Spacex, United Launch Alliance, Virgin Orbital,
these are the companies you think of when you think of
commercial rockets, but another venture involving rocket motors rakes in
heaps of cash every year. Missiles are guided rockets used in
war, both defensively and offensively. There are large missiles, small
missiles, missiles designed to destroy tanks, missiles designed to take out
planes in just about everything in-between, including missiles designed to
shoot down other missiles. And they are the number two
defense expert in the U.S. behind aircraft. The major players in the United
States are by far Lockheed Martin, Raytheon, Boeing, Northrop Grumman. Those would be the top missile
sellers in the United States. Like with aircraft, missile sales are
based on international alliances and treaties. And these sales can become hot
button issues like a recent sale proposal of Boeing harpoon missiles to Taiwan
or a failed bid to sell the Patriot missile system produced
by Raytheon to Turkey. As technology advances, the line between
drones and missiles is blurring, and this has the potential
to disrupt the entire industry. I'd like to say that in some some
respects we've we've entered a kind of new missile age with a really
significant global supply and demand signal. What will the new missile age
hold for companies that sell these weapons of war? Raytheon, the producer of the iconic Patriot
missile system, is one of the top manufacturers of guided missiles in
the world during a recent missile tests by the U.S. Navy, a Raytheon
standard missile, three or sm three intercepted an intercontinental ballistic missile
or ICBM shooting down an incoming ballistic missiles, a
very difficult problem. They move very, very fast and they
tend to be surrounded by debris. That's also moving very fast. So you have to hit them
quickly, target them quickly and differentiate between the actual missile
and the surrounding debris. We tested a ship based interceptor
against an ICBM, considerably expanding our capability to defend against
those kinds of threats. That makes the sm three a potential
deterrent against an ICBM launched by North Korea or Iran. I think the most important takeaway of the
sm three to a ICBM intercept is that it increases the reliability and
our confidence in it against some really stressing regional threats. Raytheon introduced cost saving measures due
to the drop in commercial air travel during the covid-19 pandemic. But its missile and defense division has
continued to drive sales and has had an operating profit of 453 million
in the third quarter of twenty Twenty. American aerospace giant Boeing
sells missile systems like the harpoon. It's also involved in fielding
missiles designed to kill ICBMs like the ground based
midcourse defense system. Boeing is now competing for the
bid to produce the potential next generation interceptor, or NDEYE. Boeing has pivoted towards defense sales
to make up for commercial losses and has made six point eight billion
dollars in that sector in the third quarter of 2020 alone. Some missiles in the U.S. are designed and built
by multiple companies. The next generation of interceptor bid
from Boeing, for example, also involves General Atomics and Aerojet Rocketdyne,
the winner of the next generation interceptor bid could secure four
point nine billion over five years from the Pentagon's Missile Defense
Agency to build the interceptor of the future. Lockheed Martin and
Northrop Grumman are also bidding on the right to produce Yanhai. Northrop Grumman is involved in making
rocket motors for many other missiles, including the Air
to Air Sidewinder. Northrop Grumman saw its sales increase in
the third quarter of 2020 by seven percent from 2019, rising to
nine point one billion dollars. General Dynamics is involved in creating
warheads in other parts in various missile programs, and Lockheed
Martin is also involved in upgrading the missile fired by the
Patriot system designed by Raytheon, which is just one more example of
how these companies tend to work together on these complex projects. Thanks to the advanced technology used
to make these missile systems, all of these companies remain dependent
on relationships between the U.S. government and other countries
to make international sales. After all, the U.S. needs to
trust customers before allowing defense contractors to sell them
cutting edge weaponry. When Turkey fielded fresh bids to buy
a new missile system in November of 2013, the Patriot was
an assumed frontrunner. But things quickly went off the rails
when Turkish demands became too much to make the deal doable. Turkey's decision to buy the Russians four
hundred is probably one of the messiest arms deals that's ever
gone down in history. Turkey wanted to buy the
United States Raytheon's patriot system. The United States passed a couple of years
in a row and Russia scooped up to pick up Turkey and sell them
to us for the failure of Raytheon's reported three point five dollars
billion bid also affected relations between the U.S. and Turkey. The manufacturing for some components of
the F-35, the cutting edge American stealth fighter jet from Lockheed
are being moved out of the country to other F-35 partner states. Russian and Chinese companies also
sell advanced missiles in all categories and are always looking to
enlarge their market share and compete with American offerings in countries
that are on the fence about who to buy from in
