Defence industrial base: the factories and firms behind modern war

What it is

The defence industrial base is the network of factories, forges, propellant lines and supply chains that convert government budgets into deliverable weapons. This beat tracks seven organisations whose combined output shapes every major active or potential conflict. Four are publicly traded Western primes: Lockheed Martin (US), RTX (US), BAE Systems (UK) and Rheinmetall (Germany). One is Russia's state conglomerate, Rostec. One is China's largest state-owned arms maker, NORINCO. The seventh subject is not a company but a supply-chain indicator: 155mm artillery shell output, tracked as the closest available proxy for who can sustain a war of attrition.

History

Post-Cold War dividend cuts and 1990s consolidation hollowed Western surge capacity. The US defence industry shrank from more than 50 prime contractors to roughly five: Lockheed and Martin Marietta merged in 1995, McDonnell Douglas was absorbed into Boeing in 1997. Shell-production lines across NATO idled. Russia's Rostec was formed in 2007 to consolidate surviving Soviet-era plants under Kremlin control; NORINCO expanded through the 2000s to supply export markets from sub-Saharan Africa to the Middle East. After Russia's 2014 annexation of Crimea, European budgets edged up but not enough to rebuild ammunition depth. The February 2022 invasion of Ukraine broke the model: NATO transferred to Kyiv in roughly twelve months what the alliance had planned to manufacture over five years, exposing the factory-throughput gap that has since defined this beat.

Current state

The SIPRI Top 100 companies recorded combined arms revenues of US$679bn in 2024, the highest total SIPRI has ever measured, up 5.9% year on year. US companies contributed US$334bn across 39 firms; European companies reached US$151bn, a 13% jump, with Germany's four Top-100 firms surging 36% to US$14.9bn collectively. Rheinmetall has ramped 155mm shell output from 70,000 to 1.1 million per year, targeting 1.5 million by 2027, see ラインメタル、通常弾薬の生産でドイツが米国を追い抜いたと表明. The US Army was still producing around 40,000 shells per month entering 2026, against a target of 100,000. BAE Systems is six months late on a 16-fold capacity expansion at its Glascoed plant in South Wales, see BAEのグラスコード155mm砲弾工場、計画能力を倍増しながらも遅延. RTX books a growing Patriot and GEM-T interceptor order book across Europe, see RTX傘下レイセオンがウクライナ向けパトリオット迎撃弾37億ドルの取引を成約、欧州生産を拡大. Rostec claims barrel-artillery shell output roughly tenfold above February 2022 levels; it and United Shipbuilding Corporation combined for US$31.2bn in 2024 revenues (up 23%), though Western analysts flag reliance on refurbished Soviet stocks, see ロシアが戦時生産を拡大、ロステフが「西側には夢見ることもできない」武器生産量を誇示. NORINCO posted a 31% revenue drop in 2024 following corruption investigations inside China's military procurement chain.

Relationships

Rheinmetall and BAE Systems contest the same NATO ammunition contracts; Rheinmetall leads on volume in mid-2026, see ラインメタル、ウクライナへ提供した回収車の補充でドイツ連邦軍から受注 for how Bundeswehr backfill orders are feeding that order book. Lockheed Martin and RTX operate at the guided-platform end: HIMARS, F-35, Patriot and Stinger, where backlogs now stretch across multiple years, see ロッキードが350億ドルのTHAAD契約を獲得、湾岸戦争で在庫が枯渇した後の迎撃ミサイル生産を4倍に. Rostec and NORINCO are near-peer counterweights: Rostec feeds the Russian war economy and a sanctions-constrained export residual; NORINCO supplies China's PLA and belt-and-road clients but is under domestic integrity pressure after 2024. The 155mm shell count links all seven: whichever industrial base can sustain the highest monthly output longest holds the attritional edge, and the gap between Rheinmetall-led European lines and US production is the most-watched single metric on this beat.

What to watch

Whether Rheinmetall hits 1.5 million 155mm shells per year by 2027, the self-set benchmark against US lines, see ラインメタル、通常弾薬の生産でドイツが米国を追い抜いたと表明. Whether BAE Systems commissions the Glascoed plant before end-2026 and resets the UK output trajectory, see BAEのグラスコード155mm砲弾工場、計画能力を倍増しながらも遅延. How RTX and Lockheed Martin resolve Patriot and F-35 production delays as European backlogs deepen, see RTX傘下レイセオンがウクライナ向けパトリオット迎撃弾37億ドルの取引を成約、欧州生産を拡大 and ロッキードが350億ドルのTHAAD契約を獲得、湾岸戦争で在庫が枯渇した後の迎撃ミサイル生産を4倍に. Whether NORINCO recovers from its 31% revenue collapse as the Chinese military corruption probe widens. And whether Rostec export revenue, declining in SIPRI data even as domestic war-output claims rise, recovers: the gap between claimed throughput and commercial muscle is the clearest tell on Russian industrial capacity, see ロシアが戦時生産を拡大、ロステフが「西側には夢見ることもできない」武器生産量を誇示.