Executive summary
Modern high-intensity wars increasingly involve long-range conventional missile duels, with great volumes of strike weapons trying to get past surface-to-air missiles designed to intercept them. The global demand for precision-guided weapons (PGMs) continues to climb, while existing stockpiles dwindle and defence production atrophies. Australia’s Guided Weapons and Explosive Ordnance (GWEO) Enterprise, created in recognition of these shortfalls and of mounting regional security challenges, aims to procure weapons to fill capability gaps in the short term while developing Australia’s indigenous capabilities to build, maintain and repair its own weapons in the medium-to-long term. Thus far, GWEO has fallen short of expectations. Defence is yet to articulate its overarching GWEO strategy or plan, nor has it delivered on two of the most important ambitions for the initiative: co-production and sustainment.
GWEO could become a missed opportunity for Australia and the United States to deepen their partnership and deter aggression. Both countries need to rapidly acquire more maritime strike and air defence missiles to strengthen deterrence in the Indo-Pacific.
GWEO could become a missed opportunity for Australia and the United States to deepen their partnership and deter aggression. Both countries need to rapidly acquire more maritime strike and air defence missiles to strengthen deterrence in the Indo-Pacific. Partnering on GWEO will serve this objective, improve interoperability and create opportunities for deeper logistics and sustainment cooperation. Demonstrating Australia-US resolve through co-production efforts would discourage aggression from China. The United States and Australia have an opportunity to deepen their industrial base integration and strengthen combined supply chains if they act quickly and take the following steps:
- Australia should focus its co-production of PGMs on weapons that have a large international market so that its industry can maintain a continuous build and keep production lines hot, while the United States should allow Canberra to export the American weapons that it domestically manufactures.
- Australia should co-develop and purchase sophisticated and long-range PGMs — the maritime strike and air defence weapons that are needed to deter China — from the United States instead of trying to domestically manufacture them.
- Australian companies should seek to produce sub-components that currently are in short supply in the United States, such as solid rocket motors, to strengthen combined supply chains.
- The United States should provide Australia with the requisite technology and information to sustain key PGMs and consider how to integrate PGM sustainment and maintenance into Australia-US force posture initiatives.
- The United States should prioritise foreign military sales to nations that advance its defence strategy, including Australia.
This multifaceted level of collaboration would increase Australia’s ability to defend itself, strengthen the crucial Australia-US relationship and bolster deterrence even in the face of growing uncertainty.
Introduction
The war in Ukraine has provided a stark illustration for policymakers internationally that high-intensity conflicts consume an enormous amount of munitions. As the West has tried to meet Ukraine’s requirements, it has become clear not only that existing stockpiles are too low, but also that defence industries have atrophied to a point where they can no longer surge precision-guided munitions production to meet sudden demands. Given current and projected future demand, the United States and Australia must work together to produce more PGMs to bolster deterrence.
Both the United States and Australia have made deterring coercion in the Indo-Pacific the focus of their defence strategies and plan to do so by denying an aggressor the ability to achieve its objectives. In response to the deteriorating strategic environment in the Indo-Pacific, Australia’s 2024 National Defence Strategy commits the Australian Defence Force (ADF) to deterring aggression through a strategy of denial.1 Denial entails having the means to defeat an attack, which requires deep stockpiles of conventional weapons. Accordingly, a critical aspect of Australia’s defence strategy is the development of the sovereign ability to “produce, maintain, repair and overhaul” key munitions through its Guided Weapons and Explosive Ordnance Enterprise, announced in 2021. Similarly, the US Department of Defense (DoD)’s 2022 National Defense Strategy (NDS) identifies China and Russia as priority security challenges and aims to deepen US integration with allies and partners, which it identifies as a core US strength.2 Furthermore, the first US National Defense Industrial Strategy (NDIS), released in January 2024, calls for working with allies and partners to increase defence production and improve the resilience of supply chains.3 Because Australia’s alliance with the United States remains “fundamental” to its national security and because the two nations’ forces enjoy a high degree of interoperability, it is natural for Canberra to seek to cooperate with Washington on GWEO.
Progress is already being made in combined PGM production within the Australia-US alliance. For instance, during the July 2023 Australia-United States Ministerial Consultations (AUSMIN), the allies agreed that by 2025 the United States and Australia would co-produce Guided Multiple Launch Rocket Systems (GMLRS).4 Later that year, Australia announced its intention to expand production of 155mm artillery shells, the most in demand weapon in the Ukraine war, and BLU-111 air-delivered bombs.5
Going forward however, there are many unanswered questions about the intricacies of Australia-US munitions cooperation. For instance, should Australia expand its industry to support European partners in meeting their current demand for weapons, or should it focus on building weapons with greater relevance for threats closer to home? More fundamentally, the Australian Government must consider what weapons it wants to co-develop and build in Australia, what weapons it should buy from the United States, and, further, what weapons it wants an ability to sustain. Can Australia develop and manufacture its own weapons? Should Australia and the United States focus on co-developing and co-producing advanced weapons like hypersonics, or should their partnership emphasise co-production of mature missiles that can be quickly delivered to warfighters? How can Canberra and Washington tailor co-development agreements that leverage each other’s strengths and compensate for weaknesses while keeping costs down?
To answer these questions, this brief explores what weapons would be most useful for the priority Australian and United States defence planning scenarios and considers the factors that should influence which weapons are selected for bilateral industrial cooperation.
This brief concludes that partnering through GWEO will help Australia and the United States meet the current global demand for weapons and improve their ability to deter aggression in the Indo-Pacific region. Though Australia should co-develop and purchase sophisticated and long-range PGMs from the United States, it should focus its domestic production efforts on established middle-range PGMs that have large international customer bases. The United States should permit Australia to export the PGMs that they co-produce. At the same time, the allies must be careful to grow and strengthen rather than stretch existing global supply chains. If Australia simply buys more American weapons or assembles them in Australia without expanding production, existing US supply chains, already failing to meet current demand, will be further backlogged. Thus, Australian industry should look to contribute key subcomponents that are currently bottlenecks for the US industrial base. Finally, sustaining many of its own PGMs would increase Australia’s readiness and could form the foundation of a shared Australia-US sustainment capability.
