The 2026 National Defense Strategy emphasizes leveraging allied and partner production to meet US requirements. This necessitates allies acting not just as consumers but as co-investors and co-producers to advance shared security interests, ultimately shaping the speed at which the US can scale production when critical.
Mike Coulter: Hanwha's Re-Industrialization of Philly Shipyard
Hanwha Defense US acquired Philly Shipyard with the intent to re-industrialize it using Korean technology and know-how. Significant investments, totaling $350 million already and a planned $400 million more, are being made to expand its footprint and capabilities, signaling a commitment to bolstering US shipbuilding capacity.
Mike Coulter: Hanwha's Munitions Production and US Challenges
Hanwha possesses the capability to produce artillery and munitions at an 'eyewatering rate' in Korea, with systems actively used in Europe and the Middle East. The company intends to bring this scaled production capability to the United States to help address existing munitions challenges within the US defense industrial base.
Heather Trout: Kongsberg's Pure-Play Defense Strategy
Following a recent reorganization, Kongsberg has become a pure-play defense and dual-use technology company, split into three divisions. This strategic shift allows them to focus on best-in-class technology across domains from space to seabed, including missile systems and aeros structures, with a growing US presence.
Heather Trout: Kongsberg's Naval Strike Missile and NASAMS Production
Kongsberg is producing the Naval Strike Missile and Joint Strike Missile in the US, marking the first multi-year procurement for munitions given to a foreign company. They also co-produce the NASAMS air defense system with Raytheon, a critical asset for protecting airspace and critical infrastructure, with numerous international users.
Eric Hillmer: Helsing's AI-Enabled Hardware and Agile Development
Helsing focuses on developing AI-enabled hardware systems, believing that software and hardware must be coupled from inception. They emphasize 'production as a warfighting domain,' designing for producibility and affordability, and adopting a 'move fast and break things' philosophy validated by real-world field testing.
Eric Hillmer: Helsing's HX2 Loitering Munition in Ukraine
Helsing's HX2 loitering munition system, operating in Ukraine, has demonstrated high efficacy (over 80% in combat, over 90% in exercises) and is designed for affordability and rapid iteration. This success validates their philosophy of developing capabilities that are both advanced and field-ready.
Kongsberg: The US Market's Strategic Allure
The US defense market is the largest globally, offering significant opportunity. For Kongsberg, investing in the US aligns with its strategy of selling only to allied partners, enabling economies of scale by developing systems that address multiple allied needs. Contributing to the alliance is paramount, especially given Norway's support for Ukraine and its long-standing partnership with the US. Operating under a mitigated legal structure is a form of foreign direct investment, allowing for tailored production and leveraging Foreign Military Sales (FMS) tails for US programs of record. Creating US jobs also builds crucial advocacy on Capitol Hill, reinforcing the necessity of allies to tackle global challenges like confronting China and Russia.
Helsing: US as the Nexus of Future Warfare
Beyond market size, the US is the most consequential defense market for shaping future warfighting concepts and defense policy. For Helsing, being in the US is essential to becoming a global powerhouse in software-defined warfare and defending democracy. By working with the US and the broader NATO community, Helsing can deliver capabilities that enhance cohesiveness and interoperability across allied forces, improving how they fight through greater commonality. This involves not just policy influence but also delivering superior capabilities that necessitate widespread adoption, leading to greater integration within multinational operating pictures.
Helsing's 'Resilience Factories': Rapid Deployment of Drone Production
Helsing is investing $50 million in Martinsburg, West Virginia, to establish 'resilience factories' capable of being stood up in approximately three months. These factories will replicate the footprint of their German facility, which can produce up to 2,000 strike drones per month. The initial run in West Virginia will involve 115 drones in one week, manufactured by 10 interns, demonstrating a high degree of design for manufacturability and rapid production capability that Helsing believes surpasses current US offerings for group two systems.
Hanwha's Strategic Pivot: Re-industrializing the West
Hanwha's strategic pivot involves leveraging its industrial strength and know-how from Korea to address the lack of industrial capacity in the Western world. Instead of solely focusing on exports, Hanwha aims to become a leading global aerospace and defense company by investing significantly in the US and Europe. This includes replicating its advanced munitions campus in Pine Bluff, Arkansas, creating a duplicate factory to scale production rapidly during conflict. The ambition is to provide sovereign capacity in key regions, recognizing that global leadership requires a strong presence in the largest defense market, the United States.
