When Democracy’s Arsenal Runs Empty: The Crisis Reshaping Western Defence

Executive Summary

Why American Factories Can’t Keep Up: The Industrial Base Breakdown

The Western alliance faces a critical inflection point in military industrial capacity.

The historical imperative to reconstitute America’s defence manufacturing ecosystem—echoing President Franklin D. Roosevelt’s invocation during World War II—has re-emerged with unprecedented urgency as geopolitical competition intensifies across multiple theatres.

The Ukraine conflict has exposed substantial vulnerabilities in the defence industrial base, whilst simultaneous strategic competition with China demands exponential increases in munitions production, advanced weapons systems, and critical component manufacturing.

The arsenal of democracy remains weakened by decades of post-Cold War consolidation, outdated infrastructure, and fragmented supply chains that cannot sustain high-intensity, prolonged conflicts.

Remedying this systemic challenge requires unprecedented coordination between governmental authorities, private sector innovation, and transatlantic alliances through defence coproduction frameworks.

The window for intervention narrows as peer competitors—particularly China—accelerate military-civil fusion initiatives and demonstrate superior production velocity.

Strategic success depends upon reimagining acquisition pathways, leveraging commercial technologies, establishing sustained demand signals through multi-year procurement commitments, and fundamentally restructuring the defence industrial architecture from a cost-optimised peacetime model to a resilience-prioritised wartime mobilisation paradigm.

The Historical Imperative and Contemporary Context

When Democratic Nations Must Gear for Conflict

The invocation of arsenal of democracy carries profound historical resonance.

During the Second World War, the United States transformed its industrial capacity to produce the weapons, ships, and aircraft that sustained democratic resistance against totalitarian powers.

Today, Western strategists confront an equally defining moment—one characterised not by the catastrophic symmetry of conventional warfare, but rather by the asymmetric demands of sustaining Ukraine whilst deterring Chinese aggression across the Indo-Pacific and simultaneously maintaining credible strategic deterrence against Russia.

The contemporary challenge differs fundamentally from mid-twentieth century mobilisation.

Post-Cold War doctrine emphasised economy through consolidation, resulting in a defence industrial base stripped of redundancy and surge capacity.

The Department of Defence, responding to fiscal constraints in the early 2010s, accepted substantial risk with munitions production precisely when the geopolitical environment began deteriorating.

This strategic miscalculation created cascading vulnerabilities across critical supply chains, rendering the United States increasingly dependent upon a fragile ecosystem of prime contractors, subcontractors, and component suppliers frequently concentrated in single sources.

The Ukraine conflict catalysed awareness of these structural deficiencies. Initial assessments of Western munitions sufficiency proved catastrophically optimistic.

The Ukrainian military expended artillery ammunition at rates that exceeded Pentagon planning assumptions by orders of magnitude, whilst simultaneous demands from American military contingency planning revealed that the entire defence industrial base lacked capacity to sustain protracted great-power competition.

Key Developments: Recognising the Arsenal’s Deterioration

The Ammunition Crisis and Supply Chain Revelations

The production bottleneck for 155-millimetre artillery shells exemplifies broader systemic failure. Prior to Ukrainian requirements, the United States manufactured these munitions through a highly centralised pathway involving multiple facilities across Pennsylvania, Iowa, and other locations.

A single disruption cascaded through the entire supply chain. When Turkey introduced production systems to accelerate manufacturing, American military officials discovered that the nation’s domestic tooling capacity could not rapidly scale.

This revelation precipitated emergency contracting arrangements with Canadian manufacturers and Turkish system integrations—a humbling acknowledgement of supply chain fragility.

The artillery shell crisis catalysed corrective action. The Department of Defence secured Congressional appropriations totalling 3.1 billion dollars in fiscal year 2024 supplemental funding specifically to expand 155-millimetre production capacity.

General Dynamics Ordnance and Tactical Systems constructed a largely automated facility in Mesquite, Texas.

Nevertheless, even accelerated initiatives required eighteen-to-twenty-four month implementation timelines—an eternity in the context of immediate operational demands.