This brief is organised in 5 sections. The first section explains the importance of missiles to modern warfare and their role in China’s military strategy. The second section traces the development of Australia’s GWEO Enterprise and outlines achievements to date. The third section examines the state of the US industrial base and trends in Pentagon PGM acquisition. The fourth section makes the case for Australia-US cooperation and considers which weapons should be prioritised by Australia’s GWEO Enterprise. The fifth section offers conclusions and recommendations.
The modern missile age
Long-range conventional missile duels are a characteristic of modern conflicts.6 Strike weapons — whether they are cruise or ballistic missiles or one-way kamikaze drones — are fired at military targets, commercial ships and civilian infrastructure, while missile defences attempt to intercept these threats before they reach their target.7 This salvo competition model of conflict is a result of the proliferation of precision-guided weapons technologies across the globe, which has now reached a tipping point.8 Though the technology is not new, PGMs were previously only available to a select few nations with advanced militaries because they were complex to develop and costly to procure.9 In the modern missile age however, even isolated nations and non-state actors, including the Democratic People’s Republic of Korea, Iran, the Houthis in Yemen, and Hezbollah in Lebanon possess growing arsenals of precise long-range missiles and drones. By themselves, long-range missiles are not a war-winning capability. Still, as Andrew Metrick argued in Foreign Affairs, large numbers of relatively cheap, accurate missiles and drones enable both states and non-state actors to impose sustained costs on their opponents and provide coercive leverage,often at disproportionately low costs compared to adversaries’ defences.10
These long-range weapons come in a variety of forms. Missiles with a sensor directing them to their target are considered PGMs.11 Precision, however, refers not only to more accurate missiles but also to improved offboard sensors for targeting, including those in space, and to the communications networks that pass targeting data from sensors to shooters.12 Drones or uncrewed aircraft play an increasingly important role in missile warfare as reconnaissance and strike platforms.13 Long-range one-way kamikaze drones, also known as loitering munitions, are blurring the line between cruise missiles and drones.14 Their pinpoint accuracy enables the destruction of a distant target with a conventional warhead and is increasing the lethality of the battlefield. Missiles and drones are easier to use than crewed aircraft, offer a relatively cheap means of projecting power, and limit risk to crews.15
In the modern missile age, even isolated nations and non-state actors, including the Democratic People’s Republic of Korea, Iran, the Houthis in Yemen, and Hezbollah in Lebanon possess growing arsenals of precise long-range missiles and drones.
Missiles however, are not only needed for offensive attacks. As recent operations in the Middle East and the ongoing war in Ukraine have demonstrated, air defence missiles can provide effective protection against incoming attacks, whether by intercepting munitions in flight or deterring a would-be attacker. For example, Ukraine’s ground-based air defences, which consist of both old Soviet and more modern Western systems, have kept the Russian Air Force at bay. For most of the war, Russian aircraft launched long-range standoff strikes against Ukrainian positions or infrastructure from within Russian-controlled territory beyond the range of Ukrainian surface-to-air missiles,with limited effect.16 Only recently, as Ukraine has run low on air defence interceptors, have Russian aircraft more frequently flown closer to Ukrainian airspace and launched attacks with glide bombs.17 Russia’s close-in glide bombs are cheap and plentiful, and have been used in large numbers to devastate Ukrainian forces and cities near the frontlines. Ukraine lacks the air defence systems and interceptor missiles in the volumes necessary to counter these Russian attacks.18 Although they have proven quite effective at intercepting threats, missile defence interceptors and air-to-air missiles are more expensive than the cheap drones and missiles fielded by regional adversaries, and interceptors have tended to be in particularly short supply.19 If the United States were to end up in a high-intensity conflict against a great power, it would need large inventories of offensive and defensive missiles.
By 2018, the US government recognised that it was engaged in a long-term strategic competition with China and that the outcome of this contest would determine the shape of the Indo-Pacific.20 The United States and its allies aim to maintain a free and liberal order, while China is seeking to expand its influence and territory and to limit the role of outside states in the region.21 Great power competition is taking place in the diplomatic, technological, economic and informational realms, but it is the growing strength of the Chinese People’s Liberation Army (PLA) that is enabling Beijing to act increasingly assertively in the region.22 The US-Chinese military competition is most intense at locations where Beijing is asserting its right to disputed territory in the South China Sea, around Taiwan and in the East China Sea. Chinese military, coast guard and paramilitary forces routinely engage in unsafe and illegal harassment to intimidate their neighbours.23
US military planners have worried for decades that countries like China and Russia that field large inventories of offensive and defence missiles could prevent US forces from projecting power into their region and stopping aggression against allies and partners.24 Although the term anti-access area-denial (A2/AD) is often not well understood, at its core the A2/AD concept involves keeping outside nations from projecting combat power into a country’s near abroad by attacking foreign bases and forces and contesting the ability of foreign forces to operate freely with layered air, ground, and sea-based air defences.25 Very accurate long-range missiles are central to A2/AD threats, which are often simplistically depicted as missile range rings or what Mike Kofman has called “angry looking red circles on a map.”26 These A2/AD missile range ranges are often thought of as impenetrable ‘bubbles,’ but are in reality areas in which operations would be contested, depending on the density of the fires.27 In addition to missiles, A2/AD complexes require multi-domain sensors to find and track targets and battle networks to connect sensors to shooters and enable the rapid engagement of enemy forces.