the case of Russia. The U.S. has pushed back on Russian
missile sales with the threat of sanctions, but the political ramifications of
missile sales can cut both ways. China will regard any future
arms sales to Taiwan as highly provocative. And if there's anything
we know about the incoming administration's policy towards China, it
will remain fundamentally on a competitive footing. But the administration
won't be looking to simply poke China in the eye in the
way that the Trump administration has. So it is very possible that we could
see a calibration for some of these sales that could be rolled back. They could be modified,
they could be shrunk. Taiwan and some of its neighbors have
really been getting into the missile game. They've been doing
it for many years. But in the past couple of months
and really this past year, some pretty significant sales have been authorized,
especially in the anti ship missile category. In Taiwan's case, it
it's a major threat on a on an operational level is a
Chinese invasion fleet, ships crossing the Taiwan Strait. And if Taiwan can
find some way to threaten those ships, threaten to wipe out the invasion
force, then it can solve its strategic problem, even if it can't
match China's spending and the size of China's
other military forces. The incoming Biden administration could
handle arms sales differently than the Trump administration has. As of now, Taiwan plans on buying
400 harpoon defense systems from Boeing for two point three seven billion
dollars, a hefty investment in missile technology. But as technology advances,
could giant purchases like this one be rendered useless by newcomers
to the guided weapon world? In the U.S., the design, production
and sales of missiles employ thousands of people across almost every state. The reason why all these defense
companies see such bipartisan support is because they don't necessarily
headquarter at one place. They spread the wealth. So they have depots, maintenance
facilities, testing centers throughout the United States, large missile systems
are costly to build and maintain. For example, the U.S. approved of a potential sale of
44 terminal high altitude area defense systems for an estimated 15 billion
dollars to Saudi Arabia in twenty nineteen. Even smaller missile systems like
anti-tank missiles or air to air missiles can cost thousands of
dollars per missile or millions of dollars per unit when all costs,
such as research and development, are factored in. The U.S. sale of 210 javelin anti-tank missiles
and thirty seven launchers for 47 million to Ukraine in twenty nineteen is
an example of the cost involved even in smaller missiles, advances in
guided weapons such as low cost cruise missiles or even suicide drones,
which can fly almost undetected and destroy targets defended with expensive
air defenses, are changing the game. We can look at the attack last
year by the suspected attack by the Houthis on Saudi oil facilities,
where Saudi Arabia's Patriot missile defenses can do anything against these
low flying drones that basically exploded on impact and
caused massive damage. Countries including Iran, a number of
other countries around the world, North Korea, have increasingly
precise military capabilities. But of course, earlier this year,
after the assassination of Qassem Soleimani, the Iranian general saw Iran
launch strikes against US military facilities and actually strike
with pinpoint accuracy. The U.S. has invested billions into
missile defense technology since the 1980s. It remains to be seen
whether current systems can actually intercept ICBM launches in a real
world scenario, the best defense against a nuclear tipped ICBM, which
is a annihilation level weapon, right? I mean, that's
the kind of weapon. If you fire one, you're going to get
one shot back at you back and forth, back and forth until all the
human civilization has been destroyed. So anyway, that's the ICBM and it's
a it's an existential problem for all of us. But you don't
defeat the problem of ICBMs and more broadly, the problems of the
problem of nuclear weapons by having the ability to shoot down a few of
them, maybe, if you're lucky, at great cost. It's challenges, I think,
are here to stay the the genie of missile proliferation is
going to be very, very difficult to reverse. In fact, the best tool we
have today really seems to be a non-binding export control regimes where
states commit on a unilateral basis not to sell missiles to countries
that shouldn't have them or really any countries at all to prevent
the proliferation of this technology more broadly. So air defenses are always scarier
on paper than they are in practice because there are a lot
of practical limitations to their use terrain communications networks that
might be fragile, sensor networks that also
might be fragile. These things just don't work as well in
the real world as they do in simulations or in PR copy. So and that probably applies even more
so to Russian made systems than to Western systems. The new Missile Age has seen the
rise of hypersonic glide vehicles as possible game changers. I would say hypersonic missiles of various
kinds are kind of the poster child of this new era of missile warfare,
and we're going to have to find ways to contend with that. The incoming Biden administration may
take a stronger look at alliances and who's getting what systems
and maybe playing a little bit more of a diplomatic role instead of
trying to rack up and boost arms sales.
