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Home»Business»Defense Contractors See Massive Windfall From Missile Demand
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Defense Contractors See Massive Windfall From Missile Demand

January 3, 2024No Comments4 Mins Read
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Western defense contractors have order books up nearly 60% since 2017 when demand for missiles started to skyrocket, and they’re struggling to keep up, The Wall Street Journal reported Wednesday.

The war in Ukraine has put an unforeseen vice around Western artillery production, and the conflict between Israel and Gaza could further strain defense contractors’ abilities to fill an ever mounting orders, according to the WSJ. Supply chains have become more complicated and companies are struggling to recruit a specialized workforce, creating what analysts say could be the most constrained production environment since the Korean War about 70 years ago despite record billions in defense spending.

Ten of the largest defense companies in the West have combined orders worth more than $730 billion, up close to 57% since the end of 2017, according to the WSJ. (RELATED: US Looks To Japan To Backfill Supply Of Advanced Air Defense System For Ukraine)

“We all have to increase our production,” Pentagon acquisition chief Bill LaPlante said at a conference in November, according to the WSJ. Holding up one palm up high and the other down low, he added, “The worldwide demand is here, the ability to supply is about here.”

In September, LaPlante said the Pentagon is on pace to achieve a rate of 100,000 155 mm artillery shells, one of the most common shell types, per month by 2025 and should achieve 57,000 monthly production by the spring of 2024. In November, that number was revised down to 36,000 per month in the first quarter of 2024.

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Still, defense spending in 1950, when the Korean War began, sat around 5% of U.S. Gross Domestic Product (GDP), reaching 13.6% by the end of the war. The Pentagon’s 2022 expenditure of $877 billion was 3.5% of GDP.

Orders for the National Advanced Surface-to-Air Missile System (NASAMS) ballooned to $5.5 billion, six times the 2018 levels, as the firm Kongsberg racks up a multiyear order backlog, according to the WSJ. Demand jumped after the 2014 Russian invasion of Crimea and again after the Ukraine invasion in 2022. Taiwan has also showed interest in the ground-based air defense system.

“I’ve never seen anywhere near so much demand,” Eirik Lie, president of Kongsberg’s defense arm responsible for NASAMS production, told the WSJ.

U.S. and NATO leaders have raised concerns the persistent shortages of several kinds of missiles will hinder the West in a potential fight, whether with China or another country.

DoD acquisition head Bill LaPlante says US can make 100,000 shells per month by 2025—up from 14,000/month 6-8 months ago—but only if supplemental passed by Congress. “If we don’t get the supplemental…we won’t get there.” Money needed to get rate from 80,000 to 100,000 #RNDF2023 pic.twitter.com/1bRv9vxZUI

— Shashank Joshi (@shashj) December 2, 2023

For example, RTX, formerly known as Raytheon, said supply chain issues have added two years to the projected timeline for doubling production of Javelin anti-tank missiles and Stinger surface-to-air missiles, twice as long as the company originally forecast, according to the WSJ. Western firms have attributed the shortfall to lack of solid rocket motors, but the Pentagon says other components, including chips, springs and ball bearings, are low in supply.

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A recent Pentagon effort tracking Javelin and Stinger supply chains aimed at identifying and neutralizing bottlenecks came up short, Michael Vaccaro, the Pentagon industrial base strategy chief, said at an industry conference, the WSJ reported. “We do not have that ability,” he said.

Both Ukraine and Taiwan have demand for Javelins.

Asian nations have begun developing their own systems “because of limited U.S. production,” Bang Jong-kwan, a former South Korean Army Major General, told the WSJ.

Ukrainian President Volodymyr Zelenskyy said demand in Gaza has already slowed artillery shell deliveries to Ukraine, according to the WSJ.

All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

Contractors Defense demand Massive Missile Windfall
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