![\"\"](\"\/wp-content\/uploads\/2026\/08\/36_industry_historical.jpg.jpg\")
That price is a defense sector that can\u2019t move as quickly as the Pentagon wants it to. America is now supplying materiel for the wars in Ukraine<\/a> and Israel<\/a>, which started a year and a half apart. The high demand has strained an industry that often struggled to meet needs long before Russia\u2019s full-scale invasion of Ukraine in February 2022.<\/p>\n\n\n\n And these wars aren\u2019t even the Defense Department\u2019s top priority; that\u2019s China, whose massive military buildup<\/a> over the last 20 years is the pace America\u2019s leaders say they must match. Nowhere is this clearer than in the Pentagon\u2019s new defense-industrial strategy, which says China\u2019s industrial might in many areas \u201cvastly exceeds\u201d that of the U.S. and its allies.<\/p>\n\n\n\n In response, the plan calls for \u201cgenerational\u201d investment in the industrial base. To do so, the Pentagon is now showing a new set of graphs.<\/p>\n\n\n\n Bill LaPlante, the department\u2019s top weapons buyer, has a wall in his office covered with images plotting how long it would take to build more missiles and other munitions. His deputies are sharing these with company after company, he said \u2014 though the Pentagon isn\u2019t making them public.<\/p>\n\n\n\n Call it a tale of two charts: In 30 years, the Pentagon went from a defense industry it considered too large to sustain, to one now too small to surge. To understand that path, Defense News spoke with analysts and industry executives as well as top industrial base policy officials dating back to the Clinton administration. They likened the sector to something of a spring-loaded door \u2014 where capacity slammed shut due to smaller budgets, changing preferences and a thinning workforce.<\/p>\n\n\n\n That door is now creaking open again as America retools its defense industry, workforce and suppliers to compete with an advanced adversary.<\/p>\n\n\n\n \u201cIt\u2019s dusting off a lot of skills that we\u2019ve had in this country that we haven\u2019t used in a while,\u201d LaPlante told reporters in December at the Reagan National Defense Forum.<\/p>\n\n\n\n Experts on America\u2019s defense industry tend to speak about it like an intro economics course. They often note the sector doesn\u2019t move like other markets.<\/p>\n\n\n\n Defense companies build what governments want, but rarely any more or anything different. The Pentagon\u2019s orders, hence, have an unusual amount of sway over the shape of the companies fulfilling them.<\/p>\n\n\n\n \u201cThe defense industry is hypersensitive to and responsive to its customers,\u201d said Steve Grundman, a senior fellow at the Atlantic Council think tank.<\/p>\n\n\n\n Grundman worked in the Pentagon in the 1990s, in the wake of the peace dividend. Military spending had surged<\/a> under the Reagan administration as the U.S. competed with the Soviet Union. But when the USSR dissolved in 1991, ending the Cold War, America had no opponents left to outcompete. Defense spending fell each fiscal year from 1985 to 1998, according to the Center for Strategic and Budgetary Assessments think tank.<\/p>\n\n\n\n Specifically, the Pentagon\u2019s spending on procurement, research, development and construction dropped 44% during that time period, CSBA found.<\/p>\n\n\n\n America needed a defense industry built for peacetime. So arrived the Last Supper, a name Augustine himself gave the 1993 dinner. Even at the time, he said, it appeared to be sound policy. Defense spending was bound to fall, leaving the Pentagon with two choices: a sprawling industry versus a smaller, more efficient one.<\/p>\n\n\n\n Defense officials encouraged the latter. Alongside the plummet of prime contractors, the number of mid-tier and small suppliers also cratered as companies merged in order to lower costs.<\/p>\n\n\n\n Eventually the government said enough was enough. In the late 1990s, it blocked Lockheed Martin\u2019s plan to buy Northrop Grumman.<\/a> The era of major consolidation was over.