China has the most advanced and robust A2/AD capabilities in the world and has adopted a military strategy to defeat the United States by disrupting the flow of information with cross-domain attacks against key American military nodes, including logistics, bases and command and control facilities.28 The PLA has built a mature precision strike complex “with Chinese characteristics” that includes sophisticated sensors to detect mobile forces and networks to enable it to rapidly share this information.29 China has the most active ballistic missile program in the world, is the leader in hypersonic missiles and is upgrading its already large fleet of drones.30 Collectively, PLA conventional firepower can currently reach targets at a distance of 5,500 kilometres, which includes Guam and northern Australia, but the density of its fires attenuates with range.31 Close-in American facilities, such as Kadena airbase on the Japanese island of Okinawa, are particularly vulnerable because the PLA Rocket Force (PLARF) has more than 2,000 short- and medium-range missiles that can reach the island.32 The volume of Chinese conventional missile fires declines with distance as the PLARF has fewer of the more expensive long-range MRBMs and IRBMs. Its ships, submarines and aircraft however, also carry land-attack and anti-ship missiles further extending the range of Chinese striking power.33
The increase in its hard power is enabling the PLA and various proxy forces to engage in “increasingly coercive and risky operational behavior” to advance the Chinese Communist Party’s claims to the East and South China Seas, while simultaneously making prospective US or allied intervention in the event of a war more difficult and costly.
In addition to its offensive firepower, China also has a “robust and redundant” network of integrated and layered air defences within 300 nautical miles of its coasts that could shoot down enemy aircraft and missiles trying to enter its airspace.34 Chinese air defences depend on an early warning radar network that includes sophisticated ground-based radars that can reportedly detect stealth aircraft as well as modern early warning aircraft that extend the range of its ground-based radars.35 If a threat is detected, the PLA can launch fighters armed with long-range air-to-air missiles or employ surface-to-air missiles to intercept it.36 Because China’s surface-to-air missiles are connected, the system is resilient. If the various types of radars share real time data, they can compensate for each other’s weaknesses, improving the range and accuracy of radar tracks, reducing blind spots and allowing for mutually supporting fires. This makes the system stronger than the sum of its parts.37 Although not directly connected to its ground-based integrated air defence systems (IADS), China’s counter-intervention strategy plans to coordinate the employment of its sea-based air defences with its IADS, which also further extends the range at which Chinese forces can intercept aircraft and missiles.38
The increase in its hard power is enabling the People’s Liberation Army and various proxy forces to engage in “increasingly coercive and risky operational behavior” to advance the Chinese Communist Party’s claims to the East and South China Seas, while simultaneously making prospective US or allied intervention in the event of a war more difficult and costly.39 For those same reasons, both the US military and Australian Defence Force need to deter or defeat Chinese aggression with offensive and defensive missiles. Partnering on Australia’s GWEO Enterprise is an opportunity for both allies to fill in this capability gap and to strengthen deterrence in the Indo-Pacific.
Australia’s Guided Weapons and Explosive Ordnance Enterprise
A key component of Australia’s new defence strategy and its effort to bolster the ADF’s lethality in the near term is to procure greater numbers of sophisticated, accurate, long-range missiles. Australian industry however, does not currently produce PGMs, leaving Defence reliant on foreign suppliers. The COVID-19 pandemic exposed the vulnerability of global supply chains, further increasing Canberra’s desire for a sovereign production capability.40 Accordingly, the Australian Government’s 2020 Defence Strategic Update concluded that to “build resilience and self-reliance,” Defence would acquire weapons with longer ranges, increase its stockpiles, and would explore options for manufacturing sophisticated precision weapons in Australia.41 While GWEO began with a focus on creating a sovereign capability, it simultaneously embraced the notion of cooperating with the United States.42 Over time, Australian officials have increasingly stressed the importance of deepening defence industrial base integration with the United States as a part of their combined commitment to upholding a free and open Indo-Pacific region.43 Australia’s Minister for Defence Industry Pat Conroy explained in March 2024 that Australia is trying to “supplement, not supplant” US industry and that Washington should see cooperation “as an opportunity” to establish “a second supply line.”44 Thus, the goalpost has shifted somewhat from self-sufficiency to combined resilience, which is a more achievable goal. Industrial base integration with the United States for GWEO, however, has proceeded far too slowly.
In March 2021, the Morrison government announced that it was accelerating the establishment of a A$1 billion sovereign guided weapons production capability and laid out a vision for the initiative.45 In the short-term — the first 5 years — policymakers envisioned that Australia’s GWEO enterprise would involve the procurement of more weapons from foreign producers, while laying the groundwork for Australian industry to build and maintain greater numbers of PGMs in the future. In the medium term — out to 10 years — Defence would seek to co-develop future weapons and components in Australia. Finally, in the long-term — 10 to 15 years — -Australia would independently design, develop, build and sustain certain classes of PGMs.46 The Morrison government’s graduated plan seemed to assume that Australia still had ample time to build up its guided weapons manufacturing capability and did not make it a pressing issue.
Russia’s invasion of Ukraine in February 2022 underscored for Australia the urgent need to expand the global defence industrial base to meet Kyiv’s insatiable need for weapons, while also highlighting that GWEO’s unhurried pace was not keeping up with the international environment. It was not until April 2022 that Defence announced the selection of Lockheed Martin and Raytheon as strategic partners to the GWEO Enterprise, and the Australian Missile Corporation and the Sovereign Missile Alliance as enterprise partners. The announcement however, provided few details about GWEO’s next steps. There was no selection of specific weapons to be built, no date for when they would enter the inventory, and no plan for how Australian industry would contribute or where production would take place.47 Beyond announcing the initiative and nominating industry partners then, the Morrison government made little real progress towards producing PGMs in Australia.
The release of the 2024 National Defence Strategy and Integrated Investment Plan in April was another missed opportunity to articulate a plan for GWEO.
While domestic production lagged, the Morrison government did take steps to acquire foreign-made PGMs, albeit in an ad hoc fashion that was seemingly disconnected from the broader GWEO enterprise. The procurement of these weapons seemed to follow the normal procedures for foreign military sales and there did not appear to be discussions about production of these PGMs in Australia. For instance, in August 2021, the Australian Army became a partner in the US Army Precision Strike Missile (PrSM) Increment 2 program, an initiative to develop a long-range ground-launched ballistic missile capable of hitting moving targets, to which Australia contributed US$54 million (A$73.5 million).48 That same month, the US Department of State approved the sale of SM-2 and SM-6 air defence interceptors to outfit Australia’s Hunter class destroyers for US$350 million (A$477 million).49 Around the same time that its GWEO industry partners were revealed, Defence separately announced the acceleration of procurement for 3 weapons: the Joint Air-to-Surface Standoff Missile-Extended Range (JASSM-ER), the Naval Strike Missile (NSM), and maritime mines for A$3.5 billion.50 Additionally, as part of Pillar II of the AUKUS initiative, Australia disclosed that it would develop hypersonic and counter-hypersonic technology with the United Kingdom and United States.51 In the absence of an overarching framework or plan, these disconnected announcements suggested a scattershot approach to GWEO contingent upon normal procurement processes and the underdeveloped Pillar II of AUKUS.