This bottleneck phenomenon extends across the entire munitions industrial base.

The Naval Strike Missile, Patriot Advanced Capability-3, Long Range Anti-Ship Missile, and Advanced Medium-Range Air-to-Air Missile all suffer from constrained production due to specialised component availability, obsolete manufacturing equipment, and insufficient testing infrastructure.

Prime contractors—particularly Lockheed Martin and Raytheon Technologies—operate existing facilities at steady-state production with minimal surge capacity.

When confronted with demands to increase output by orders of magnitude, these contractors report equipment limitations, component supplier constraints, and workforce capacity restrictions.

Semiconductor Sovereignty and Critical Materials Integration

Recognising that military-industrial capacity depends upon semiconductors, the Biden administration pursued what may represent the most consequential domestic manufacturing initiative in decades: the CHIPS and Science Act.

Authorising approximately 53 billion dollars in direct government investment, the legislation sought to reshape the American semiconductor industry from one characterised by offshore manufacturing and complete dependence upon Taiwanese production to a diversified, domestically-resilient ecosystem.

The strategic logic is compelling.

Advanced weapons systems—from F-35 fighter jets to guided missile systems to sophisticated command-and-control networks—require semiconductors manufactured to cutting-edge specifications.

Taiwan’s dominance in semiconductor production created systemic vulnerability.

Any disruption in the Taiwan Strait immediately compromised American military manufacturing. The CHIPS initiative addressed this vulnerability by incentivising domestic production through direct subsidies, tax credits, and capital investment guarantees.

Intel received 7.86 billion dollars in direct funding to support its 100-billion-dollar domestic investment plan.

Samsung, TSMC, and other manufacturers simultaneously announced substantial American manufacturing expansions.

The architectural goal was to restore United States production of leading-edge semiconductors from zero percent of global supply to approximately thirty percent by 2032.

Facts and Concerns: The Structural Crisis

The Inherited Weakness of Consolidation

During the 1990s and 2000s, the defence industrial base underwent substantial consolidation. Thousands of small and mid-sized suppliers merged into larger entities; manufacturing facilities closed; vertically-integrated production chains were fragmented and outsourced.

This consolidation, whilst economically rational in a period of declining defence requirements, created systemic fragility. Today, the defence industrial base resembles a highly optimised peacetime system rather than a resilient wartime apparatus.

The consequences manifest across multiple dimensions. Single-source dependencies have proliferated.

When the Armed Forces Radiological Research Institute required specific alloys or the Missile Defense Agency needed precision components, manufacturers often discovered that historical suppliers had exited the business entirely.

The phenomenon of Diminishing Manufacturing Sources and Material Sources—where legacy defence systems depend upon technologies no longer in production—has become endemic. Facility modernisation lags decades behind commercial manufacturing standards.

Many ammunition facilities operate with equipment installed during the Vietnam War era.

The skilled workforce has contracted substantially; the average age of defence manufacturing workers has climbed precipitously as experienced technicians retired without successors.

The Multiplication Problem: Demand Exceeds Capacity by Orders of Magnitude

The fundamental crisis emerges from a stark mathematical reality: current defence industrial capacity cannot satisfy concurrent demands. Ukraine requires approximately 50,000 to 200,000 artillery rounds monthly to sustain defensive operations.

American military planning assumes potential conflict with China would necessitate exponentially greater ammunition expenditure.

Taiwan requires weapons system acquisitions that American manufacturers cannot fulfil within reasonable timeframes.

The latest arms package for Taiwan valued at 11 billion dollars involves delivery timelines stretching across multiple years precisely because production capacity is fully allocated.

Analysts at the Department of Defence estimate that meeting all stated requirements would demand at minimum a tripling of current production capacity across multiple munitions categories, and potentially doubling missile production.

Achieving such increases requires not merely incremental investments but rather fundamental restructuring of manufacturing paradigms, supplier relationships, and acquisition processes.

