Defence industrial base: the factories and firms behind modern war
Seven firms across the US, Europe, Russia and China, plus the 155mm shell count, track who can sustain arms production at the tempo modern attritional war demands.
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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 Rheinmetall says Germany has overtaken the US in conventional ammunition output. 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's Glascoed 155mm plant slips as it doubles planned capacity. RTX books a growing Patriot and GEM-T interceptor order book across Europe, see RTX's Raytheon books $3.7bn Patriot interceptor deal for Ukraine, scales European output. 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 Rostec touts arms output 'the West can't dream of' as Russia scales war production. 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 Rheinmetall wins Bundeswehr order to backfill recovery vehicles sent to Ukraine 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 Lockheed lands $35B THAAD award to quadruple interceptor output after the Gulf war drained stocks. 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 Rheinmetall says Germany has overtaken the US in conventional ammunition output. Whether BAE Systems commissions the Glascoed plant before end-2026 and resets the UK output trajectory, see BAE's Glascoed 155mm plant slips as it doubles planned capacity. How RTX and Lockheed Martin resolve Patriot and F-35 production delays as European backlogs deepen, see RTX's Raytheon books $3.7bn Patriot interceptor deal for Ukraine, scales European output and Lockheed lands $35B THAAD award to quadruple interceptor output after the Gulf war drained stocks. 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 Rostec touts arms output 'the West can't dream of' as Russia scales war production.