In August 2022, the new government of Prime Minister Anthony Albanese had concerns about current Defence plans including GWEO, so requested an independent Defence Strategic Review (DSR) to consider how the ADF should modify its force structure, force posture, readiness and modernisation to meet the changing security environment.52 While the DSR was drafted, GWEO efforts were paused. The DSR’s final report released in April 2023, concluded that “GWEO is central” to developing “long-range strike and other guided weapons,” which are needed “to hold an adversary at risk in Australia’s northern approaches.”53 At the same time, the DSR noted that GWEO had not produced a strategy, was insufficiently resourced and lacked dedicated senior leadership. It therefore recommended appointing a senior official to oversee and drive the entire enterprise. Air Marshall Leon Philipps was appointed the first Chief of GWEO shortly thereafter in May 2023.
Throughout 2023 however, GWEO failed to lay out a holistic plan for Australian production, even as the government continued to purchase additional foreign weapons through normal channels. For instance, in August 2023, Defence announced that the ADF would double its buy of the High Mobility Artillery Rocket Systems (HIMARS) from 20 to 42 launchers and would domestically manufacture its weapons, but failed to identify which of the several possible HIMARS weapons Australia would produce.54 Additionally, Defence announced that it was buying more than 200 Tomahawk land-attack (TLAM) cruise missiles for its Hobart destroyers and 60 Advanced Anti-Radiation Missile Extended Range (AARGM-ER) for its fighter aircraft.55
In 2024, there were a few small steps towards co-production of PGMs with the United States, but these tentative moves could easily be reversed and Defence has not articulated which weapons will be in what parts of GWEO domestic production and why it has selected these particular PGMs. In January 2024, the Albanese government finally awarded a contract to Lockheed Martin for domestic production of weapons in Australia, committing A$37.4 million to manufacture one tranche — consisting of about a dozen — GMLRS at the entirely new Orchard Hills facility in Western Sydney.56 For this initial batch, Australian workers will simply assemble 12 rockets from US-made components. This so-called “crawl, walk, run approach”57 is intended to enable the United States to transfer the GMLRS technologies to Australia and for Australian industry to lay the foundation for future large-scale production by obtaining the requisite manufacturing certifications and training the Australian workforce. Though an important first step, this tentative approach to GWEO is unlikely to deliver meaningful production at the speed of relevance for Australia’s strategic requirements. Additionally, Defence announced that it had committed to the co-development of PrSM Increments 3 and 4 with the United States, which secured Australia access to long-range missile programs that could be relevant for the defence of its northern approaches.58
The release of the 2024 National Defence Strategy and Integrated Investment Plan in April was another missed opportunity to articulate a plan for GWEO. The strategy stressed the importance of PGMs and allocated A$16-21 billion to GWEO over the next 10 years, but lacked specifics on what weapons would be purchased, domestically produced and sustained; what Australian industry would contribute; and when each of these steps would be completed.59 In sum, over 4 years, Defence made considerable progress towards acquiring advanced foreign-produced PGMs through typical processes, but it has only invested 4.5% of the A$810 million currently committed for GWEO and less than 1% of the A$21 billion planned over the next 10 years in the Integrated Investment Program.60 In terms of domestic production, Canberra will assemble about 12 short-range rockets by 2025 that, as will be discussed below, are not relevant for operations in the Indo-Pacific. Thus, much remains to be done to make GWEO a reality.
US munitions ups and downs
Although the Trump administration’s 2018 National Defense Strategy focused the US military on great power competition, it did not emphasise the procurement of the right PGMs to deter, and if necessary, defeat China. It was not until war broke out in Ukraine in 2022 that the Pentagon began to seriously expand its stockpiles of PGMs. US efforts to supply Ukraine with weapons to repel Russian aggression revealed existing stockpiles were too low to meet Ukrainian forces seemingly insatiable demand for artillery shells and PGMs, and that US defence industry was unable to surge. Large-scale modern wars have proven more intense and protracted than US military planners assumed. As of April 26, 2024, the United States has provided Ukrainian forces with more than 3,000,000 rounds of 155mm artillery shells, 2,000 Stinger man-portable air-defence missiles, 10,000 Javelin anti-tank missiles and 11,550 GMLRS.61 This is an enormous rate of munitions consumption with Ukrainians firing on average more than 400 GMLRS, 270 Javelins, 74 Stingers, and 111,111 155mm rounds a month. Moreover, these numbers only reflect what was available, not the amount deemed necessary or desirable. For instance, Ukrainian officials have claimed that they need 20,000 shells a day, although they have often only met a tenth of that number.62 Although these numbers are impressive, US industry has not been able to meet ongoing Ukrainian ammunition requirements, raising questions about its ability to build enough weapons to strengthen deterrence and meet future needs in the Indo-Pacific theatre.63
Several factors have contributed to the decline of US defence industry and the missiles and munitions sector in particular, since the end of the Cold War. As global tensions declined with the dissolution of the Soviet Union, the DoD increasingly emphasised efficiency and cost savings and therefore did not stockpile large numbers of expensive weapons that might not be needed. Because conflicts were expected to be short, surge capacity was not seen as important and the industrial base eliminated redundancy. The Pentagon assumed that the forces would fight with what they had on hand and that defence industry would have time to replenish stockpiles before another threat emerged.64 In practice however, this is not what happened: US forces have nearly exhausted stockpiles of key munitions during even short conflicts and industry has been called on to rapidly increase production.65
Overall, US PGM procurement has followed a cyclical pattern, increasing when US forces use weapons during a contingency and then just as rapidly declining once the operation ends.66 Moreover, orders for individual PGMs are volatile, with purchase volumes varying significantly from year to year.67 This unpredictability is due to the fact that the services tend to de-prioritise PGM purchases and defer acquisition in favour of resourcing large weapons platforms like ships, aircraft and tanks. In Pentagon budget cycles, munitions are seen as ‘the billpayer’ — an area that can easily be slashed to free up resources for other priorities with the assumption that buys will be made up in the future.68 As a result of the unreliability of its primary customer, the Pentagon, the US missiles and munitions industrial base struggles.
