The war between the US, Israel and Iran, which began on February 28, has quickly become more than a geopolitical flashpoint. It is a stress test for the global defence industrial base, exposing shortages, driving a surge in military spending, and potentially triggering a multi-year rearmament cycle.
From dwindling missile stockpiles to billion-dollar daily burn rates, the conflict shows a fundamental imbalance: modern warfare is consuming weapons far faster than the world can produce them.
A war burning through stockpiles
Within days of escalation, strain on global inventories became clear. German defence major Rheinmetall said on March 6 the conflict validated plans to rapidly expand missile production, acknowledging Western manufacturing capacity is insufficient. The company is building new missile and rocket engine facilities in Germany and Spain, but those plants are not expected online until around 2027 — too late for immediate shortages.
By March 19, Rheinmetall CEO Armin Papperger warned stockpiles were nearly empty across Europe, the US and West Asia, especially for interceptor missiles used in air-defence systems. He warned that if the conflict continued another month, global inventories of key interceptors could be exhausted.
Scale of consumption: billions in days
Munitions are being used at an unprecedented pace. Estimates from the Center for Strategic and International Studies put US spending at $12.7 billion in the first six days of the war, with costs rising by roughly $500 million per day.
Missile usage is a major driver. Over 300 Tomahawk cruise missiles were fired in the early days, each costing about $3.5 million — roughly $1.2 billion for Tomahawks alone. Other tallies include offensive strike munitions at about $5.5 billion and air-defence systems (THAAD, Patriot interceptors) around $5.7 billion.
The asymmetry is stark: Iran’s response included roughly 2,500 drones and missiles, many far cheaper to produce. This has forced the US and allies to use high-cost interceptors against low-cost threats, rapidly depleting inventories.
Weapons in play and makers
The conflict has deployed one of the most sophisticated arsenals in a regional war. The US “Operation Epic Fury” has used more than 20 weapon systems across air, sea and land, including:
– Missiles & defence systems: Tomahawk cruise missiles; Precision Strike Missile (PrSM) via HIMARS; Patriot systems; THAAD interceptors.
– Aircraft & strike platforms: B-1 bombers, B-2 stealth bombers, F-15, F-22, F-35 fighters.
– Drones: MQ-9 Reaper (high-cost, up to $40 million per unit); LUCAS low-cost drones (~$35,000), highlighting a shift to expendables.
– Naval & surveillance: Aircraft carriers, Aegis-equipped destroyers, AWACS, electronic warfare and reconnaissance platforms.
These systems are produced by a relatively small group of dominant defence contractors:
– Lockheed Martin: F-35, THAAD, HIMARS, missiles
– RTX: Tomahawk, Patriot systems
– Northrop Grumman: B-2 bombers, radar systems
– Boeing: F-15, B-1, surveillance aircraft
– L3Harris: avionics, ISR systems
– General Atomics: MQ-9 Reaper drones
– Huntington Ingalls: aircraft carriers
– SpektreWorks: LUCAS drones
On the Israeli side: Rafael (Iron Dome), Israel Aerospace Industries (missiles, drones), Elbit Systems (electronics, UAVs). Iran relies on a mix of imports and domestic production, including technology sourced from Russia, China and North Korea, plus reverse engineering and local manufacturing. Iranian officials have said missile production is continuing with no shortages.
A production problem years in the making
Experts say current shortages reflect structural weaknesses in global defence manufacturing. For decades, Western defence industries prioritized efficiency over scale, keeping lean production lines suited to peacetime demand. The sudden spike in consumption exposed the limits of that model.
Ramping production is slow because of complex supply chains (semiconductors, propulsion systems, explosives), long manufacturing cycles for advanced weapons, and limited skilled labor and specialized facilities. That’s why multi-year factory projects are being announced even as immediate shortages persist.
A supply-chain war: the Hormuz factor
The conflict is disrupting critical supply routes. A US Military Academy analysis highlighted that disruption in the Strait of Hormuz could choke access to key raw materials — copper, chemicals used in munitions — creating second-order risks: war → commodity disruption → defence production bottlenecks.
Who dominates global defence production?
The global arms industry is concentrated. According to SIPRI, the top 100 defence firms generated $679 billion in revenue (2024). US companies accounted for $334 billion (50%), followed by China ($88 billion), the UK ($52 billion), Russia ($31 billion) and France ($26 billion). The US leads in spending, industrial capacity and technological leadership, with 39 companies in the global top 100.
Defence budgets: already massive, now rising
The war is accelerating an upward trend in global military spending. Approximate current defence budgets:
– USA: $1 trillion (targeting $1.5 trillion by 2027)
– China: $300 billion
– Russia: $110–120 billion
– UK: $70–75 billion
– Israel: $25–30 billion
– Iran: $10–15 billion
The US is seeking an additional $200 billion in emergency funding to replenish stockpiles and expand its industrial base — far exceeding the war’s immediate costs so far.
The economics of modern warfare is breaking down
A core mismatch drives the crisis:
– Interceptor missile: $1 million–$3+ million
– Drone: $10,000–$50,000
Using expensive interceptors to shoot down cheap drones is financially unsustainable. Even advanced militaries are trapped in a cost imbalance where defence becomes prohibitively expensive over time.
That dynamic is already pushing a shift toward low-cost drones and loitering munitions, anti-drone artillery, electronic warfare and jamming, and future systems like directed energy weapons.
If the war drags on
A prolonged conflict would likely produce several outcomes:
1. Severe supply shortages: Interceptors and other munitions could become critically scarce, forcing rationing or alternate defence strategies.
2. A global defence capex supercycle: Governments would significantly increase spending not just on weapons but on manufacturing capacity.
3. Multi-year order visibility for defence firms: Companies such as Lockheed Martin and RTX could see sustained revenue from replenishment orders.
4. Shift in doctrine: The war would accelerate moves away from high-cost precision toward scalable, cost-effective warfare models.
Bottom line
This conflict is not only depleting weapons; it is exposing the limits of the global defence industrial system. Stockpiles are running low, production cannot keep pace, and costs are spiraling. What follows will likely be a fundamental reset of defence economics, marked by higher spending, expanded manufacturing, and a rethinking of how wars are fought — potentially the start of the next global defence supercycle.
Read US-Israel-Iran-War Live Updates here: https://www.cnbctv18.com/world/iran-us-israel-war-live-updates-trump-netanyahu-khamenei-drone-west-asia-conflict-death-toll-oil-markets-liveblog-19872093.htm