<\/p>\n\n\n\n Its effects were twofold: less competition and less ability to surge. The first, in many cases, has meant the Pentagon\u2019s orders take longer, cost more and are vulnerable to brittle supply chains<\/a>. The second \u2014 caused both by consolidation and more efficient manufacturing techniques<\/a> \u2014 makes it harder to respond to sudden conflicts.<\/p>\n\n\n\n Heading into the 2000s, leaders in large part began to favor weapons that were more advanced but would be fewer in number. Defense Secretary Donald Rumsfeld labeled it a \u201ctransformation\u201d that would vault the Pentagon\u2019s arsenal a whole generation ahead.<\/p>\n\n\n\n Some of these advanced weapons \u2014 such as the Army\u2019s Future Combat System and the Navy\u2019s Littoral Combat Ship \u2014 did not work out as intended. And the shift toward fewer, more capable systems further encouraged companies to consolidate.<\/p>\n\n\n\n In 1998,<\/a> five companies built surface ships and two made tracked combat vehicles. By 2020, <\/a>those numbers had fallen to two and one respectively.<\/p>\n\n\n\n \u201cAs dumb as it sounds, given how much we spend on defense, oftentimes the volume for any single supplier isn\u2019t enough,\u201d said Dave Bassett, a retired Army lieutenant general, who until December ran the Defense Contract Management Agency.<\/p>\n\n\n\n The peace dividend did not survive America\u2019s wars in Iraq and Afghanistan.<\/p>\n\n\n\n The 9\/11 attacks followed by the two conflicts swelled the Defense Department\u2019s budget. When adjusted for inflation and including supplemental funding, Pentagon spending rose an average of 7% from fiscal 1999 to fiscal 2008, according to CSBA.<\/p>\n\n\n\n This spending went toward a new set of threats.<\/p>\n\n\n\n As an example, Bassett and other experts interviewed by Defense News singled out a class of heavily armored vehicles developed for the wars. The mine-resistant, ambush-protected vehicle program was Defense Secretary Bob Gates\u2019 top priority. With heavy investment, the Pentagon fielded more than 13,000 MRAP vehicles in three years.<\/a><\/p>\n\n\n\n The program has since become a talisman for some who argue the defense industry can move nimbly if given the proper resources. But it\u2019s also a reminder of where those resources went for more than 15 years. From 2001 onward, the Pentagon needed weapons for counterinsurgencies.<\/p>\n\n\n\n Those are far from what Ukraine needs to defend itself against Russia \u2014 an industrial-age war defined by the use of artillery and small drones. Even further are the needs of defending Taiwan, an island nation threatened by a leading manufacturing powerhouse.<\/a><\/p>\n\n\n\n \u201cIf what you\u2019re facing is an Iraqi threat, you\u2019re probably not going to have the same capacity as when you face a Russian and the Chinese threat,\u201d said Bill Lynn, deputy defense secretary during the Obama administration and now chief executive of Leonardo DRS.<\/p>\n\n\n\n And the change in capacity had become clear to defense officials.<\/p>\n\n\n\n Brett Lambert, who ran industrial base policy for the Pentagon while Lynn was deputy secretary, remembers a tornado in 2011 that struck Joplin, Missouri \u2014 nearly hitting a major battery supplier.<\/p>\n\n\n\n \u201cWe realized that even though the plant itself was not hit, we didn\u2019t have a backup,\u201d Lambert said. \u201cThat was a wake-up call to me.\u201d<\/p>\n\n\n\n Another warning came in the form of a four-year study of major weapons programs Lambert helped lead. He found, in large part, that prime contractors didn\u2019t understand their own supply chains.<\/p>\n\n\n\n But while the alarm went off, no one woke up, said Robert Lusardi, a former Pentagon industry official. The study\u2019s data, he noted, largely faded into the ether.<\/p>\n\n\n\n \u201cNobody used it,\u201d he said.<\/p>\n\n\n\n Eric Chewning was vacationing with his family at the Outer Banks in summer 2017.