The US missiles and munitions industrial base is weak with only two prime contractors dominating the market, many chokepoints in the production process, many sole source suppliers, obsolescence problems and outdated manufacturing processes.
The fiscal year 2023 defence budget was a record year for conventional PGM procurement, but over the last 2 years there has been an overall decrease in spending on munitions. In addition, there have been plateauing or declining buys of some of the key weapons needed for the Indo-Pacific.69 Though foreign sales can theoretically help to smooth out the demand curve for PGMs, the US foreign military sales process suffers from “historical inefficiencies” that make it unpredictable.70 Sales of weapons to foreign countries must be approved on a case-by-case basis by the State Department and Congress and often take years to be finalised.71
Inconsistent demand simply makes missiles and munitions an unattractive market for prime contractors and sub-tier suppliers. Thus industry struggles to build and maintain stable and resilient supply chains and is disincentivised from investing in upgrading their manufacturing processes or expanding production lines.72 Consequently, the US missiles and munitions industrial base is weak with only 2 prime contractors dominating the market, many chokepoints in the production process, many sole source suppliers, obsolescence problems and outdated manufacturing processes.73 As a result of these limitations, weapons cannot rapidly be built even with a large influx of resources. The Ukraine supplemental appropriations have funded improvements to the industrial base and expanded the production of certain weapons, but these efforts are far too limited. The US missiles and munitions industrial base needs significant expansion after 3 decades of neglect if it is to meet the immediate demand of the wars in Europe and the Middle East, let alone if it is going to be able to support the Pentagon as it prepares for the ‘pacing challenge’ of China.
Cooperation is needed, but on which weapons specifically?
Both the US and Australian governments have realised the need to rapidly acquire more missiles to deter aggression in the Indo-Pacific and recognised that cooperation is necessary to make this a reality. Neither country can quickly produce enough missiles to meet its own needs, let alone their combined requirements, nor can they financially afford to go it alone.
Cooperating to develop and manufacture PGMs has benefits that go beyond the capability that is produced. Friend-shoring can help to eliminate dependencies on unreliable or unfriendly sources for critical materials and create trusted supply chains.74 For example, in 2022 the US Air Force stopped accepting new F-35 deliveries for fear that Chinese metals used in the jets’ engines were compromised.75 Moreover, if US and Australian forces employ a larger number of the same PGMs, they will enhance tactical interoperability, which in turn could create opportunities for sharing of weapons and weapons storage and sustainment facilities.76 Ukraine has driven home the value of true interchangeability — the highest form of tactical interoperability — where one nation’s weapons can be used by another country, especially for munitions. NATO standard 155mm artillery shells and commonly used weapons, such as the AIM-120 AMRAAM, have meant that many countries can work together to try to collectively meet Ukraine’s munitions requirements.77 To deter a war in the Indo-Pacific, having shared stockpiles of common weapons that are distributed throughout the theatre could be very helpful and reduce the logistical burdens on any one nation.78
What weapons should be included in GWEO from an alliance perspective?
Australia-US co-production and co-development are necessary but complicated. Ideally, the specific PGMs chosen for development in Australia should be munitions that meet both allies’ operational needs, but reconciling Washington and Canberra’s different requirements, constraints and strengths in this regard is not straightforward. Ideally, GWEO would include PGMs that both countries’ forces need in the Indo-Pacific, but it is unclear which weapons both countries agree best fit that bill. Moreover, other factors such as the global demand for a particular PGM and ways to improve the capacity and resiliency of combined supply chains for that PGM, need to be taken into consideration. If Australia does not carefully select the PGMs that it will produce, it risks establishing a manufacturing line at great cost, that is not sustainable and that stretches rather than strengthens existing supply chains.
US PGM requirements for the pacing challenge
To deter Chinese aggression against Taiwan or in the East and South China Seas, the United States should rebalance its PGM portfolio to include more maritime strike and air defence weapons with longer ranges.79 Wargames have shown that US forces would exhaust existing stockpiles of key PGMs within a week of high-intensity war with China over Taiwan.80 This is because the Pentagon has primarily invested in short-range land attack PGMs for decades of operations in the Middle East, where US forces have enjoyed near uncontested access to battlespaces. In the event of war against China, US forces need to be able to project power outside of the worst threat rings, which requires longer-range weapons.
Maritime strike missiles represent a particularly critical gap in the joint weapons portfolio, meaning that the Pentagon does not have many modern weapons designed to sink ships. US forces largely divested of these weapons after the Cold War. Even the US submarine fleet decided to rely on its existing inventory of heavyweight torpedoes and production stopped for several decades.81 The US Navy retained small numbers of Harpoons — a 1970s anti-ship cruise missile — but this weapon is relatively short-range and lacks the advanced capabilities needed to penetrate modern air defences. Given that stopping an invasion fleet is one of the core missions in a war to defend Taiwan from a Chinese invasion, US forces need an ability to sink ships from all domains. The Pentagon has begun to make progress buying long- and medium-range anti-ship cruise missiles and updated heavyweight torpedoes, but this positive momentum needs to be sustained over many years of consistent procurement across the joint force to build an inventory sufficient to deal with the Chinese threat.
Another area where the United States needs more investment is air defences, which are always in high demand. As discussed previously, the People’s Liberation Army Rocket Force has one of the largest ground-based missile forces in the world, including anti-ship ballistic missiles and China’s A2/AD complex can hold at risk US bases and naval forces out to the second island chain.82 Therefore, US bases need layered defences and ships also need air defence missiles, while aircraft need long-range air-to-air missiles.83 The United States has invested consistently in air defence weapons, but these have been depleted by operations. Moreover, US investments have centred on long-range ballistic missile defences rather than short-range air defences.84 After disestablishing its short-range air defence units, the Army is investing in ground-based defences against cruise missiles and drones, but it will need deep inventories of interceptors.