The Intellectual Property Impasse

An underappreciated constraint involves intellectual property ownership.

Prime defence contractors possess proprietary designs for critical systems but resist sharing these designs with the government or authorising smaller, more innovative firms to produce variants.

This institutional behaviour, rational from the perspective of individual corporate profit maximisation, directly undermines the Arsenal of Democracy imperative.

The Long-Range Anti-Ship Missile exemplifies this phenomenon.

Only two prime vendors manufacture this system, neither possesses surge capacity, and both decline to license their intellectual property to enable new producers.

The Pentagon lacks statutory authority to compel such licensing absent emergency wartime conditions.

Consequently, production remains constrained by the two existing manufacturers’ facility capabilities—a situation the analysis community has termed “the elephant in the room.”

Geographic and Strategic Vulnerability

Much of the defence industrial base remains geographically concentrated. The 155-millimetre ammunition production ecosystem historically revolved around Pennsylvania and Iowa facilities.

Supply chain vulnerabilities manifest across rare earth elements, specialty alloys, precision ball bearings, and other components produced by a limited number of suppliers, frequently vulnerable to single points of failure. Foreign sourcing of critical components remains endemic.

For instance, certain specialty chemicals essential to missile production are manufactured overseas in locations—particularly China—geopolitically adverse to American interests.

The Ukraine Test Case: Attrition Dynamics

The Ukraine conflict has provided a brutal stress test for Western munitions production. The war of attrition between Russian and Ukrainian forces has consumed ammunition at rates that shattered existing production assumptions.

Russia fires artillery at rates estimated at five times greater than Ukraine’s capacity, though this advantage has diminished as Western nations increased production and Ukraine developed impressive domestic manufacturing capabilities.

Ukrainian losses in materiel drive continued Western supply requirements.

Russia has suffered an estimated million casualties (killed, wounded, or captured) in approximately two years of intensive warfare. Weapons system losses have been equally substantial.

The Pentagon conducted supplemental appropriations specifically to replenish stocks sent to Ukraine and to ensure American reserves remain adequate for other potential contingencies.

This reality demonstrates that historical ammunition stockpiles, designed for Cold War deterrence rather than sustained conflict, cannot sustain the demands of contemporary warfare.

Cause-and-Effect Analysis: How the Arsenal Weakened

The Peace Dividend Illusion

The defence industrial base deterioration traces to a cascade of decisions following the Cold War’s end.

Political leaders from both parties embraced the “peace dividend” thesis—the proposition that reduced threat environment could sustain lower defence spending and industrial capacity.

This logic appeared sound during the 1990s and early 2000s.

The Soviet Union had collapsed; regional conflicts, whilst troubling, remained geographically bounded.

The United States possessed overwhelming technological and industrial superiority. Strategic planners concluded that future conflicts would be regional, limited in scope, and unlikely to demand sustained, mass production of conventional munitions.

This strategic assessment catastrophically misjudged the future security environment.

The post-2008 financial crisis produced further defence budget pressures.

Conflicts in Iraq and Afghanistan, despite their intensity, remained constrained geographically and were pursued through expeditionary forces rather than homeland mobilisation.

The defence industrial base contracted further. Prime contractors consolidated. Suppliers exited the market. Manufacturing expertise dispersed.

By the time Russian aggression against Ukraine in February 2022 catalysed Western awareness of the crisis, the arsenal of democracy had been gutted by three decades of consolidation and deferred maintenance.

The Vicious Cycle of Uncertainty

The transition from peacetime optimisation to wartime mobilisation encounters a fundamental obstacle: uncertainty regarding sustained commitment.

Defence contractors investing in new production facilities require confidence that demand will persist.

If political leadership or budget circumstances change, such investments become stranded assets—economically catastrophic for firms already operating on thin profit margins.

Congress has attempted to address this through multi-year procurement authorities and sustained appropriations.

The Defence Production Act Title III mechanism provides authority for direct government investment in industrial capacity expansion.

