From Factory Floor to Frontline: Four Defense Industry Shifts to Watch in 2026

Traditional assumptions of warfare continue to be shattered and rewritten.

The defense industry in 2026 will need to keep pace.

From printing parts on the frontline to counter drone proliferation and the second wave of AI moving from battlefield to service hangar, industry must prepare for a number of key changes.

Prediction 1: Taking production lines to the frontline to reduce supply chain threats and increase force efficiency and resilience

Recently, the US Secretary of the Army, Dan Driscoll, spoke on the Army’s ability to manufacture better than the vendor. He used the example of UH-60 Black Hawk’s external fuel tank and a tiny Black Hawk screen control knob and said, “The parts could be 3D-printed at higher quality for about $3,000 and $60, respectively, but cost $14,000 and $47,000 for full assembly replacements from the manufacturer.”

3D printing technology—enabled by advances in digital engineering—is pushing the production line closer to the frontline. Already, as part of the U.S. Department of War’s (DoW) FY2026 budget, $3.3 billion has been allocated to additive manufacturing projects. By pushing the production of replacement parts closer to the point of use, military forces can reduce susceptibility to lengthy supply lines, repair equipment faster, and build resilience into global supply chains. This is especially critical for theaters of conflict burdened by a lack of transportation infrastructure or extreme distances.

In another example, the U.S. Navy printed a replacement pump for one of its Arleigh Burke-class destroyers, reducing the time to produce the part by 80%—a significant improvement over traditional casting processes. An additional point—it was printed in Spain—allowing the ship to continue its future deployment, rather than sitting at port waiting for a replacement.

These early adopters of expeditionary printing have been the services themselves, but the defense industrial base (DIB) has taken notice of the speed, innovation, and resilience this move brings to military forces. Undoubtedly, expeditionary manufacturing for repair and sustainment will spread and become a staple of the global industrial base.

None of this happens, however, without the digital thread—crucial for the transfer of design files to remote 3D printing locations. The importance of digital engineering has already been recognized by the Department of Defense Instruction (DoDI) 5000.97, which mandates that all defense capabilities are set up for digital engineering.

Prediction 2: Commercial manufacturers are ready and waiting in the wings for times of conflict

Ukraine’s artillery consumption outstripped NATO’s production capacity within months. For decades, military planners assumed that stockpiles and well-developed supply lines could sufficiently resupply military forces in conflict long enough for the industrial base to ramp up production for whatever was needed. Regional conflict in Eastern Europe proved this assumption to be breathtakingly wrong. It wasn’t just that the DIB was unable to respond to demand in the field—but any belief that stockpiles provided a modicum of deterrence vanished.

Relying on larger stockpiles isn’t the answer. The kill chain must be extended from the frontline all the way back to the factory floor. But the DIB can’t afford to simply maintain idle production lines in factories waiting for conflict. Instead, in 2026, we will see increased reindustrialization of the manufacturing base, with defense manufacturers commercializing and commercial manufacturers adding defense manufacturing capabilities. This allows for a defense capacity that can be rapidly scaled up in times of conflict. Commercial companies have noticed the opportunity—positioning themselves as viable options for defense contracts should the need arise.

But it’s not as simple as flipping a switch and making jet engines. Defense manufacturing requires extremely diverse types of manufacturing. Mixed-mode capabilities allow manufacturers to produce both high-volume, standard components as well as custom, low-value items needed for defense applications within a single supply chain. Leveraging a business system that enables project, discrete, and process manufacturing in one environment is critical to build diversity and resilience into production.

As the UK’s Finance Minister, Rachel Reeves recently said about investment into the DIB, “This additional investment is not just about increasing our national security but increasing our economic security, too.”

Prediction 3: The fightback against the drone epidemic is underway

The last two years have seen an explosion of autonomous and first-person view (FPV) drones proliferating on the battlefield. Relatively low-cost solutions have proven capable of delivering disproportionate effects, making this tech du jour a weapon of choice in Ukraine. The defense industry and governments alike have taken notice. The UK Ministry of Defence aims to deliver 100,000 drones to Ukraine by the end of 2025, and the U.S. Secretary of War stated that “Drones are the biggest battlefield innovation in a generation.” The booming drone gold rush is exacerbated by the concept that drones are “bullets, not planes,” meaning that small, cheap drone swarms have become a real threat to majestic, heavy-duty assets.

With the backdrop of the relative effectiveness of drone warfare, the attention of the defense industry and governments is turning to counter-autonomous drone tech. For fiscal year 2026, the US DoW budget requested over $3 billion just for counter-drone capabilities alone. These capabilities come in the form of small handheld systems such as the DroneGun Mk4, built for rapid response to neutralize individual targets, or large vehicle-mounted Radiofrequency Directed Energy Weapons currently in testing by the British military.

As military forces experiment with multiple applications to respond to the emergence of autonomous drones, the defense industry is innovating in parallel to develop a capability that meets a new set of emerging diverse requirements. The winners will need to scale quickly to deliver tech that was essentially non-existent a mere five years ago.

Prediction 4: Industrial AI diffuses from the battlefield to maintenance bays and sustainment projects

In 1962, Everett Rogers argued that technology doesn’t spread in a straight line, but rather in waves. Early adoption of AI on modern battlefields due to an existential threat quickly validated its value. Target recognition, analysis of volumes of intelligence, and decision support schema have been employed successfully and, in many cases, at scale. In a devastating strike against the strategic Russian bomber fleet dubbed Operation Spiderweb, Ukraine employed AI to find, target, and strike 41 aircraft.

But the second wave of AI in defense is upon us and will not take place at the front, it will take place in shipyards, hangars, and maintenance bays. As military commanders begin to trust AI as a technology, they will demand its application elsewhere—and there are few areas as rife for adoption as in maintenance and sustainment. Fleet and field commanders don’t want to spend their time thinking about whether their assets will be ready—they simply want them fully mission capable to employ at a time and place of their choosing.

While some programs have leveraged AI behind the scenes for years, such as the US Air Force’s Conditions-Based Maintenance Plus Program Office, battlefield successes will accelerate the second wave. For decades, large assets such as ships and aircraft have been placed on complex schedules to be taken out of service to inspect time interval-dependent components, or to replace parts to stave off unplanned downtime. AI completely upends this system by employing predictive algorithms that will predict failure, recommend maintenance, and optimize downtime.

Victory will still depend on the frontline, but readiness will be won on the flightline.

Mission briefing understood—2026 is ripping up the defense rulebook

With the continuation of global and regional conflict, the defense industry will remain at the forefront of adopting new strategies, technologies, and assets in 2026. Supply lines will be bolstered by expeditionary manufacturing and the reindustrialization of the manufacturing base, while autonomous drone combat will meet its match as counter-drone technologies enter the frontline. And, AI will become the difference between mission readiness success and failure, as it diffuses from the battlefield and into maintenance facilities.

Chris Morton is a defense industry veteran and Global Director of Aerospace and Defense at IFS.