Australian requirements to defend its northern approaches
According to Australia’s 2024 NDS, the ADF must be prepared to deter aggression in Australia’s northern approaches. While the NDS does not specify the country, Canberra is likely focused on potential future Chinese coercion and grey-zone attacks — ambiguous or somewhat deniable threats or acts of aggression that do not cross the threshold of outright war — in its north.85 The Chinese Navy may begin patrolling these waters, which could potentially be assisted by access to a naval base in the South Pacific, for example in the Solomon Islands. Either way, the premise is that Chinese Naval out-of-area operations become more frequent and Beijing begins to use this capability as a coercive tool to advance its interests. To counter a hypothetical Chinese maritime threat to Australia’s north, the ADF primarily needs a mix of maritime strike, air defence and anti-radiation weapons. The ADF will want to retain some land attack PGMs in the event that foreign forces land on one of Australia’s many islands, but the overarching goal should be to prevent aggression in the first place, which is likely to emanate from PLA Navy (PLAN) ships.
The PLAN is slowly growing more comfortable with blue water operations farther from the first island chain, demonstrated by a growing tempo of maritime surveillance operations near Australia.86 China has the largest navy in the world with more than 370 ships, including 3 aircraft carriers and numerous amphibious ships and its fleet is still growing. It is the destroyers and cruisers that might escort these other warships, however, that potentially pose the greatest threat to Australia. The PLAN has built a large fleet of advanced missile destroyers and cruisers. The Type 052-D Luyang III destroyers and Type 055 Renhai cruisers have vertical launch systems for air defence, land attack and anti-ship cruise missiles (ASCM) and can carry 64 and 112 missiles respectively.87
Because Chinese intermediate range and intercontinental ballistic missiles (which can be conventionally armed) can now range northern Australia from the Chinese mainland, theatre air and missile defences are needed.
To deter Chinese naval vessels from aggression against Australia, the ADF will need surveillance capabilities to detect ships and obtain targeting tracks, in addition to a range of anti-ship weapons to hold them at risk. In general, it would be better for Australian ships to have long-range weapons that allow them to stay outside of range of the Chinese Navy’s YJ-18 ASCMs. Australian air forces will also want standoff maritime strike weapons because they will not want to enter the engagement range of the ships’ air defence missiles. This is particularly true for non-stealthy platforms like F/A-18 Super Hornets and P-8 maritime patrol aircraft. Even the F-35, given that it lacks all-aspect stealth, could benefit from a medium-range weapon that provides it with some standoff strike capability. Ground-launched missiles positioned in northern Australia can also provide a sea denial capability. These missiles must be able to strike distant targets well beyond Australia’s coastline, at least 500 and ideally 1,000 kilometres out, so that they can reach most parts of the of the Timor and Coral Seas.
The ADF must also protect its northern bases from Chinese ballistic missiles, PLAN ships that carry CJ-10 land attack cruise missiles and fighters operating on Chinese aircraft carriers that could attack northern Australia. To counter these threats, Australia needs layered air defences that include fighter aircraft and long- and short-range surface-to-air missiles capable of intercepting ballistic missiles, cruise missiles and aircraft. Currently, Australia has no ground-based ballistic missile defences, which is a reflection of its relative distance from potential threats. Because Chinese intermediate range and intercontinental ballistic missiles (which can be conventionally armed) can now range northern Australia from the Chinese mainland, theatre air and missile defences are needed.88 Additionally, the ADF needs modern mobile point defences, such as NASAMS or IRIS-T, to protect against cruise missiles and drones.
Table 1 shows the PGMs currently in the ADF’s inventory in bold; PGMs that the services are interested in in italics; and those it is in the process of acquiring in normal text. The PGMs are broken down by their range, mission and launch modality.89 Short-range weapons can travel less than 50 kilometres, while medium-range can travel 50 to 350 kilometres, and long-range weapons fly more than 350 kilometres.
Table 1. Australia’s guided weapons portfolio
| Air-launched | Ground-launched | Surface (ship)-launched | Undersea-launched | ||
| Air defence | Long | SM-6 | |||
| Medium | AIM-120B/C-5/C-7/D
AMRAAM |
AIM-120C-7 AMRAAM (launched with NASAMS) | SM-2 Block IIIB RIM-162A ESSM | ||
| Short | AIM-9X Sidewinder II AIM-132 ASRAAMM Paveway II/IV |
RBS 70 | |||
| Antiship | Long | AGM-158C LRASM | PrSM Inc 2 | ||
| Medium | AGM-84A Harpoon JSM |
RGM-84L Harpoon Block II
NSM |
UGM-84C Harpoon Block 1B |
||
| Short | Mk 54 | MU90 | Mk 48 ADCAP mod 7 |
||
| Land attack | Long | AGM-158A JASSM AGM-158B/AGM-158B-2 JASSM-ER |
PrSM Inc 3&4 | RGM-109E Tomahawk |
|
| Medium | AGM-154C JSOW AGM-88E AARGM AARGM-ER JDAM-ER SDB-I SDB-II HARM |
GMLRS ATACMS |
|||
| Short | AGM 114 Hellfire II JDAM GBU-54 Laser JDAM APKWS |
FGM-148 Javelin XM-182 Block Ia-1 Excalibur |
Note: Long-range weapons are those with ranges of over 350 kilometres; medium-range weapons are those with ranges between 50 and 350 kilometres; and short-range weapons are those with ranges of less than 50 kilometres.
Bold text indicates those weapons that are confirmed to have been procured by Australia; italic text indicates those in which Australia has demonstrated interest, but there is no confirmed order; unformatted text indicates where weapons have been ordered but delivery has not been confirmed.
Shaded cells indicate current Australian Defence Force capability gaps that are important for countering China and where additional investment is needed.