Yet the actual appropriations have remained modest. During the Biden administration, Title III funding averaged 400 to 500 million dollars annually—a figure that analysts estimate represents one-sixth to one-tenth of the investment required to satisfy stated defence requirements.

This circular dynamic perpetuates crisis. Without clear, sustained demand signals backed by multiyear contracts, contractors cannot justify capital investment in new facilities or modernisation of existing infrastructure. Without capacity expansion, the Pentagon cannot satisfy demand.

Without operational demand, political pressure for expanded funding diminishes. The cycle continues, defence industrial capacity stagnates, and vulnerability accumulates.

The Commercial Technology Bifurcation

A related phenomenon involves the divergence between cutting-edge defence technology requirements and commercial manufacturing dynamics.

America’s commercial technology ecosystem—semiconductors, artificial intelligence, autonomous systems, advanced materials—increasingly outpaces traditional defence contractors in innovation velocity.

Yet procurement barriers, security requirements, and acquisition processes prevent rapid integration of commercial innovations into military systems.

Entrepreneurial firms like Anduril Industries have pioneered alternative approaches, developing hypersonic missiles at substantially lower cost and faster production velocity than traditional defence contractors through application of commercial manufacturing methodologies, including streamlined supply chains and lean production principles.

However, these innovative firms remain marginal to the broader defence industrial base.

Traditional primes retain dominant positions precisely because of scale economies and historical relationships. Restructuring these relationships encounters political and institutional resistance.

The Geopolitical Acceleration

China’s demonstrated commitment to military-civil fusion and accelerated defence industrial expansion adds existential urgency. Satellite imagery reveals massive expansion of missile production facilities across China’s industrial heartland.

Chinese shipbuilding capacity dwarfs American production, enabling rapid expansion of naval forces.

China’s “Made in China 2025” initiative explicitly prioritises defence manufacturing integration with civilian industry, creating an integrated ecosystem capable of mobilising commercial manufacturing capacity to support military production during crisis.

The Pentagon estimates that a potential great-power conflict with China would cost approximately ten trillion dollars globally and require unprecedented weapons production.

American industrial capacity, even with aggressive expansion, may prove insufficient without fundamental restructuring.

This recognition has driven emergency measures under the Trump administration, which has directed the Pentagon to explore extraordinary means to accelerate weapons production and, specifically, to double missile capacity.

Future Steps: Restructuring the Arsenal

Multidimensional Demand Signal Amplification

Reversing industrial base deterioration requires sustained, credible demand signals backed by multiyear procurement commitments and increased appropriations.

Congress has begun implementing this through expanded use of multiyear contracts for critical munitions.

The Department of Defence has pushed for Congressional elevation of the Defence Production Act Title III budget to billions annually rather than the current 400-to-500 million dollar range.

Simultaneously, the Department of State has facilitated allied weapon procurements structured to leverage American production capacity.

Taiwan’s approved defence spending increase to five percent of GDP by 2030 will drive substantial American manufacturer demand.

Polish commitment to produce Javelin missiles domestically creates sustained requirements for American components and intellectual property licensing.

Australian investments in munitions production similarly create demand drivers.

Reshoring Critical Materials and Components

The defence industrial strategy recognises that certain materials and components are sufficiently critical that domestic production, even at higher cost than foreign sourcing, is strategically necessary.

The Defence Production Act Title III mechanism has been directed toward establishing domestic production for critical chemicals, rare earth elements, specialty alloys, and precision ball bearings.

The CHIPS and Science Act’s semiconductor initiatives represent a parallel effort to reduce dependency on Taiwanese production.

This reshoring agenda encounters economic realities.

Domestic production of critical materials frequently costs substantially more than foreign alternatives. Rare earth element processing, for instance, is significantly more expensive in the United States than in China.

Establishing domestic capability requires accepting higher costs and sustained government support through loan guarantees, purchase commitments, or tax incentives.

Yet the strategic logic is compelling: the alternative—dependence upon adversarial nations or fragile supply chains—is unacceptable.

