The U.S. Department of Defense (Pentagon) signed a new agreement that will significantly increase production of interceptor missiles for Patriot and THAAD missile defense systems. The deal was made with defense industry giants Lockheed Martin and Northrop Grumman.
Under the deal announced on Monday, production of Patriot PAC-3 systems will triple, and THAAD production will quadruple. The move aims to ease pressure on stockpiles caused by military aid to Ukraine and tensions with Iran.
Michael P. Duffey, Under Secretary of Defense for Acquisition and Sustainment, said: 'Building the Arsenal of Freedom requires robust and dynamic supply chains at every level of the industrial base.'
Financial details of the agreement were not disclosed. However, the U.S. Army on Wednesday awarded Lockheed Martin a contract exceeding $58 billion to produce Patriot interceptor missiles. This contract converted the annual $4.7 billion deal announced in April into a seven-year production agreement.
Northrop Grumman disclosed that its share of the deal exceeded $3 billion. Ben Davies, corporate vice president of the company, said: 'Our long-term investments in breakthrough manufacturing technologies and resilient supply chains have enabled us to go from steady-state production to surge production in record time.'
Northrop Grumman reported that, thanks to investments in 2021, production capacity at its Allegany Ballistics Laboratory in West Virginia nearly tripled, and production at its Maryland facility increased by 25 percent.
Ukraine, a key U.S. ally, faces critically low stocks of Patriot interceptors, its only weapon capable of stopping ballistic missiles.
On the first trading day of the week on Wall Street, shares of both companies gained. Northrop Grumman rose over 1 percent in early trading, while Lockheed Martin gained 0.7 percent.
