Managing Crises in Defense Industry: The PEPCON and Avtex Cases

National planning for the expeditious recovery and expansion of essential industrial production facilities is often geared only to large-scale declared emergencies. Under the worst scenario of a global war, all necessary authorities and funding are assumed to be available. But more often, lesser emergencies require responses without the broad powers and commitment associated with a declared national emergency. A real emergency can provide insight into the appropriateness of planned management approaches and the adequacy of available authorities. This account of two actual emergencies provides lessons on how statutory procedures could be improved, regulations clarified, the government data base expanded, and steps taken to speed up the process to be followed in the event of other crises. In May 1988, the United States lost half of its capacity to produce ammonium perchlorate when explosions and fire destroyed one of the two producing plants. Ammonium perchlorate is the oxidizer essential to solid-fuel rocket motors. Here, without question, was an excellent test case. Existing ammonium perchlorate had to be carefully allocated and additional production capacity was needed; numerous ongoing production programs for both strategic and conventional systems needed the product, and some would be curtailed if sufficient ammonium perchlorate was not available. This paper documents the government's actions and decision-making process in dealing with various legal and administrative hurdles in both restoring the capacity and allocating available ammonium perchlorate. The examination of the Nevada plant emergency serves as a case study that not only illustrates how government organizations took action to correct this problem but also suggests how they might function in a large-scale emergency. In a second and related case, Avtex Fibers -the sole source of long-fiber rayon used in rocket motors and reentry vehicles- stopped production in 1989 for financial reasons. This case is examined and, whenever appropriate, compared with the issues in the PEPCON case.