Transatlantic Defence Industrial Coproduction Architecture

Recognising that no single nation possesses sufficient industrial capacity, NATO has embraced an integrated defence coproduction model.

The NATO Industrial Capacity Expansion Pledge, reinforced at the 2025 NATO Summit in The Hague, commits members to joint procurement and coproduction arrangements. Poland now produces Javelin missiles under licensing arrangements.

Germany hosts NATO-coordinated Patriot missile production.

Denmark has committed to hosting Ukrainian defence manufacturing facilities on its territory, receiving American components and Western expertise whilst providing secure production locations outside Russian strike range.

This coproduction strategy acknowledges mutual vulnerabilities whilst leveraging allied strengths. Europe possesses advanced defence manufacturing capabilities in certain domains but faces geographic and regulatory fragmentation.

The United States possesses scale and technological leadership but capacity constraints.

Australia contributes geographic positioning and growing defence industrial investment. Coordinating these assets through standardised procurement, shared development, and cross-border manufacturing creates resilience through redundancy and geographic distribution.

Acquisition Reform and Commercial Technology Integration

Fundamental acquisition process reform is simultaneously underway.

The Department of Defence has accelerated security clearance processes for commercial technology firms.

Regulatory barriers preventing integration of commercial AI, autonomous systems, and advanced materials into military systems have been substantially reduced.

The Replicator initiative, budgeted at one billion dollars, seeks to rapidly field thousands of autonomous and attritable systems—drones, decoys, and complementary systems—by leveraging commercial manufacturing and technology ecosystems rather than traditional defence procurement.

The Trump administration’s executive actions have pushed further, directing the Pentagon to explore extraordinary production acceleration measures and threatening financial restrictions on defence contractors that miss deadlines or exceed budgets.

Whilst such measures encounter institutional resistance and implementation challenges, they signal executive commitment to rapid transformation.

Defence Production Act Title III and Public Sector Industrial Investment

The expanded utilisation of Defence Production Act Title III authorities represents a critical future step.

Rather than depending exclusively on conventional defence procurement to stimulate industrial capacity, the government is invoking Title III authorities—through loan guarantees, purchase commitments, and direct subsidies—to fund expansion across critical sectors.

Hypersonics industrial base expansion, solid rocket motor production, microelectronics manufacturing, and casting/forging capacity have all received Title III investments.

Future initiatives will likely expand this approach to additional critical domains.

Success requires sustained Congressional appropriations and executive commitment to deploy Title III authority assertively rather than through incremental measures.

The Transatlantic Imperative: Allied Industrial Integration

NATO’s Five Percent Target and Industrial Alignment

The NATO Defence Ministerial of 2025 established an unprecedented commitment: members would allocate five percent of gross domestic product to defence, comprising 3.5 percent for core military spending and 1.5 percent for defence enablers including industrial capacity.

This commitment, representing tens of billions of dollars in additional European spending annually, creates enormous demand for defence production.

Yet demand without corresponding industrial capacity creates inflation and extended delivery timelines rather than capability improvement.

European defence industries, whilst technologically sophisticated, suffer from structural fragmentation.

Thirty NATO members maintain distinct national defence industrial interests, often resulting in duplicative programmes, inefficient worksharing arrangements, and delayed integration.

The A-400M transport and European sixth-generation fighter initiatives exemplify how national interests can gridlock transatlantic programmes.

Addressing this fragmentation requires unprecedented coordination between NATO and the European Union, between national governments and private defence firms, and between American producers and European counterparts.

The most promising path involves licensing arrangements through which American defence firms establish European production, reducing reliance on long-distance logistics whilst circumventing regulatory barriers that sometimes delay transatlantic technology transfer.

The Geopolitical Stakes: Deterrence Through Production

The China Factor and Indo-Pacific Implications

The ultimate driver of arsenal of democracy reconstruction is the perceived necessity to maintain credible deterrence against Chinese military expansion.

American defence strategists assess that China possesses military-industrial advantages in shipbuilding capacity, production velocity, and the integration of civilian and military industrial ecosystems.

