Western Defense Industrial Reshoring: Munitions Math in 2026

From peacetime stockpile to active attrition economics #

Western munitions manufacturing was sized in the 2010s for slow rotation of war reserve stocks against a contingency planning assumption that any major conflict would be short, decisive, and air dominated. Russia's full scale invasion of Ukraine on 24 February 2022 broke that assumption inside six months. By autumn of 2022 Ukrainian artillery consumption ran at 6,000 to 8,000 155mm rounds per day, against a combined US and European production rate of roughly 35,000 to 40,000 rounds per month. A single month of Ukrainian fire consumed roughly five months of allied output.

The response has been the largest peacetime expansion of Western munitions capacity since the Korean War rearmament. Congress authorized multi year procurement authority for critical munitions in the 2023 and 2024 NDAAs. The European Council adopted Regulation 2023/1525, the Act in Support of Ammunition Production, in July 2023 with a 500 million euro envelope. The European Defence Industry Programme regulation under the file 2024/848, commonly cited as EDIP, opened with a 1.5 billion euro Day 1 allocation and a structural commitment to joint procurement. The NATO Defense Production Action Plan, endorsed at Vilnius in July 2023, set common standards and capacity assurance instruments. Three years in, headline shell forging has moved fast. Energetic chemicals, propellant powders, missile grade rocket motors, and attritable autonomy production engineering are moving more slowly.

The 155mm artillery ramp and its binding chokepoints #

The 155mm howitzer round, primarily the M795 high explosive projectile and the M982 Excalibur precision variant, sits at the center of the ramp. The Army Joint Program Executive Office for Armaments and Ammunition published a baseline of 14,400 M795 rounds per month at the start of 2023, with a target of 100,000 per month by October 2025 disclosed in successive GAO reports. Scranton and Wilkes Barre forging operations, run by General Dynamics Ordnance and Tactical Systems, were augmented by a new Mesquite, Texas metal parts plant. As of early 2026 the Army acknowledges monthly output is closer to 70,000 to 75,000 rounds, with the 100,000 target slipping into the second half of 2026 on TNT and load, assemble, and pack capacity rather than metal parts.

Europe runs a parallel ramp from a smaller base. The European Commission disclosed in its 2025 ASAP review that EU 155mm production rose from approximately 250,000 rounds in 2022 toward 2 million rounds per year capacity by end 2025, with about 1.4 million rounds in actual deliveries during 2025. Rheinmetall's greenfield plant at Unterluess in Lower Saxony, ground broken in February 2024, targets 200,000 rounds per year at full ramp. BAE Systems Glascoed in Wales is doubling capacity under a UK MoD contract worth approximately 280 million pounds. Nammo's Karlskoga site in Sweden is expanding propellant and shell capacity in coordination with Norwegian sister facilities. Norske Eltrich and the Czech Strategic Group, CSG, the latter through its acquisition of Excalibur Army, are layering in central European capacity that benefits from lower energy costs and existing energetics workforce.

The binding chokepoints are upstream rather than at the forge. TNT, trinitrotoluene, has only one Western producer, Nitro-Chem in Bydgoszcz, Poland, after Holston Army Ammunition Plant in Tennessee shifted decades ago to IMX type insensitive munitions formulations. The Department of Energy and the Army Joint Munitions Command opened design work in 2024 on a new TNT facility, with a notional capacity of 60 million pounds per year, but ground breaking is not expected before late 2026 and first product before 2028. IMX fills are an alternative for some natures, but qualification for 155mm M795 high explosive is incomplete and the precursor chemistry, including DNAN and NTO, has its own thin supplier base in a handful of US and Canadian plants.