<\/p>\n\n\n\n Sitting on the North Carolina beach with his kids, Chewning \u2014 then a partner at the consulting firm McKinsey and Co. \u2014 scrolled through his phone and saw a news release about an executive order. President Donald Trump was instructing the Pentagon\u2019s first top-down review of its defense-industrial base since the Eisenhower administration.<\/p>\n\n\n\n \u201cI say to myself: \u2018Who are they going to get to do that?\u2019 \u201d Chewning told Defense News in an interview.<\/p>\n\n\n\n Later that day, he was walking back from the beach when he got a call from the Pentagon asking if he would interview for the top industrial base policy role. In October, he took the job, which meant he would be the one running the study.<\/p>\n\n\n\n \u201cThe mindset was: How do we holistically now transition ourselves from the post-9\/11 wars, where there really wasn\u2019t ever a question around our ability to generate enough material capability, to one focused on competition with an economic peer?\u201d Chewning said.<\/p>\n\n\n\n What he found is that doing so wouldn\u2019t be easy \u2014 in large part because of what was happening with the American workforce. By the time the defense industry consolidated in the 1990s, the U.S. was decades into a deep manufacturing slide.<\/p>\n\n\n\n From the late 1970s to 2017, the country lost 7.1 million manufacturing jobs, or 36% of the sector\u2019s workforce, according to the study Chewning led<\/a>. Such declines serve as a challenge to any attempt to quickly bulk up America\u2019s defense industry. Even with more advanced factories that now heavily rely on robotics, weapons still need people who know how to build them.<\/p>\n\n\n\n This is part of why capacity is so difficult to add once it\u2019s gone, said Bassett, the retired Army general. It takes years to find and train skilled workers, as companies across the country have seen in the recently tight labor market.<\/p>\n\n\n\n While leading the Defense Contract Management Agency, Bassett studied business traits that would help predict manufacturing problems. A significant one he found was the share of blue-collar employees who had been on the job for less than a year; once it reached a certain threshold, he said, quality issues were almost guaranteed.<\/p>\n\n\n\n While the 2018 study led to some reforms, it did not reverse the trend in manufacturing, which only got worse as older workers retired en masse during the COVID-19 pandemic<\/a>. Like many reports in Washington, it pointed to major issues that existed alongside other difficulties, all competing for time and money.<\/p>\n\n\n\n \u201cThere\u2019s never just one problem,\u201d said Chewning, now a vice president at the shipbuilder HII. \u201cThe immediate problems get the most attention.\u201d<\/p>\n\n\n\n By 2022, the problem had become immediate. Russia launched a full-scale invasion of Ukraine, and Washington continued sending weapons to aid Kyiv.<\/p>\n\n\n\n The U.S. has given Ukraine a staggering amount of security aid \u2014 more than $44 billion since February 2022<\/a>. Despite that sum, one of the lessons for many in the Pentagon has been that industry was unprepared for a crisis.<\/p>\n\n\n\n Arguably, nowhere is this more obvious than in America\u2019s supply of 155mm artillery shells.<\/p>\n\n\n\n The 155mm round \u2014 next to small drones \u2013 has defined fighting in Ukraine. For self-defense, Kyiv needs 60,000-80,000 shells per month, Michael Kofman, an analyst at the Carnegie Endowment for International Peace, told Defense News.<\/p>\n\n\n\n That rate well surpasses the pace at which Ukraine\u2019s Western allies could resupply them. Even with an extra $1.5 billion from Congress in 2023 to increase production, America was making 28,000-30,000 shells in December, said LaPlante, who is in charge of acquisition and sustainment at the Pentagon.<\/p>\n\n\n\n The Defense Department\u2019s goal is to reach 100,000 rounds per month by the middle of 2025. But that pace likely won\u2019t be possible without more funding from Congress, which has stalled a security spending bill requested by the White House.