubber footwear, boots and so forth.

Mr. Ray says, "I have read the DOD Annual Report on the Industrial Textiles Base as it applies to Defense."

My first question is on several areas, but particularly in foot wear and chemical protective clothing. I believe you make those notations on page 4 of your statement here. You say chemical protective items, tentage items, nonrubber footwear and rubber footwear are items that could give you some trouble. I will go ahead with the letter.

I have enclosed a photograph of defective shoes supplied to the Nicaraguan Freedom Fighters through the 1985 humanitarian aid program. The photograph shows a boot which came apart after 7 days.