Sources: US Defense Security Cooperation Agency 2008-2024; Australian Department of Defence 2021-2024; Australian Strategic Policy Institute; Center for Strategic and International Studies.90
The table helps to identify current gaps, which are shaded in grey, where the ADF lacks a fielded capability or only has an outdated weapon.91 It shows that the ADF has invested heavily in land attack weapons, but mainly short- and medium-ranged ones, and is only now in the process of acquiring long-range air-, ground-, and sea-launched surface strike weapons with JASSM-ER, PrSM Increments 3 and 4, and Tomahawks. The area with the least amount of current capability — maritime strike — is also one of the most critical for defending Australia’s northern approaches. The ADF currently only has the venerable Harpoon ASCM and is only now acquiring the medium-range NSM and its air-launched variant — the Joint Strike Missile (JSM), which can be carried internally by the F-35. Additionally, the Army is acquiring PrSM Increment 2 and the Royal Australian Air Force (is seeking a sophisticated long-range anti-ship cruise missile (LRASM). Australian submarines do have heavyweight torpedoes, but they likely would not operate in the shallow waters of Australia’s northern approaches. Moreover, plans to outfit the Collins class submarines with Tomahawk cruise missiles were abandoned in the wake of the AUKUS submarine deal.92 Finally, additional investment in air defences is needed. The Royal Australian Navy has a strong medium-range air defence capability with the RIM-162 Evolved SeaSparrow Missile (ESSM) and SM-2 missiles, while the Army and Air Force have ground and air launched AMRAAMs. Yet, Australian forces currently lack long-range air defences, and are only planning to acquire the SM-6 missile for their destroyers.
The above discussion makes it clear that there is considerable overlap between US and Australian PGM requirements for their priority challenges, which is not surprising given that Washington and Canberra are both focused on denying Chinese aggression. Both nations need more medium- and long-range maritime strike weapons as well as a layered system of air defence missiles. In addition to their deterrence mission needs, the allies should apply additional pragmatic and alliance filters to select the PGMs that will be produced in Australia. It is important to note that Australia is never going to be able to produce all of the types of weapons that its forces need to protect its northern approaches. Therefore, choosing which weapons it produces and which ones it buys from the United States or other countries is an important and underappreciated aspect of GWEO that needs to be worked out.
Additional considerations for GWEO production and sustainment
Beyond identifying the weapons that Australian and US forces could use in the Indo-Pacific, there are other factors that should be weighed when deciding which weapons to manufacture in Australia and how to sustain them. Australia should factor into its decision the size of the global marketplace for any weapon that it produces, as the Pentagon’s procurement of PGMs is unreliable and the demand from the ADF alone will not support a continuous build. Overall, Australia will be subject to US export controls and will need US government approval to sell US-origin weapons, which could limit opportunities to sell excess capacity into the global market. Washington should allow Canberra to sell the PGMs that are manufactured in Australia if it wants to create sustainable Australian production lines. But more sophisticated and longer-range weapons are expensive, which means that fewer will be purchased.93 Even the United States with its large defence budget cannot afford to purchase thousands or tens of thousands of missiles that cost multiple million dollars each. Moreover, the United States is more resistant to sharing advanced technology except with very trusted allies, which will further constrain the number of potential buyers. These factors combined will significantly limit the possibilities for selling higher-end US-made missiles. If there are fewer potential buyers for a weapon, the lines will be more susceptible to disruptions in demand, rising costs and extended delivery timelines.
Washington should allow Canberra to sell the PGMs that are manufactured in Australia if it wants to create sustainable Australian production lines.
In general, longer-range weapons and newer ones with more sophisticated seekers or that are manoeuvrable are likely to have a smaller potential pool of buyers. In contrast, there is already a larger market for mature PGMs, like GMLRS, AIM-9, earlier variants of AMRAAM, and SM-2. From the perspective of the international demand for a weapon and its releasability, producing GMLRS in Australia makes sense. There is a large existing market and the weapon is currently in high demand.94 GMLRS is also a lower cost, higher volume PGM, which should help to keep production lines running. Although standard missile air defence interceptors are considerably more sophisticated than GMLRS, something like the SM-2, which is more mature and has a modest sized international market, may be good for production in Australia.95 GMLRS, however, would not help the ADF to support the strategy of denial, while SM-2 could provide an important air defence capability to defend against Chinese missiles.
As Australia moves into the walk and run phases of GWEO, there appears to be an assumption that it will manufacture more sophisticated weapons, like PrSM or hypersonic missiles. While the ADF could certainly use these capabilities, their high cost is likely to keep inventories small. Australia and the United States should consider whether the demand will keep Australian production lines hot over the long run. It may be better for Australia and the United States to pursue co-development of these advanced weapons so that Canberra gets preferential access to them but opt not to build them in Australia.
Finally, as Australia considers which weapons to manufacture in GWEO, it should think about how it can strengthen the combined Australia-US supply chains and alleviate existing chokepoints. To strengthen supply chains, ideally Australia should seek to manufacture sub-components and provide materials that are in short supply. However, the devil is in the details, and the Pentagon has admitted that it does not have great visibility into its defence supply chains.96 Thus, providing concrete recommendations on specific supply chain inputs is difficult. Generally, however, the allies should conduct an analysis of existing supply chains and look to find ways to leverage Australia’s strengths and compensate for existing US industry weaknesses. For example, US industry is not building solid rocket motors fast enough, and they are a critical subcomponent used in most PGMs.97 Thus, if Australia were to produce solid rocket motors it could add redundancy and resiliency to existing supply chains and would help to accelerate PGM production. Moreover, a solid rocket motor production line could be established with enough flexibility to build a variety of different rocket motors or generally the same class (e.g. tactical missiles). A flexible rocket motor production capability would enable an Australian company to build rocket motors for multiple different missiles, which would increase the likelihood that it has a steady stream of business.