Propellant powder and the energetics chemistry stack #

Propellant supply is the second binding chokepoint and the more technically intractable. Nitrocellulose, the foundation of single base and double base propellants used in 155mm modular charges and tank gun rounds, requires high purity cotton linters or wood pulp processed through nitration with mixed acid. Western nitrocellulose capacity declined sharply after the Cold War. Chemring Nobel in Norway, Eurenco in France and Sweden, Nitro-Chem in Poland, and General Dynamics Ordnance and Tactical Systems in Canada and the US carry most of the load. Eurenco brought a new nitrocellulose line at Bergerac back into production in 2024 after a dormancy of more than a decade. Lead times for the specialized stainless steel reactors and acid recovery systems run 24 to 36 months.

The strategic implication is that 155mm shell forgings without matching propellant are stranded inventory. Through 2024 and 2025, several allied stockpiles accumulated empty projectiles waiting for charge bags, a problem that surfaced in NATO ministerial meetings and RUSI commentary. The propellant constraint also shapes the missile ramp, since solid rocket motor production for GMLRS, PAC-3, AIM-120, and Stinger draws from an overlapping supplier base of ammonium perchlorate, HTPB binder, and aluminum powder. Northrop Grumman and Aerojet Rocketdyne, the latter now inside L3Harris after the 2023 acquisition, are the two domestic solid rocket motor producers for tactical missiles, constrained by ammonium perchlorate supply from a single AP plant at Cedar City, Utah operated by American Pacific.

Demand signal, missile capacity, and the air defense bottleneck #

Ukrainian artillery consumption stabilized through 2024 and 2025 at roughly 7,000 to 10,000 155mm rounds per day during active operations, falling toward 4,000 to 5,000 per day during operational pauses. This is the empirical ceiling on what Ukrainian crews and barrels can sustain rather than a demand signal limited by supply, since allied deliveries in 2025 ran below this rate. Israeli munitions consumption since October 2023, across 155mm, JDAM kits, Hellfire, and small diameter bombs, drew down US theater stocks and forced the Pentagon to draft a competing demand allocation framework that prioritizes Indo Pacific contingency reserves while sustaining Ukrainian and Israeli flows.

Air defense interceptors are the sharpest bottleneck, and Patriot PAC-3 MSE is the most acute single line item. The MSE round is built by Lockheed Martin at Camden, Arkansas, with Boeing supplying the seeker through its St Louis defense business. Gallium nitride radar components, focal plane arrays, and final integration test capacity all sit on critical paths that resist quick expansion. The Army accepted approximately 550 PAC-3 MSE rounds in 2025 and is contractually committed to 650 per year by fiscal year 2027. AIM-120 AMRAAM production at RTX sits at roughly 1,200 to 1,500 rounds per year against demand from Ukraine, Taiwan FMS cases, US Air Force inventory rebuild, and NASAMS deliveries. Tomahawk Block V production at Raytheon Tucson is being lifted from approximately 70 rounds per year toward a target above 200 as the Maritime Strike variant enters service.

Stinger production at Raytheon Tucson restarted from a cold line, an unusual industrial event for a system whose original production ended in the early 2000s. The Army awarded Raytheon a 624 million dollar contract in May 2023 to deliver replacement Stingers, and a follow on 1.2 billion dollar award in 2024 to scale toward roughly 750 missiles per year by 2027. The constraint is the seeker focal plane array, whose supplier base had largely been wound down, and the workforce, which had to be rebuilt at a site simultaneously running NASAMS. GMLRS production at Lockheed Martin Camden is on a steeper trajectory, climbing from 9,600 rounds per year in 2022 toward 17,000 by 2027.

Replicator and attritable autonomy: a different industrial logic #

Replicator 1, announced by Deputy Secretary of Defense Kathleen Hicks in August 2023, set a target of fielding multiple thousand attritable autonomous systems within 18 to 24 months across air, surface, and subsurface domains. The 2024 and 2025 tranches funded Anduril's Roadrunner-M reusable interceptor, AeroVironment Switchblade variants, and small unmanned surface vessels including Saronic Technologies' Spyglass and Cipher classes. Replicator 2, scoped in 2025 and resourced in the fiscal year 2026 budget request, focuses on counter unmanned systems and base defense, with Anduril Pulsar electronic warfare nodes among the disclosed candidates.