A protracted Indo-Pacific conflict would favour the belligerent with superior logistics, production capacity, and the ability to sustain high operational tempo.

Taiwan’s defence investments are constrained not by budgetary considerations—Taiwan has committed to defence spending reaching five percent of GDP by 2030—but by American production capacity constraints.

When Taiwan ordered F-16 Block 70/72 fighters, delivery delays extended across multiple years precisely because Lockheed Martin could not accelerate production beyond current facility capabilities.

This situation reverses traditional deterrence logic: instead of American capability constraining adversary actions, American industrial limitations constrain allied defence readiness.

Addressing this inversion requires demonstrating American commitment to allied defence through actual production capacity, not merely through security declarations. Ukraine provides cautionary evidence.

Despite American rhetorical commitment to Ukrainian defence, the inconsistency of American material support—particularly under the Trump administration’s initially ambivalent posture—undermined deterrence credibility.

Allies observe whether security commitments translate into material support or remain performative declarations.

The Attrition Logic of Contemporary Warfare

The Ukraine conflict has established a brutal empirical foundation for arsenal of democracy calculations: contemporary warfare consumes materiel at rates dramatically exceeding Cold War planning assumptions.

If Russia and Ukraine each fire hundreds of thousands of artillery rounds annually, and air defence systems consume missiles at comparable rates, then the production requirements for potential great-power conflict dwarf existing capacity by orders of magnitude.

Conversely, allied production capacity improvements have demonstrably affected battlefield dynamics.

Ukrainian defence industry growth—which has expanded over tenfold since the 2022 invasion—now provides approximately one-third of Ukrainian force requirements.

This domestic production, supplemented by Western supply and increasingly supplemented by manufacturing partnerships with Poland, Denmark, and other allies, has enabled Ukraine to sustain operations despite Russian economic advantages and prior Russian military superiority.

The implication is profound: production capacity directly translates to military capability in wars of attrition.

Nations that can produce munitions, replacement systems, and repair parts faster than adversaries can destroy them gain compounding strategic advantage.

This reality elevates the arsenal of democracy from historical metaphor to contemporary operational imperative.

Conclusion

The Civilisational Competition

From Metaphor to Operational Doctrine

The arsenal of democracy has transitioned from historical memory to contemporary strategic doctrine.

What Franklin Roosevelt invoked as justification for American industrial mobilisation against Nazi and Imperial Japanese totalitarianism has become an imperative of alliance competition against authoritarian great powers.

The Western alliance confronts a defining choice: either restructure defence industrial capacity to sustain protracted great-power competition, or accept progressive erosion of military capability relative to increasingly assertive authoritarian competitors.

The scale of required transformation should not be underestimated. Current initiatives represent the largest American domestic manufacturing investments in decades.

The CHIPS and Science Act, Defence Production Act Title III expansion, and emerging coproduction partnerships with NATO allies collectively commit hundreds of billions of dollars to restructuring the defence industrial base.

Yet even these unprecedented efforts fall short of stated requirements in certain critical.

Success requires sustained political commitment across multiple administrations, Congressional allocation of resources even during fiscal constraint periods, willingness to accept higher defence manufacturing costs than commercial alternatives, and fundamental reconceptualisation of acquisition processes to favour rapid innovation over incremental consolidation.

American political culture, with its historical ambivalence toward sustained defence spending outside genuine crises, presents formidable obstacles.

Nevertheless, the geopolitical logic is inexorable: without credible production capacity, security guarantees become hollow; without hollow security guarantees, alliance systems fracture; without functioning alliance systems, American strategic position erodes.

The arsenal of democracy is being rebuilt. Whether it will be rebuilt with sufficient velocity, scale, and innovation to maintain Western deterrence in an era of great-power competition remains the defining question of strategic consequence for the coming decade.

The answer will be determined not by defence strategy documents but by factory production rates, supply chain resilience, allied coproduction arrangements, and the political commitment to sustain mobilisation amid the ambiguous, prolonged competition that characterises the contemporary era.