U.S. defence industry faces missile output strain ahead of Trump meeting

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U.S. defence missile strain

Highlights

Trump will meet major U.S. defence firms Wednesday to address munitions output strain caused by depleted stockpiles and shifting procurement toward drones and cheaper cruise missiles.
Top five U.S. defence primes face a record $1.36 trillion order backlog through 2025, up 24 percent year-on-year, as investments are hindered by component shortages and workforce gaps.
Pentagon's new seven-year munitions purchase frameworks and recent agreements for 10,000+ low-cost cruise missiles aim to expand supply, but compliance burdens and rare earth shortages persist.

Production bottlenecks shape White House agenda

As reported by Financial Times, constraints in munitions manufacturing are expected to dominate Wednesday's White House meeting between Trump and leading U.S. defence companies. The administration is pressing contractors to expand output after stockpiles are drained by the Iran war, while also trying to reorient procurement toward newer systems such as drones and cheaper cruise missiles.

Trump has criticised defence groups for prioritising dividends and share buybacks over factory expansion, and on Monday said "they can't do that anymore." Lockheed Martin broke ground last month on a new Alabama facility, while Northrop Grumman, Raytheon and L3Harris are also investing billions of dollars to increase manufacturing capacity.

Even with those investments, companies and suppliers say they still face obstacles including uneven government spending, procurement rules, shortages of critical components and a lack of qualified workers. PwC research says the five largest U.S. defence primes hold a combined backlog of $1.36 trillion in undelivered orders through 2025, up 24 percent from the previous year.

Jen Stewart, executive vice-president of the National Defense Industrial Association, says there is bipartisan support in Washington for moving faster and reducing barriers for manufacturers. But she says the contraction of the U.S. defence industrial base over three decades, from 51 prime contractors in the early 1990s to five today, is not solved in a single year.

Supply chain gaps test rearmament strategy

The Trump administration describes its goal as putting the U.S. defence industry back on a wartime footing, but analysts say that requires rebuilding a broader network of smaller suppliers of materials and components. Stacie Pettyjohn of the Center for a New American Security says these companies struggle to finance equipment and capacity upgrades when Pentagon demand changes sharply from one year to the next.

Under defence secretary Pete Hegseth's acquisition transformation strategy, the Pentagon is using seven-year framework agreements for munitions purchases, simplifying procurement, encouraging second-source suppliers and favouring commercially available products over bespoke systems. Last month, the government also announced framework agreements with Anduril, CoAspire, Leidos and Zone 5 to produce more than 10,000 low-cost cruise missiles over three years from 2027.

Industry officials say incentives alone do not solve shortages in rare earths, critical minerals, explosives, chemical processing and workers with security clearances. An NDIA survey this year shows 50 percent of companies cite the burden of complying with government requirements as a pressing issue, up from 23 percent last year.

Missile electronics are another weak point. Jim Will of SkyWater Technology says primes struggle to find domestic microelectronics sources because some chips used in systems such as Tomahawk missiles were made a decade or more ago at U.S. fabrication plants that no longer operate.

Former Pentagon and industry officials say newer entrants are receiving far more funding than a decade ago, but they warn those groups may still hit the same structural obstacles without deeper procurement reform. Pettyjohn says wider foreign production partnerships could ease domestic bottlenecks, though she adds the administration's America-first approach may push some allied buyers toward alternative suppliers if they face long waits for systems such as Patriot missiles.

In our earlier article, we covered Treasury Secretary Scott Bessent’s push to strengthen U.S. supply-chain resilience in critical industries so they can withstand shocks, coercion and foreign chokepoints. He argued that full domestic production of every component isn’t realistic, but that the U.S. should diversify away from risky concentrations while building enough capacity at home to reduce strategic vulnerability.

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