How might we strengthen the defense industrial base so that the U.S. can sustain innovation leadership amid renewed geopolitical competition?

The defense industrial base — the companies, suppliers, and workforce that design, build, and maintain military systems — is critical to national security. But it has atrophied over decades of consolidation, offshoring, and peacetime procurement reductions. Shipyards that could build dozens of vessels annually now struggle to deliver single ships on schedule. The submarine industrial base can't meet the U.S. Navy's needs, let alone AUKUS commitments to Australia. Critical components depend on single suppliers, creating vulnerabilities. And the workforce is aging, with more engineers retiring than entering the industry.

Strengthening the industrial base requires action across multiple dimensions: expanding production capacity for critical systems, diversifying supply chains to eliminate single points of failure, attracting and training the next generation of defense workers, modernizing manufacturing technology to improve productivity, and creating a more dynamic ecosystem where new companies can enter and scale in defense markets. This isn't just about spending more — it's about spending smarter, with acquisition strategies that build industrial capacity, not just buy products. And it requires viewing the industrial base as strategic infrastructure that needs sustained investment even in peacetime, not just surged during crises.

America's defense industrial base was built during World War II, when the U.S. converted civilian manufacturing capacity to war production at unprecedented scale. Automobile factories built tanks and aircraft. Shipyards launched vessels faster than they could be sunk. By 1944, the U.S. was outproducing all other combatants combined — not because American technology was necessarily superior, but because American industry could scale production faster. This industrial advantage proved decisive, and it shaped postwar thinking: maintaining a strong defense industrial base was viewed as essential to national security.

The Cold War maintained a large defense industrial base, but the focus shifted toward technological sophistication rather than mass production. Nuclear weapons, jet aircraft, guided missiles, and electronics required specialized expertise that civilian industry didn't provide. This led to the emergence of dedicated defense contractors — companies whose primary business was military systems. At the peak in the 1980s, the U.S. had dozens of major defense contractors, hundreds of significant subcontractors, and robust competition for major programs. Companies like McDonnell Douglas, Grumman, General Dynamics, and Lockheed competed for fighter contracts; multiple shipyards built submarines and surface vessels.

The post-Cold War drawdown triggered consolidation. Defense spending declined 35% between 1985 and 1998. Companies merged to survive: Lockheed merged with Martin Marietta, Boeing acquired McDonnell Douglas and Rockwell's defense business, Raytheon absorbed Hughes and Texas Instruments' defense units. By 2000, five prime contractors dominated the industry. This reduced excess capacity but also reduced competition, innovation pressure, and resilience. Programs became larger and longer because primes needed to amortize fixed costs across fewer contracts. And the supplier base consolidated too, with many second-tier companies either acquired or exiting defense work, leaving single-source dependencies for critical components.

Offshoring and globalization eroded critical capabilities. Manufacturing that was once done domestically moved overseas for cost reasons. The U.S. lost the ability to manufacture certain electronics, rare earth materials, and specialized components. While this reduced costs in peacetime, it created vulnerabilities: supply chains stretched across potentially hostile countries, components could be subverted during manufacturing, and production couldn't surge quickly in a crisis. The COVID-19 pandemic and China tensions highlighted these risks, spurring efforts to reshore critical manufacturing — but rebuilding capabilities that took decades to offshore can't be done quickly.

China's military-civil fusion strategy and rapid defense buildup created new urgency about the U.S. industrial base. China was building ships faster than the U.S., expanding missile production, and investing heavily in next-generation technologies like hypersonics and AI. Analysis suggested that in a prolonged conflict, the U.S. might struggle to sustain munitions production at necessary levels. This sparked initiatives to expand defense manufacturing: the Navy committed to increasing shipbuilding, the Army invested in munitions production capacity, and Congress funded industrial base investments through the Defense Production Act. But rebuilding takes time, and the fundamental challenge remains: how to maintain production capacity and skills in peacetime that would only be fully utilized in wartime, without the Cold War-era defense budgets that previously sustained the industrial base.