The Quiet Bottleneck in U.S. Defense: Energetics
Defense discussions tend to focus on autonomy, AI, and drone swarms. Yet every missile, artillery shell, and precision-guided munition ultimately depends on something more basic: energetics. Explosives and propellants are the chemical foundation of modern warfare. In the United States, that foundation remains concentrated, aging, and difficult to scale.
This week, Texas-based Critical Materials Group (CMG) emerged from stealth with a focused objective: scale production of military-grade energetics such as C-4 using automated manufacturing. The company’s announcement was low profile. The sector it touches is not.
Energetics production in the United States is anchored in a small number of government-owned, contractor-operated facilities, many built during the Second World War.
Holston Army Ammunition Plant in Tennessee, operated by BAE Systems, is the only domestic source of RDX and HMX. These high explosives are embedded in nearly every missile, torpedo, and precision-guided munition. A prolonged disruption there would ripple across multiple weapons programs simultaneously.
Radford Army Ammunition Plant in Virginia, also operated by BAE, produces solvent-based propellants for artillery and rocket systems. Its geographic proximity to Holston concentrates risk within a single region.
Lake City Army Ammunition Plant in Missouri, operated by Northrop Grumman, produces more than a billion rounds of small-arms ammunition annually and anchors another segment of the energetics base.
This concentration has already proven fragile. In 2021, an explosion at the nation’s only domestic black powder facility halted production for nearly two years. Stockpiles were drawn down and deliveries delayed. There was no immediate backup.
When policymakers speak about scaling artillery shells or increasing missile output, the constraint is often assumed to be machining or final assembly. In practice, energetic fill capacity frequently sits upstream as a gating factor.
The vulnerability extends beyond physical plants. Key precursor chemicals, including inputs for nitrocellulose and other propellants, depend on global supply chains. Some materials originate in regions that would be central in any major power conflict. Even when production occurs domestically, upstream inputs may travel long distances before reaching U.S. facilities.
For decades, the system was optimized for cost efficiency rather than resilience. It was not designed for sustained high-tempo conflict. War games modeling a major contingency routinely conclude that certain U.S. precision munition inventories could be depleted quickly. Expanding output after the fact is not straightforward when the chemical base is narrow and heavily regulated.
Technologically, much of the sector still relies on batch processing methods developed generations ago. These systems are labor intensive and safety sensitive. They can produce high-quality material, but scaling them rapidly is difficult. Facilities such as Radford have required extensive modernization simply to replace aging equipment prone to outages.
At the same time, competitors have invested in higher-performance energetic compounds. Materials such as CL-20, long known in research circles, offer greater energy density than legacy RDX or HMX. The United States is now running pilot efforts to integrate such materials into selected systems and evaluate cost and scalability.
Congress has begun to treat energetics as a strategic domain rather than a narrow technical issue. The FY24 National Defense Authorization Act established the Joint Energetics Transition Office to coordinate research, development, and production planning across the services. Subsequent legislation has tightened reporting requirements on foreign sourcing and expanded authorities to mitigate supply chain risk.
The Department of Defense is funding modernization efforts that replace traditional batch processing with continuous-flow systems designed to increase safety and throughput. Additive manufacturing is also entering the field. Companies such as Firehawk Aerospace are applying 3D printing to solid rocket propellants in an effort to compress production timelines and enable more distributed manufacturing models.
It is within this broader shift that CMG’s emergence becomes relevant. Led by Kevin Capozzoli, a former Army Special Forces veteran and former Mach Industries president, the company is attempting to modernize C-4 production through semi-automated processes designed to evolve toward full automation. Automation in energetics manufacturing reduces worker exposure, improves consistency, and increases throughput without proportionally increasing safety risk. More importantly, it opens the possibility of adding incremental capacity outside the legacy facilities that currently dominate the landscape.
Energetics is not an easy sector for new entrants. Compliance burdens are high. Environmental permitting is complex. Margins are thin. Industry consolidation has limited competitive pressure, and long-term government demand signals have historically been inconsistent. For that reason, the significance of companies like CMG lies less in disruption and more in supplementation. Additional, modernized capacity reduces concentration risk and introduces updated production architectures into a sector that has been slow to evolve.
Modernizing energetics will not, by itself, solve the broader munitions scaling challenge. Metal casings, electronics, workforce constraints, environmental approvals, and long lead-time equipment all shape output. The industrial base is a system, not a single chokepoint.
Energetics matters because it sits early in that system and because its capacity remains unusually concentrated. When disruption occurs at that level, effects propagate across multiple weapon categories.
The practical test over the next decade is straightforward: can the United States steadily add safer, more distributed, and technologically current energetic production lines while securing upstream chemical inputs? If it can, resilience improves incrementally. If it cannot, ambitions to scale advanced weapons will continue to encounter limits rooted not in design, but in industrial chemistry.
The energetics concentration risk is the kind of structural vulnerability that tends to get priced only after a disruption — the 2021 DNAN plant explosion you mention is exactly the type of event that should have repriced defense supply chain risk but largely didn't. From an equity standpoint, the more interesting question is whether the modernization wave benefits the legacy primes (BAE, Northrop, which operate the existing GOCOs) or creates an opening for new entrants like CMG and Firehawk to capture margin on the efficiency gap. The software and autonomy layer usually gets the investor spotlight, but the physical production layer — energetics, propellants, metal cases — is where the real bottleneck lives and where repricing tends to be most durable. Do you see Congressional funding (the Joint Energetics Transition Office in the NDAA) as sufficient to close the gap, or is this structurally undercapitalized relative to the actual munitions demand signal from Ukraine and Indo-Pacific planning?