Government's Role: Enabling Investment and Innovation
Governments play a critical role in fostering defense industrial base investments. Programs like the Department of Defense's IBASS provide crucial funding for companies also investing their own capital, helping to scale investments and onshore more content. States actively compete to attract defense factories due to their job creation potential, with West Virginia offering exceptional support. Navigating regulations like ITAR is essential, and collaboration with government bodies like the State Department and DoD can identify areas for adjustment or clarification, addressing 'catch-22' situations, such as engineers being unable to enter the US to assist with factory setup due to deemed export rules. Furthermore, government procurers should focus on defining the problem rather than dictating solutions to encourage industry innovation and avoid cost overruns.
Mike: Hanwha's Global Ambition and US Commitment
Hanwha's ambition is to be a leading global aerospace and defense company, recognizing the current geopolitical climate presents a unique moment to reposition. The company is making significant investments in the US, including a $2.2 billion munitions campus at Pine Bluff, Arkansas, replicating its world-class Korean facility to provide dual-theater capacity. This strategic move acknowledges the necessity of being a leader in the largest defense market, the US, and providing sovereign capacity not only in the US but also in Europe and Australia. Hanwha understands that commitment must be to sovereign capacity, and the US administration and Congress show bipartisan support for innovative approaches and ready products, understanding the need for a viable business case on the back end.
Eric: IBAS Sweetens the Pot for US Defense Investments
Government initiatives like IBAS act as 'sweeteners' for allied companies looking to invest in the US defense industrial base. While the US market is attractive on its own, programs like IBAS make the business case even more compelling by incentivizing investment and providing access to the largest defense market globally. This encourages companies to bring their capabilities to the US, knowing they have government backing to help offset initial investment risks.
Mike Heather: Multi-Year Procurements Drive Investment
Multi-year procurements are a critical engine for investment in the defense industrial base, offering long-term, predictable demand signals that benefit both government and industry. These contracts require meeting specific criteria, including significant cost savings, making them a win-win scenario. The consistent demand authority provided by Congress, coupled with budget passage, ensures this predictable flow, which is essential for companies to make substantial investments.
Eric: Helsing's US Factory and Market Traction
Helsing is shifting its center of gravity towards the US, planning to grow its American business significantly. A key milestone is the opening of their factory in Martinsburg in December, which will produce 115 systems. The company anticipates customer visits and continued investment in the US industrial base, alongside new product drops and presence at operational exercises, signaling strong market traction and commitment.
Eric: Iterative Design and Software Flexibility are Key
To address the rapid evolution of battlefield needs, particularly highlighted by the Ukraine conflict, defense systems must be designed for iteration. This involves making hardware flexible enough to accommodate software updates and ensuring software can compensate for hardware limitations. Companies like Helsing are developing systems where software updates can be validated and deployed rapidly, on cycles as short as two weeks, allowing for continuous adaptation without requiring entirely new production lines.
Deborah Kagan: The Need for Iterative Fielding in US Systems
The rapid feedback loop observed in Ukraine, where problems are identified and fixed within hours, highlights a critical need for the US to adapt its system fielding and qualification processes. Current US procedures often require extensive re-qualification for even minor changes, hindering the continuous adaptation of capabilities. Modifying these processes is essential for the US to evolve its fighting and fielding methods effectively.
Mike Heather: Hanwha's US Expansion and Partnership Strategy
Hanwha, as a unique Korean conglomerate entering the US market, aims to be 'constructively disruptive' and seeks partnerships with companies that share this vision. They are actively collaborating with both large primes and startups on various platforms like UAVs, UUVs, and USVs. This strategy is crucial for building the necessary industrial strength in the United States and fostering global supply chain resilience.
Mike's Investment Thesis
Mike advocates for the aerospace and defense market, asserting that despite its competitiveness, it remains wide open for companies with disruptive advantages willing to invest. He cites Hanoa's successful contracts for the US Army as proof of concept, emphasizing the necessity of such investments for US re-industrialization.