<\/a><\/p>\n\n\n\n But funding hasn\u2019t slowed down production in recent years; from FY16 to FY23, Congress added 7.3%, or $79.3 billion, to the White House\u2019s requested Pentagon procurement fund, according to CSBA. The problem is inconsistent demand, which LaPlante illustrated with another chart last fall.<\/a><\/p>\n\n\n\n Starting with the Gulf War 30 years ago, munition orders have gone up and down in a series of peaks and valleys: A crisis breaks out, the Pentagon surges supply, it reaches the number a couple years later, then the crisis wanes and supply falls.<\/p>\n\n\n\n \u201cThat\u2019s one of the challenges that we have now \u2014 that inability to make adjustments because of the lack of investment that we\u2019ve made to the industrial base historically,\u201d Justin McFarlin, who leads industrial base development for the Pentagon, told Defense News.<\/p>\n\n\n\n Munitions are often at high risk for such whiplash. Eric Fanning noticed this pattern after years of holding senior positions with the Navy, the Air Force and the Army. Much of each service\u2019s spending power was sewed up in large systems, such as aircraft carriers and fighter jets. <\/b>More inexpensive items ended up tapered to make the budget fit. And because the Pentagon\u2019s demand affects supply, the companies fulfilling those orders trimmed capacity over time.<\/p>\n\n\n\n Now orders are up again \u2014 this time for 155mm shells and a bevy of other munitions. For some, Congress has allowed the Pentagon to issue long-term contracts that keep demand stable for years. But for others, companies are left worrying government demand won\u2019t last, according to Fanning, now head of the Aerospace Industries Association.<\/p>\n\n\n\n \u201cThat sense of long-term commitment is still not quite there,\u201d he said.<\/p>\n\n\n\n The Pentagon says it\u2019s signaling future commitments in its new industrial base strategy<\/a>. The document focuses on four areas: creating resilient supply chains, ensuring workforce readiness, creating business-friendly acquisition policies and bolstering the national security marketplace.<\/p>\n\n\n\n \u201cThese are not new ideas,\u201d Halimah Najieb-Locke, acting deputy for industrial base policy, told Defense News. \u201cBut they haven\u2019t been said with the [needed] authority.\u201d<\/p>\n\n\n\n In a separate briefing with reporters in January, Najieb-Locke previewed the Pentagon\u2019s goals for its defense-industrial base over the next three to five years. One is to speed up long-lead items, such as ball bearings or solid-rocket motors that slow down the production of important weapons. Others include retooling obsolete parts of the supply chain and using more funding from the Defense Production Act, which allows the Pentagon to issue national security-related grants<\/a>.<\/p>\n\n\n\n \u201cWe no longer can afford to ignore [issues in the industrial base] and hope for better,\u201d Najieb-Locke told Defense News. \u201cWe have to take decisive action.\u201d<\/p>\n\n\n\n But there are problems outside of the Pentagon\u2019s control.<\/p>\n\n\n\n The first is politics. As of publication, Congress had yet to pass a full defense spending bill \u2014 the latest entry in more than a decade of continuing resolutions<\/a>. Defense remains a largely bipartisan issue, but there is a widening gap within the Republican Party \u2014 one reason Congress hasn\u2019t passed additional aid for Ukraine, Israel and Taiwan.<\/p>\n\n\n\nIndustrial base 101<\/h1>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2026\/08\/34-35_industry_tank.jpg.jpg\")
\u2018A wake-up call\u2019<\/h1>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2026\/08\/GettyImages-114925418.jpg.jpg\")
\u2018There\u2019s never just one problem\u2019<\/h1>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2026\/08\/77S2YLP5VREODJNNODEH5XE5VA-Cropped.jpg.jpg\")
![\"155mm](\"\/wp-content\/uploads\/2026\/08\/AP23107715974669.jpg.jpg\")
\u2018First contact with the enemy\u2019<\/h1>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2026\/08\/GettyImages-1918096530.jpg.jpg\")