In addition to the PGMs that Australia should buy or build, it is important to also discuss sustainment of PGMs, which is often overlooked. Currently, most US PGMs in the ADF’s inventory must be sent back to the United States for repair and maintenance. Transiting back and forth by sea to join the often long queue in the United States for repair limits their availability and hurts the ADF’s readiness. If Australia were to obtain the PGM testing and repair equipment, it could not only maintain its own weapons, but also undertake repairs for US PGMs. Since logistics are expected to be heavily contested during a conflict, having maintenance facilities closer to the fight would improve the US’ ability to stay in and ultimately prevail in a war with China.98 In recognition of this fact, the Pentagon’s Regional Sustainment Framework aims to expand shared sustainment facilities with allies, but is initially focused on large platforms like ships and aircraft.99 It should be expanded however to include munitions. Working with Australia through GWEO could be one important way to realise this goal.
Conclusion and recommendations
Missiles for strike and defence are central to modern warfare. Both the United States and Australia need to rapidly expand their inventories of PGMs, especially maritime strike and air defence missiles, to strengthen deterrence in the Indo-Pacific. Beyond the immediate goal of denying a Chinese military victory, both nations also need to be prepared for the eventuality that a war with China would likely be protracted and that deep inventories of offensive and defensive missiles are needed.100 Working together through GWEO can help meet these objectives, and simultaneously improve interoperability and create opportunities for deeper logistics and sustainment cooperation. Yet the unhurried pace of GWEO to date does not match the urgency of the threat environment. Canberra and Washington need to accelerate GWEO delivery timelines. Doing so would send a strong signal to China that Australia and the United States are resolved to oppose aggression, which in turn should make it less likely.
Canberra and Washington need to accelerate GWEO delivery timelines. Doing so would send a strong signal to China that Australia and the United States are resolved to oppose aggression, which in turn should make it less likely.
It is important however, to think strategically and to differentiate the 4 components of GWEO: co-development, foreign military sales, co-production and sustainment. All aspects of GWEO are necessary to strengthen combined supply chains and deter aggression, but Canberra and Washington must smartly choose which weapons fall into which categories so that the enterprise is sustainable. The ADF needs advanced missiles to defend its northern territories and it aspires to develop a sovereign ability to manufacture and sustain PGMs, while also strengthening trusted supply chains with the United States. Australia however, must approach these issues pragmatically and realise that it is not likely affordable for it to produce many of the advanced PGMs it desires. GWEO should mature, but it will not likely be a linear progression resulting in Australian production of the most sophisticated of missiles. That does not mean that it cannot support the acquisition and sustainment of advanced PGMs. Establishing production lines in Australia that only yield a few years’ orders of missiles before being disestablished would be an enormous expense and would not provide Australia with a long-term sovereign production capability that it desires. It would be wiser for Australia to co-develop, purchase and then acquire an ability to sustain advanced missiles that will be made in relatively small numbers and are more susceptible to volatile market demands and to also produce PGMs that have a larger potential market and will be more likely to be insulated from volatile purchasing patterns. This report yields the following recommendations for Australian-US cooperation on GWEO:
- Australia should focus its co-production of PGMs on weapons that have a large international market so that its industry can maintain a continuous build and keep production lines hot, while the United States should allow Canberra to export the American weapons that it domestically manufactures. To be sustainable, Australian manufacturers must concentrate production efforts on weapons with large potential export markets to capitalise on economies of scale. Thus GWEO cannot focus myopically on the ADF’s requirements. Through GWEO, Washington and Canberra can help to arm European allies and partners. GMLRS and 155mm shells are not capabilities that are useful for American or Australian forces to deter China. They are however in great demand across the globe and co-production of these weapons can help to meet this demand and establish a sustainable munitions industry in Australia. Going beyond short-range ground attack weapons, Australia may be well positioned to co-produce some short-range air defence weapons that would be useful in Europe and the Indo-Pacific. Additionally, if Australian industry were to contribute key subcomponents such as solid rocket motors, it could co-develop a range of tactical missiles in the future.
- Australia should focus on co-developing and purchasing sophisticated and long-range PGMs — which are many of the maritime strike and air defence weapons that are needed to deter China — from the United States. Domestic production is desirable because it creates jobs and guarantees access to the weapons. However, it will take longer to establish Australian production lines; each item will cost more; and as the ADF’s requirements are small relative to global demand, it would not allow Australia to capitalise on economies of scale. Thus, seeking to co-produce advanced long-range weapons, which will be acquired in relatively small numbers, is a recipe for inefficiency, high costs and short-lived production lines. As detailed above, Australia has purchased many sophisticated missiles from the United States in the last few years. Going forward it should continue this approach rather than trying to co-produce future advanced weapons, like PrSM increments 3 and 4, SM-6, or hypersonics.
- Australian companies should seek to produce sub-components that are currently in short supply in the United States to strengthen combined supply chains. Solid rocket motors stand out as an obvious area where Australian industry could potentially make an important contribution. Moreover, developing a production facility that could build a certain class of solid rocket motors could be used to build rocket motors for multiple different PGMs. The Pentagon should share with Canberra other chokepoints in its PGM supply chains and Australia should look to see where its industry could supplement US production of these critical components.
- The United States should provide Australia with the requisite technology and information to sustain PGMs needed to deter China and consider integrating PGM sustainment and maintenance into Australia-US force posture initiatives. Co-sustainment of PGMs could potentially be a big force multiplier for both the United States and Australia, increasing the number of PGMs that are ready and available for operations at any given time. Thus, the United States should provide Australia with the technology needed to sustain key PGMs that both countries would need for Indo-Pacific threats and Australia should look to share this capability with US forces in the theatre. Additionally, developing shared stockpiles of key PGMs in Australia — especially maritime strike and air defence weapons — would be beneficial to both nations.
- The United States should prioritise foreign military sales to nations that advance its defence strategy, including Australia. In particular, the United States should expedite the sale of advanced maritime strike and air defence PGMs to Australia. Currently, the US foreign military sales process is based on a first-come-first-served basis. Though fair, this approach is not sensible given the urgency of countering growing threats. Countries that are helping to deal with priority threats as specified in the NDS should go to the head of the line.
The production of this report was supported by Thales, Raytheon and Lockheed Martin as part of a research partnership.