The industrial logic differs from traditional munitions. Replicator presumes a software defined production system in which iteration speed, sensor and compute commodity sourcing, and rapid recertification matter more than long cycle qualification. Anduril's Mississippi Arsenal complex at Pickens County, announced in early 2025 with roughly 1.0 billion dollars of capex, is sized for production rates that traditional primes have not attempted in tactical autonomy. Saronic raised a Series C of 175 million dollars in February 2025 at a 4 billion dollar valuation. The risk in this segment is not capacity, where venture capital has moved fast, but doctrinal absorption, which depends on combatant command experimentation cycles and the joint force's ability to integrate attritable autonomy into existing fire control and communications architectures.

Policy architecture: NDS, EDIP, and AUKUS Pillar 2 #

The 2023 National Defense Industrial Strategy, the first such document published by the Department of Defense, formalized resilient supply chains, workforce readiness, flexible acquisition, and economic deterrence as the four lines of effort. The 2024 implementation plan funded 27 specific actions, including investments in casting, forging, and energetics. Multi year procurement authority for selected munitions, embedded in the fiscal year 2024 NDAA and extended in fiscal year 2025, is the single most consequential lever, since it converts stop and start contracting into demand certainty that justifies private capacity investment.

On the European side, EDIP allocates 1.5 billion euro on Day 1 and structures joint procurement, security of supply, and a European Military Sales Mechanism. The European Defence Fund is being revised to align with EDIP's procurement focus. AUKUS Pillar 2, the advanced capabilities pillar covering hypersonics, autonomy, undersea, AI, and electronic warfare, has measurable industrial implications. Joint qualification of munitions and autonomous systems across US, UK, and Australian programs, accelerated through 2024 and 2025 ITAR exemptions for AUKUS partners, is opening procurement aperture for Australian and British producers into US Title 10 contracts.

Implications for capital allocators and program managers #

For capital allocators the structural cycle implies a multi year revenue tailwind for primes with exposure to munitions and air defense, namely RTX, Lockheed Martin, Northrop Grumman, General Dynamics, BAE Systems, Rheinmetall, Saab, Leonardo, Hanwha Aerospace, and the Norwegian and Czech specialists. Margins are constrained by fixed price legacy contracts and capacity expansion capex, but order books extend visibility into the 2030s. The asymmetric upside sits in upstream energetics and propellant suppliers, where consolidated supply, long permitting cycles, and emerging multi year contracts allow pricing power that broader prime competition does not.

For program managers the message is harder. Capacity targets are set and contracts signed, yet schedule slippage on TNT, propellant, rocket motors, and seeker electronics remains the dominant risk. The discipline that made sense for peacetime stockpile rotation, tightly optimized just in time procurement of low volume natures, now badly fits a war attrition environment in which surge capacity, dual sourcing, and strategic buffer stocks are cheap insurance against high impact disruption. The political economy of paying for redundancy through the 2030s, in an environment where Ukraine demand may ease and Indo Pacific contingency planning may eclipse it, will define whether the 2022 to 2027 reshoring is a structural reset or a cyclical bulge.

Sources #

• Industrial Base for Munitions: Department of Defense Capacity Expansion Reports
• DOD Has Made Progress on Munitions Production but Faces Continuing Challenges (GAO-25-107212)
• Act in Support of Ammunition Production: 2025 Implementation Review and EDIP Day 1 Allocation
• NATO Defense Production Action Plan: 2024 Implementation Update
• Replenishing the Arsenal: Industrial Mobilisation in an Age of High Intensity War
• The Military Balance 2026 and Defence Industry Survey
• Janes Defence Industry: Munitions Capacity Tracker and Missile Production Database
• Pentagon Pushes 155mm Production Toward 100,000 Rounds Per Month
• Europe's Defence Industrial Awakening: Capacity, Capital, and Constraints
• Lockheed Martin 2025 Annual Report and Missiles and Fire Control Investor Day
• RTX Corporation 2025 Annual Report and Raytheon Segment Disclosures