Revitalizing the Arsenal of Democracy

good course shift, now increase speed

A simply outstanding summary of the state of play in the re-vitalization of—and in parts re-imagining of—defense production capabilities can be found in an article in the June 5, 2026 Investors Business Daily, above the fold on page 1, by Harrison Miller and Paolo Confino.

The White House is seeking expanded manufacturing commitments from defense contractors, is pressing automakers to convert spare production capacity to defense, and is urging NATO partners to supplement weapons production. The Trump administration aims not simply to rebuild stockpiles depleted by the war against Iran. It wants to revamp large segments of the traditional military industrial complex.

Unlike previous buildups, this won’t just be the usual players we see in the defense arena (RTX (RTX), Lockheed Martin (LMT), Northrop Grumman (NOC), Boeing (BA) and General Dynamics (GD)).

This expands the number of players we will use to expand our ability to project power. To meet the requirements of the war that more and more people are starting to appreciate, we can’t rely on the excellent few; we need mass. We have a need to scale.

We need more, sooner, and are running out of time. We need more players with new ideas in the mix.

…a raft of generally younger, innovative and efficient players — Palantir Technologies (PLTR), AeroVironment (AVAV), privately owned Anduril and others — are jockeying aggressively to seize opportunities.

"The model of procurement is changing," said Dr. Jerry McGinn at the Center for Strategic and International Studies, or CSIS. "They (the White House) are doing these big deals to buy a bunch of munitions. But it's really more about how they're buying future systems, and the planning for future systems is different."

Here’s the driving factor. Since the hangover from the “peace dividend” era and the turn of the century, more and more people have been warning about the self-delusion our natsec nomenklatura. They were happy to build their reputation and their retirement fund with interesting concepts, well-edited reports, and careful alignment with domestic socio-political priorities, all the while finding reasons not to be concerned with our criminally shallow magazines.

Perhaps they’ve finally found religion.

The expenditures this spring against Iran are just a whisper of what will be required in any Great Pacific War against the People’s Republic of China (PRC). I have little patience with people—especially the retired senior GOFO and political appointees—who have retreated to the fainting couch about what was used this spring against Iran…something we have been planning for since I was in middle school. Bells were ringing about inadequate magazines after every OPLAN revision and related exercises in the mid-late 1990s. After Desert Fox. After the 2003 invasion of Iraq. Constantly discussed in COCOM planning cells.

We knew this. We were warned. Fine. We’re here—so let’s do something about it.

Without action, we risk early culmination in any conflict west of the International Date line against the PRC, or being forced to let it simply devolve into an exchange of low-tech/high death (for us) secondary weapons options…or what you see in Ukraine right now—a slow slog.

Those in the last two decades who sold “72-hour Wars” and exquisite “war winning technology” as opposed to doing the hard work of sustaining a realistic warfighting capability bear this blame, but we cannot do anything about the past.

What are we doing now? Something better than we’ve seen in years.

The aggressive start to the U.S.-Israel war on Iran depleted U.S. missile stockpiles. In the first 39 days of the Iran war, the U.S. expended more than half its prewar inventory for four critical munitions: the Precision Strike Missile (PrSM), SM-3, THAAD and Patriot, according to an April report from CSIS.

Mark Cancian, retired Marine Corps colonel and senior advisor for the defense and security department at CSIS, says the usage rate for precision munitions has been “very high,” but the rate for other munitions is comparable to operations like Desert Storm and the Iraq invasion.

“It’s a high rate of usage, but I wouldn’t say it’s unprecedented,” Cancian said.

These “exquisite class” munitions — highly advanced, high-precision weapons — are also very expensive, often priced at more than $1 million per unit. Rebuilding these inventories could take one to four years, depending on the missile pipeline, according to CSIS. The center noted these missiles would be critical for any conflict in the Western Pacific or with China.

This must be a bi-partisan effort. It must outlast the Trump administration. I know that is a position that is hard for some to run with in an election years, but this is more important than petty political posturing.

“The industry’s greatest concern is ensuring there’s a long-term commitment from the DOD to use the expanded capacity,” Cancian said.

Dr. McGinn, director of the Center for the Industrial Base at CSIS, said defense contractors have a “difficult history” planning production timelines, due to volatile demand from the DOD.

“If you’re a government program manager managing the Patriot program or if you’re a contractor building those systems and your order book is 70 then it suddenly changes to 50, that’s a big deal,” he said.

New Missiles And Munitions Programs

While the military has a bad reputation for cost management, the current budget effort looks to shore up some of its most sophisticated weapons systems with cheaper substitutes that can be built more quickly.

