National Defense Magazine: New Manufacturing Approaches, Investment Flowing to Munitions Industry

READ THE FULL ARTICLE BY JOSH LUCKENBAUGH AT NATIONALDEFENSEMAGAZINE.ORG

The war in Ukraine has led to global demand for munitions rising significantly, and both the U.S. government and private sector are exploring new ways to meet the production capacity needs of the modern battlefield.

As evidenced by Ukraine, where “hundreds of thousands of artillery rounds [are] fired in months, not years,” the consumption of ammunition in modern warfare “defies our expectations,” Boyd Miller, principal deputy director for strategic logistics, J4, the Joint Staff, said during a keynote speech at the National Defense Industrial Association’s Future Force Capabilities Conference and Exhibition.

“Demand is rising for munitions,” Miller said. “Industrial capacity is constrained — we need to unleash it. Technology is racing ahead — we have to master it. And that’s why affordable mass is more than a buzzword when it comes to munitions. It’s a necessity.”

The Army is “on a path” to produce 100,000 155mm artillery rounds per month — although the service missed its original goal of reaching the milestone by this October — and is pouring “millions of dollars” into its organic industrial base to support this effort, Eugene Conner, director of integration at the Joint Program Executive Office for Armaments and Ammunition, said during a panel at the conference.

Along with government funding, “we’re seeing now that companies are, through venture capital, making their own pre-contract investments in sensing and understanding what is going to be needed and what they can provide, making those investments in facilities, in workforce development and in materials, and then working toward getting the contracts,” Miller said.

DetTX President Steve Dart, however, during a panel expressed skepticism in venture capital’s interest in munitions, because the market is “so small — I mean, it’s tiny.”

Hunter Brown, a principal at venture capital and private equity firm Anzu Partners, noted that “for a long time, the people that were investing into venture capital as an asset class had specific restrictions about what you could or could not invest into,” and defense was, until fairly recently, “considered sort of a no-no zone.”

But “as defense tech has become more exciting, those restrictions have been lifted, and I think private capital at large is looking at the space now with an eye towards the kinds of opportunities that are presented with businesses that are now achieving a certain amount of scale,” Brown said during a panel.

In the munitions industry, the shift away from exquisite weapons to affordable mass — such as 155mm artillery rounds or aerial drones carrying kinetic payloads — presents the sort of growth opportunity that would attract venture capital, he said.

“We’re not looking for a 2x return in 10 years — we’re looking for a 200x return in 10 years,” he said. “For that to be true, we want to see that demand curve achieving an exponential growth rate, not a linear growth rate. And I think that’s kind of where some of the trends are pointing to now, and with that interest and lifting of restrictions on the investment side, [it] creates a lot of opportunity for private capital moving into the space.”

One company looking to capitalize on this shift is Union Technologies, which was founded in 2024 as a partnership with the venture capital community in Silicon Valley to “remodernize defense manufacturing,” its CEO Will Somerindyke said.

While other startups have focused on newer technology like uncrewed systems, “our focus has been more on modernizing the conventional space,” he said. “We saw some inefficiency gaps — particularly in the large-caliber munitions — we thought that we could focus on that space and help [with] something that is still very relevant on the battlefield.”

The company is employing a “software-first model” at its factories, the first of which Union is establishing in Dallas, Texas, Somerindyke said. That first facility will have two forge lines, “and the idea with that is each line has about 48 robots, about 14 cell blocks, very software driven.”

“The whole concept of what we’re trying to do is just accumulate data … and as this line spits out more data, and we realize where those efficiency points are, then, in many ways, what’s typically done with clipboards can now be done with dashboards,” he said. “The more data that comes in, the line will be smarter. You’ll understand that if something needs to be heated at a certain temperature for a certain amount of minutes,” that update can be made so parts are produced more efficiently.

Just as important as the factory’s technology is the talent behind it, Somerindyke said. Union has brought in “nontraditional” people from outside the defense industry, and “quite frankly, this industry needs to get more involved and get more talent and new ideas in here so that we can continue to innovate and evolve, which is exactly what the battlefield needs right now.”

Additionally, the Dallas facility is “completely private industry funded,” Somerindyke noted. Union is “in very close coordination with the U.S. government,” and “if we can get other assistance, absolutely, as long as it makes sense, but doing it at speed is a key piece for us right now.”

Building critical munitions isn’t something that “can wait three or four or five years,” he said, and being a government-owned, contractor-operated facility — as several Army ammunition plants are — “is not something that we, at least, are interested in.”

“We feel like private industry can go out there and find just a more efficient way and a more modernized way to do it,” he added.

Another organization taking a unique approach to expanding munitions production is the American Center for Manufacturing and Innovation, or ACMI, which is developing its 1,141-acre National Security Industrial Hub adjacent to Crane Army Ammunition Activity and Naval Surface Warfare Center – Crane in Bloomfield, Indiana.

The organization is taking a “retail center” approach to the hub’s development, said ACMI Properties CEO Dave Dowell.

“When you’re going out and building a retail center, you’re generally not building the pizza restaurant and the hair salon before you build the Publix. Publix must come first,” Dowell said during a panel at the conference. Investors will only commit money to the project when the larger “anchor” tenant is lined up, “and that is very similar to how we proceed,” he said.

“All of our projects are built around a larger anchor that has some credit with the idea that the supply chain that feeds that anchor can fill in around” it, and then the private capital markets feel confident investing in that project, he said.

The “anchor” of the National Security Industrial Hub will be the 550-acre headquarters and production facility for Prometheus Energetics — a joint venture between U.S. technology company Kratos Defense and Security Solutions and Israel-based Rafael Advanced Defense Systems.

Prometheus will produce energetics, solid rocket motors and munitions at the new facility, leveraging shared equipment and services from the Munitions Campus that ACMI is also building at the industrial hub, according to a press release.

The Defense Department awarded ACMI Federal a $75 million contract for its Munitions Campus Program in September 2023, and the initial cohort of 16 companies that will populate the campus was announced in April. The facility will begin a phased opening in 2027.