Why the Ammunition Surge Is Stalled—and How to Fix It

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Eliot Pence, Michael Brown, and Jason Nichols are the co-founders of Supply Energetics, a new energetics upstart reshaping the American defense industrial base. In addition to their roles at Supply Energetics, Brown is a General Partner at Bowery Capital, Pence is a founder of Dominion Dynamics and formerly led global growth at Anduril Industries, and Nichols is the former director of AI for Walmart.

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Over the last two years, the United States and its NATO allies have committed extraordinary resources to a problem it believed was largely solved: ammunition. The return of high-intensity industrial warfare in Europe triggered an emergency response in Washington, with Congress directing billions of dollars toward what was framed as an urgent need to “surge” munitions production.

Measured narrowly, the effort has produced visible gains. Output of 155mm artillery shells has increased and contracts have been signed (though output has not come close to the desired goal). Yet, today, the broader condition of the munitions enterprise remains fragile. Stockpiles are thin, lead times remain long, and production capacity remains vulnerable to disruption.

Industrial atrophy accumulated over half a century cannot be reversed simply by injecting capital into legacy systems. The United States is attempting to sustain a modern war of mass and precision using an industrial architecture designed for a different era, under different assumptions about scale, safety, and tempo.

The difficulty lies in diagnosis. Ammunition production has been treated primarily as a procurement problem rather than as an industrial systems problem. Funding has flowed, but the underlying structure through which that funding is converted into output has changed little.

The solution involves redesigning industrial production around small, standardized modular units rather than relying on large, centralized high-hazard plants. Using continuous-flow chemistry and automation, these modular systems scale by replication, improve safety and resilience, reduce transport risks, and allow capacity to grow without overstressing existing infrastructure.

Structural Fragility in the Munitions Base

A central weakness of the current approach is the persistence of single-spine dependencies. Despite incremental investments, large portions of U.S. munitions production still hinge on a small number of aging facilities that produce critical energetic components such as nitrocellulose or black powder. These sites function as pacing items for the entire enterprise. Their vulnerability is not theoretical. A single fire, environmental shutdown, or equipment failure can halt national output for months. Increasing throughput at such nodes improves peacetime efficiency, but it does not produce resilience under stress.

Compounding this fragility is the persistence of peacetime contracting logic. Even with emergency funding, industry behavior remains shaped by the expectation that demand will eventually fall back to baseline levels. Firms are understandably reluctant to invest in large amounts of redundant or surge capacity without long-term, bankable signals. The result is a system optimized for just-in-time efficiency rather than sustained conflict.

Modernization efforts, meanwhile, have tended toward incrementalism. Legacy facilities have been instrumented with digital sensors and compliance tooling, but the underlying production processes—many of them conceived in the mid-20th century—remain largely intact. These efforts produce marginal gains, not structural change.

Energetics as the True Bottleneck

The deeper issue is clear when examining the energetics layer of the munitions stack. Energetics—the explosives and propellants encased in shells, missiles, and rockets—are not simply another industrial input. They are a distinct class of material governed by uniquely restrictive handling and transportation standards. Finished explosives and many energetic intermediates are subject to stringent limitations on packaging, routing, shipment size, carrier certification, storage, and transfer.

As a result, energetics do not scale like metals, electronics, or structural components. Even when domestic production exists, movement remains expensive, slow, and capacity-limited, particularly as volumes increase. In crisis conditions, these constraints intensify. Insurance retreats, transport availability narrows, and regulatory waivers struggle to keep pace with operational need. The consequence is that production capacity can become functionally inaccessible long before factories reach physical limits. Throughput collapses not at the point of manufacture, but along the transportation spine that connects industrial nodes.

Reinvent, then Reshore

This dynamic explains why reshoring, by itself, has delivered disappointing results. A domestically produced energetic that must traverse long distances under hazardous-material constraints remains exposed to delay and disruption. The issue is not national origin, but system design. Attempting to move more energetic material through the same constrained transport pathways simply relocates the bottleneck. Without altering how and where energetics are produced, increases in nominal capacity do not translate into usable supply.

Distributed Production as Industrial Redesign

Addressing this challenge requires a shift in industrial philosophy rather than a continuation of current practice. Instead of concentrating output in massive, high-hazard plants, production can be decomposed into smaller, standardized modular units enabled by redesigned synthesis pathways, continuous-flow chemistry, and automation. These systems are safer, more controllable, and scalable by replication rather than expansion.

Modularization distributes capacity geographically, reduces single points of failure, and minimizes transport risk by moving safer inputs—or producing closer to use. The same logic extends beyond energetics: software-defined lines enable rapid reconfiguration, contractor-owned facilities improve operational incentives, and automation increases consistency while reducing human exposure. Collectively, this shifts the munitions enterprise from brittle optimization toward resilience and adaptability.

Aligning Policy and Metrics with Readiness

Policy must follow structure. Episodic appropriations and cost-plus expansion of legacy capacity reward paper output rather than sustained readiness. Performance-based production credits and incentives for validated surge capacity would better align private investment with national security needs, treating readiness itself as a strategic asset.

The core lesson is that industrial design—not just demand—determines wartime responsiveness. Production rate, adaptability, and resilience under disruption now define strategic advantage. The only metric that ultimately matters is reliable production under the conditions conflict actually imposes.

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