“There’s a whole variety of systems that are just coming online, coming out of what I call the developmental primordial soup,” Cancian said. He noted these systems have been in development for “many years.” But the Ukraine war accelerated those efforts.

“So there’s a variety of (counter-unmanned aircraft system) technologies that are coming online,” he said.

None of these systems are one-to-one replacements for exquisite systems. But they do offer reliable complements and alternatives, which can help stockpiles last longer, according to Cancian.

Last year the Air Force launched the Family of Affordable Mass Munitions (FAMM) program, which plans to procure 28,000 low-cost munitions by 2031. These include variations for fighter jets, palletized launches via cargo aircraft, and long-range cruise missiles.

Some recent additions to the U.S. missile arsenal, including a range of FAMM designs, cost as little as $250,000. The Air Force lists Anduril, CoAspire and Zone 5 as vendors on budget documents for the FAMM program. Other firms have revealed cheaper cruise missile models such as Lockheed’s CMMT cruise missile, a modified Boeing-made Joint Direct Attack Munition, and Leidos Holdings‘ (LDOS) Small Cruise Missile, according to reports.

The U.S. has even taken to copying some of its scrappier adversaries, developing its own version of Iran’s notoriously cheap and effective Shahed drones for just $50,000 apiece. These Low-cost Uncrewed Combat Attack System (LUCAS) drones are developed by privately owned SpektreWorks. Price ranges from $20,000 to $50,000.

Scale. That is how we get scale. Without scale we will not be able to properly attack the PRC target set. It makes the operations in Iran look like what it is, a dress rehearsal. Wars are won with the application of mass, not by having the most exquisite wunderwaffe.

In 2025, RTX, Northrop Grumman and Lockheed Martin’s international sales grew faster than those to the U.S. government, according to company filings.

RTX, the largest of the three, did $12.5 billion in 2025 sales to foreign governments, up 14% from the year before. Northrop Grumman’s overseas sales grew 20% to $5.99 billion, well ahead of the 3% increase for the overall company. At Lockheed Martin, international sales rose 15%, more than double its 6% overall revenue growth.

Sales to foreign governments represent a comparatively small — but not insignificant — share of their total business. Lockheed Martin is the least reliant on the U.S. government, with 28% of its sales coming from foreign countries, compared with 14% for Northrop Grumman and RTX.

NATO Arms Up; Will U.S. Defense Stocks Benefit?

U.S. defense stocks are seeing added demand as European allies hike their defense spending. Nothing has driven high-dollar sales of U.S. weapons to Europe like Russia’s aggression against Ukraine, and rising concerns that it won’t end there.

Germany’s 2026 defense budget of $127 billion is more than double the roughly $62 billion it spent in 2021, according to data from NATO and the German government. In April, the French government proposed to add $39 billion to its defense budget through 2030. Britain is moving up plans to increase defense spending from 2.5% to 3% of GDP in five years.

In April, RTX’s defense arm, Raytheon, agreed to two contracts with Ukraine and Netherlands for Patriot missiles, valued at $3.7 billion and $627 million, respectively. In March, Lockheed Martin signed a comprehensive agreement to provide the Czech Republic with F-35 fighter jets.

Anything we can do to encourage the internationalization of the rebuilding of defense capacity should be roundly supported. Both we and the Europeans must fully understand that if a war erupts in the Pacific, all but a token American presence in European NATO will be available—and those will be second-tier forces. Everything will be heading to the Pacific. Europe will not be on its own, but they need to prepare to act as such.

The House version of the Pentagon’s budget request now faces Senate scrutiny, which means political debate — especially in a midterm elections year. But despite the record-setting overall number, CSIS estimates the actual outlays — the amount that the Treasury actually pays out in a given year — will peak in fiscal 2028 at just under $1.3 trillion (in fiscal 2027 dollars).

That could put outlays as a percentage of U.S. GDP at around 3.7% at the 2028 peak. That level is well below the Afghanistan War’s 4.7% ratio in 2010 and the Reagan-era peak of 6% in 1986. Defense outlay ratios were much higher during the Vietnam War and World War II.

That helps explain how the current military budget could be a rare point of common ground in Congress, according to Gabelli Funds’ aerospace and defense analyst Tony Bancroft.

“There’s always going to be (political) machinations and brinkmanship, but ultimately they’ll reach a deal,” he said. “Both sides recognize they want to get this done.”

Investors and the contractors will almost certainly feel the same.

“The primes are going to enter a major capex cycle if this bill passes,” Bancroft said. “The spending is real. It’s happening.”

So, we wait—mostly—on the Senate. They have not even scheduled a floor vote yet.

As a side note, the referenced article in IBD is a deep dive. I did not even cover the portion about the Golden Dome missile defense effort. Give it a read.