Defense contractors are spending billions to build factories and increase production to stock America’s nearly bare cupboard of highly engineered missiles.

The Pentagon is pressuring U.S. missile manufacturers to dramatically increase production, with some companies asked to double or even quadruple their output. This initiative, coordinated through a new Munitions Acceleration Council led by Deputy Secretary Steve Feinberg, targets 12 critical weapon systems, including Patriot interceptors, LRASMs, SM-6, and Precision Strike Missiles. The goal is to address critical munitions shortfalls that military planners fear would leave the United States unprepared for a potential conflict with China.

Defense leaders have raised alarms after war-game scenarios highlighted significant stockpile gaps, particularly for air-defense interceptors, long-range anti-ship, and strike missiles. The Pentagon has conducted industry roundtables and requested plans from suppliers to increase production by 2.5 times or more over 6, 18, and 24-month horizons. They are also exploring new suppliers, licensing, and private capital to expand capacity, though officials warn of constraints due to long lead times, testing, qualification steps, and substantial additional funding requirements beyond current appropriations.

Defense companies are responding to this call. Lockheed Martin, for instance, secured a nearly $10 billion multi-year contract to produce 2,000 Patriot missiles and is on track to produce over 600 PAC-3 MSEs this year, having set production records last year. Northrop Grumman recently opened a new Missile Integration Facility in West Virginia to boost production. The Pentagon also recently bought $3.5 billion in AIM-120 missiles. Shares of major defense companies like Lockheed Martin, RTX, General Dynamics, and L3Harris saw gains of 1% to 5% following reports of the Pentagon's demands.

However, several significant bottlenecks threaten to impede these ambitious production goals. Solid rocket motors (SRMs), critical for missile propulsion, are a major bottleneck due to hyperconsolidation in the industry, primarily between Northrop and L3Harris. Seekers, which guide missiles, are also underproduced; Boeing, a subcontractor for PAC-3 interceptors, delivered only 500 last year, causing delays. Additionally, microelectronics and critical minerals used in missiles are heavily reliant on foreign supply chains, particularly from China, as noted in a July GAO report. Propellant production also faces challenges, with Northrop, a key supplier, struggling with deliveries and relying on a single source for ammonium perchlorate.

Despite these challenges, innovative startups are stepping in to address some of the bottlenecks. Companies like Ursa Major, X-Bow Systems, and Anduril are ramping up SRM production. X-Bow Systems recently won a $191 million contract for advanced integrated motor manufacturing, while Raytheon secured a $160 million contract for AIM-9X missile components. Ursa Major partnered with BAE Systems to test its 3D-printed SRMs, and Anduril opened an SRM production facility in Mississippi, aiming to produce 6,000 tactical motors per year by the end of 2026. Anduril was also selected by Saab to provide SRMs for their GLSDB precision munition.