WASHINGTON—The Heritage Foundation published a special report today exposing the dangers of America’s weaking Defense Industrial Base (DIB) in an increasingly complex and hostile global environment. The report, entitled “A Strategy to Revitalize the Defense Industrial Base for the 21st Century,” explains the impacts of America’s deteriorating DIB.  

Robert Greenway, director of the Allison Center for National Security at The Heritage Foundation, commented on the report’s release:  

“American industrial capacity has been in decline since the 1970s and with it the arsenal of democracy. The new Cold War with China will require the restoration of our Defense Industrial Base.

“This special report encompasses the interdependent economic, security, and workforce issues to provide actionable recommendations for federal and state legislatures, the executive branch, and our partners and allies. The authors’ novel approaches can enable an unprecedented resurgence in national security necessary to achieve peace through strength.” 

The DIB—a vast network of resources that supplies the Department of Defense (DOD) with essential defense-related materials, products, and services—is critical to national security. Once demonstrating unparalleled innovation and output during World War II and the Cold War, the domestic DIB has slowly declined as domestic defense production has consolidated and American manufacturing has moved overseas. In the face of escalating threats from China, Russia, Iran, and North Korea, the ill-equipped DIB leaves the nation increasingly vulnerable. 

Richard Stern, director of Grover M. Hermann Center for the Federal Budget, added:  

“A strong economy is the foundation of a strong military. Reckless expansions of government regulation and taxation have strangled the economy, driven up costs, shrunk the labor pool, discouraged investment, and weakened supply chains—creating a perfect storm for national security failures.

“But it’s not too late to turn things around. This report provides a clear framework for restoring America’s defense industrial strength.” 

The cross-departmental report, developed by experts from Heritage’s Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy, the Center for Education Policy, and the Grover M. Hermann Center for the Federal Budget, diagnoses the core problems undermining America’s DIB and outlines policy solutions for its revitalization.  

Madison Marino Doan, policy analyst at the Center for Education Policy, concluded: 

“America’s higher education system is in urgent need of reform. Too many graduates are entering the workforce unprepared, leaving critical sectors—like our defense industrial base—struggling to find skilled talent.

 

“By adopting the reforms outlined in this report—including decoupling federal financing from higher ed accreditation, expanding 529 plan and Pell Grant eligibility, and reviving industry-recognized apprenticeships—we can ease the burden on students, strengthen the workforce, and help secure America’s economic and military future.” 
 

KEY TAKEAWAYS:  

• The most important issue facing the defense industrial base is a lack of output, in which former Representative (R–FL) and current National Security Advisor Mike Waltz has noted, “[t]he largest shipyard in China could fit every shipyard in the United States inside it.”  

• The Biden Administration released the first-ever U.S. National Defense Industrial Strategy (NDIS) in 2024 but fell short of providing sufficient solutions and is disconnected from the DOD’s own budget.

• The U.S. defense industrial base must be revitalized to meet today’s needs. Output is insufficient, innovation is lagging, and supply chains are brittle—and it does not appear that current efforts will be effective enough to ameliorate these issues. 

• To ameliorate long-term DIB capacity issues, policy must focus on increasing capital flows to industry, reducing costs of production, expanding the available labor pool, increasing and stabilizing demand, and increasing innovation.

• In recent years, the United States has focused increasingly on buying American to produce the capabilities the Defense Department needs to conduct its mission. However, some exemptions are needed to ensure military readiness. If the U.S. is incapable of building something that is critical to its national defense, it may be necessary to coproduce with allies in the Indo-Pacific, Europe, Canada, and Israel.