Per WSJ, approval of a $95 Billion aid package frees up funding that was held up in Congress for four months. Two-thirds of it will go toward new military equipment for Ukraine, Israel and Taiwan, also expanding U.S. production. U.S. stocks will also be replenished with money from the aid package, which means big business for U.S. defense manufacturers.
Lockheed Martin and RTX (formerly known as Raytheon Technologies) were the biggest beneficiaries of the $30 Billion in federal contracts already awarded to supply Ukraine and refill U.S. weapon stockpiles. General Dynamics and L3Harris reported strong quarterly sales recently as they benefitted from deals awarded over the past two years.
More than $60 Billion of the aid package is expected to turn into new business over the next 2-3 years. This will significantly increase the Pentagon’s latest $320 Billion procurement budget.
Almost half of the new money will replenish U.S. stocks. This often involves purchasing newer, more expensive weapons than those being sent to Ukraine. The $1 Million ATACMS long-range rockets provided by the U.S. will be replaced with Lockheed’s PrSM missile which has a price tag of $2.4 Million.
The Pentagon just announced a $6 Billion aid package of new weapons, training and spare parts that will be sent to Ukraine over the next several years. These aid funds will unlock more orders for air defense systems, artillery shells and technology to knock out drones. This will sustain factories for years to come.
Lockheed said annual output of GMLRS missiles fired from its Himars rocket launchers is expected to rise 40% to 14,000 next year from 10,000 currently. RTX, which makes Patriot air defense systems and the Stinger antiaircraft missile, said they have opportunities to win contracts of ~$40 Billion from the extra aid provided to Ukraine.
Ukraine is also facing major shortages of 155mm artillery shells. The U.S. Army plans to increase monthly output to 100,000 next year from ~40,000 now. This includes a new shell plant in Texas run by General Dynamics.
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