# Why Is Expanding Munitions Production So Difficult? Source: https://www.vistashares.com/munitions-production-capacity/ Published: 2026-11-13 | Updated: 2026-11-13 By Adam Patti, Chief Executive Officer, VistaShares | November 2026 Expanding munitions production is difficult because each round depends on a chain of specialized steps, from forging metal casings and producing explosives to making rocket motors, seekers and fuzes, and many of those steps rely on a small number of plants and suppliers. U.S. output of 155mm artillery shells rose from about 14,000 a month before 2022 to about 36,000 a month by March 2026, but remained well short of a 100,000-a-month goal, according to the Defense Department's inspector general. Governments are now using longer, larger contracts to encourage suppliers to add capacity. ## Why did munitions become a priority? After the Cold War, the United States and its allies reduced munitions stockpiles and production lines, expecting short conflicts and relying on precision weapons. The war in Ukraine, which began in 2022, showed how quickly modern conflicts can consume artillery shells, air defense interceptors and drones. Transfers to Ukraine, conflicts in the Middle East and planning for possible high-intensity wars exposed how thin inventories and production capacity had become. ## How are artillery shells made? A 155mm artillery round passes through several stages, often at different sites: **Metal parts.** Steel projectile bodies are forged and machined. **Energetics.** Explosives such as TNT and RDX, and propellants for the charges that fire the round, are produced at specialized chemical plants. **Load, assemble and pack.** Projectiles are filled with explosives, fitted with fuzes and packaged at government-owned plants operated by contractors. **Propelling charges and fuzes.** Separate supply chains produce the charges and fuzes used with each round. The Defense Department's inspector general reported in July 2026 that projectile metal parts were the limiting factor in reaching the 100,000-round goal. With only three facilities producing the required metal parts, it estimated that capacity would reach about 71,000 rounds a month, or 71% of the goal.[1] The Army has said it expects new facilities and modernization efforts to raise output further.[2] A new load, assemble and pack plant in Kansas opened in April 2026 with a planned capacity of 12,000 projectiles a month.[3] ## What about missiles and interceptors? Missiles are more complex than shells and depend on solid rocket motors, guidance electronics, seekers and specialized materials. Air defense interceptors have been in particularly high demand. In January 2026, the Department of Defense and a major missile maker announced a framework agreement to raise annual production of one widely used air defense interceptor from about 600 to about 2,000 over seven years. The company said it delivered 620 of the interceptors in 2025, more than 20% above 2024.[4] A related multiyear contract was later valued at up to $58.6 billion over 2026 through 2032.[5] The department has said it plans to apply the same approach to other munitions, and reports have described plans to raise capacity for a long-range precision strike missile from 400 to 2,000 a year.[6] ## How are drones changing demand? Inexpensive drones have changed how munitions are used. In Ukraine and the Middle East, both sides have used large numbers of one-way attack drones, which can be cheaper than the interceptors used to stop them. That cost imbalance has increased interest in lower-cost interceptors, electronic warfare, guns and directed energy weapons, as well as in mass-produced drones of their own. The FY2027 U.S. budget request cited more than $74 billion for drone and counter-drone technologies.[7] These systems draw on different suppliers than traditional munitions, including electronics, battery and commercial manufacturing firms. ## Where are the bottlenecks? **Solid rocket motors.** Few U.S. suppliers make them, and capacity has lagged demand for several years. **Energetics.** Explosives and propellant production relies on aging government-owned plants and some imported chemicals. **Metal parts and forgings.** Large forgings and precision machining capacity are limited. **Electronics and seekers.** Guidance systems require specialized chips, sensors and components. **Workforce.** Skilled machinists, technicians and engineers are in short supply in many regions. **Testing and qualification.** New lines and suppliers must be qualified before production counts toward deliveries. ## How are contracts changing? Traditional annual contracts gave suppliers little assurance of future orders, which discouraged investment. Newer approaches include multiyear procurement, which commits the government to several years of purchases; framework agreements that set long-term production targets; and government investment in plants and equipment. These structures aim to give companies the demand certainty they need to build factories and hire workers. They still depend on congressional authorization and appropriations. Our article on [the U.S. defense budget](https://www.vistashares.com/us-defense-budget-explained/) explains how that funding works. ## What does this mean for investors? Munitions demand connects thematic investing to missile makers, ordnance producers, rocket motor suppliers, chemical and materials companies, electronics firms and machine tool makers. Long-term contracts can improve revenue visibility and support capital investment, but risks remain: production ramps can fall behind schedule, fixed-price contracts can compress margins if costs rise, and demand can change with policy and conflicts. Our articles on [the defense supply chain](https://www.vistashares.com/defense-supply-chain/) and [drones and autonomous systems](https://www.vistashares.com/drones-and-autonomous-systems/) offer related background. ## Frequently asked questions ### How many artillery shells does the United States produce? The Defense Department's inspector general reported that the Army was producing about 36,000 155mm artillery rounds a month as of March 2026, up from about 14,000 before 2022. The goal had been 100,000 rounds a month by October 2025. The Army has said new facilities and modernization should raise output further, but metal parts capacity has been the main constraint. ### Why did production fall short of the 100,000-round goal? According to the inspector general's July 2026 report, the Army could not forge enough projectile metal parts. One new metal parts facility did not produce the expected volume, and with only three facilities producing the required parts, capacity was projected to reach about 71% of the goal. Explosives, propellant and workforce constraints also affect overall output. ### What is a multiyear procurement contract? A multiyear procurement contract commits the government to buy a system over several years, usually up to five, rather than one year at a time. Congress must approve multiyear authority. These contracts can lower unit costs through economies of scale and give suppliers confidence to invest in capacity. The government may face cancellation costs if it ends the contract early. ### Why are interceptors so hard to produce? Interceptors combine solid rocket motors, precision guidance, sensors and seekers, often built by several specialized suppliers. Each component requires qualified production lines and testing. Demand has risen sharply as conflicts have used interceptors to counter missiles and drones. Expanding output requires investment across the entire supplier chain, not only at final assembly. ### Do allies buy U.S. munitions? Yes. Many allies buy U.S. artillery shells, missiles and interceptors through foreign military sales or direct commercial sales, and U.S. production plans account for some of this demand. Allies are also expanding their own production. Rising NATO spending targets could add demand for both U.S. and European producers over the next decade. ### How do thematic ETFs provide munitions exposure? Defense and aerospace ETFs typically hold prime contractors and suppliers, some of which produce missiles, ordnance, rocket motors or components. Pure munitions companies are few, so exposure usually comes through diversified defense firms. Reviewing holdings and company revenue breakdowns shows how much of a fund's exposure relates to munitions rather than aircraft, ships or services. ## NOTES - U.S. Department of War, Office of Inspector General, report DOWIG-2026-095 on 155mm artillery ammunition production, July 9, 2026. - The War Zone, "New $500M Artillery Shell Plant Failed to Produce Any 155mm Parts," July 14, 2026, citing Army statements. - Defence Blog, as summarized by Pulse, "U.S. Army Opens New 155mm Artillery Shell Facility in Kansas," April 14, 2026. - Lockheed Martin news release, January 6, 2026, as reported by Joint Forces News and The Aviationist. - American Machinist, "Pentagon Expands Patriot Missile Order to $58B," 2026. - Defense Archives, "Pentagon Seeks Over 300% Increase in PAC-3 MSE Production from Lockheed Martin," 2026. - U.S. Department of War, "FY2027 Budget Request," budget overview briefing, 2026. ## IMPORTANT INFORMATION This material is provided for educational purposes only. 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