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.