Defense industry must embrace speed and innovation, Austin says

The threat landscape facing the U.S. is rapidly evolving and the defense industry needs to change to keep pace.

Speaking at the annual Raymond James Defense and Government investor conference Thursday, former Defense Secretary Lloyd Austin shared his views on the need for change in the defense industrial base. He drew on lessons from Ukraine, the Middle East and America’s strategic rivalry with China.

Austin served as President Biden’s defense secretary from January 2021 to January 2025, the longest tenure for a modern defense secretary. He also is a retired four-star general and served as commander of U.S. Central Command in his last posting.

Russian President Vladimir Putin thought it would be a quick war when he ordered the invasion of Ukraine, but the conflict continues on three years. Austin credits that in part to a 50-country coalition the U.S. formed to support Ukraine, as well as Ukraine’s ability to adapt and improvise.

Ukrainian forces can now modify IT-based platforms like drones in 15-to-20 days. As Russia has adapted to drone attacks, Ukraine has been able to alter characteristics in less than three weeks.

“This was unthinkable coming into this conflict,” Austin said.

Austin said this represents a fundamental shift in military operations, where the ability to iterate quicky may matter more than initial technological superiority.

 The Defense Department and its traditional industrial base need to change their collective approach in order to build on the speed and adaptability highlighted in Ukraine, he said.

“We have to become more comfortable with supporting those mid-level companies and smaller companies that have great ideas and great technology that can be used in today’s challenges,” Austin said.

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Switchblade drones produced by AeroVironment were an example he cited.

“No one was thinking about Switchblades before the Ukraine conflict broke out,” Austin said. “We have to make sure we can enable those young entrepreneurs that have great ideas, great technology and help them scale that technology so they can make a difference.”

Ukraine’s use of drones has denied Russia air superiority for over three years, he added.

The lesson there? Small countries no longer need massive traditional air forces to contest the skies. Mass production of low-cost drones can achieve what expensive fighter jets once monopolized.

"In the old days, if you were a small country, you didn't have a big air force. There's no way you were going to ever gain air superiority," Austin said. "In this day and age, you can gain air superiority by just putting up enough UAVs and being able to produce those UAVs at a rapid pace."

This shift toward "attritable" systems — platforms cheap enough to lose — represents a philosophical change in military thinking.

Austin highlighted the Air Force's Trusted Wingman program, where a single pilot controls multiple unmanned vehicles performing tasks alongside manned aircraft like F-16s and F-35s.

"We know that we're going to lose many of those, but it doesn't matter. It doesn't cost a lot to produce those," he said. "We can present more dilemmas for our adversaries by doing things like that."

But the Ukraine conflict also uncovered weaknesses in the coalition, which included NATO countries.

“We’ve talked about interoperability day in and day out,” he said. “But what we found is that we weren’t really interoperable.”

Munitions made by one country did not work in the weapons made by another country, he said.

That was not a problem with U.S. support for Israel as it responded to the Hamas attack and launched its offensive into Gaza, Austin said.

“We were able to move quickly because most everything we have, we could share with Israel. We were interoperable in word and fact,” he said. “There have been a lot of great lessons there.”

The industrial base needs to adapt if it wants to apply the interoperability lessons from Ukraine and Israel as the U.S. pivots to meet the challenge of China, Austin said.

America's defense industrial base isn't structured for the conflicts emerging today, he added.

"Some of the weapons and munitions that we use take two years to fabricate," Austin noted. "If you get in a high-end fight, your magazine can't possibly be deep enough to sustain that fight for a long period of time unless we have additional capacity."

He advocated for greater automation of production lines, co-production agreements with allies, and the ability to rapidly scale manufacturing when needed.

The AUKUS security partnership with Australia and the U.K. to build submarines is a prime example.

“China is very worried about this, and they should be,” he said. “This is a generational capability, and it is probably one of the best investments that we’ve ever made.”

The U.S. has also increased defense investments in the Philippines and Japan.

At the same time, European countries are increasing their defense spending to over 3% of their gross domestic product These moves should create opportunities for the U.S. defense industrial base.

“We should be looking to co-produce, do joint buys whenever possible,” Austin said. “Those things help increase the depth of the magazine that we’re concerned about.”

A challenge, however, is the procurement system that is just too slow.

“It doesn’t serve us well,” Austin said..

He cautioned against becoming like China or Russia and to lean into what has made America great:

"Our tremendous entrepreneurs, our ability to innovate, our ability to bring ideas together.”