Northrop Grumman CEO Kathy Warden Talks Golden Dome Project

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news.

**Kailey Leinz** (0:07)
Kathy, thank you so much for your time. It's an incredibly interesting time, I'm sure, to be running a Defense Prime.
And I wonder how you're thinking, not just about Northrop Grumman's wartime footing now, but how the current conflict we are embroiled in in the Middle East has made you consider what wartime footing of the future needs to look like.

**Kathy Warden** (0:26)
Well, first of all, thank you for having me. It's great to be with you. And it is a dynamic time in the industry that Northrop Grumman operates in. We are certainly on a wartime footing because we've been quite active supporting the administration in operations around the globe, as you know, and at the same time working to build the capability and capacity that we need for the future, both as a nation and for our allies.
So that work for us has meant expanding across much of our portfolio in the ability to build faster and building plants that allow us to have the capacity so that we can accelerate the rate at which we are building product and delivering them to the US government.

**Kailey Leinz** (1:12)
Well, and on that exact point, obviously, with the depletions we have seen in the Middle East, this administration wants to be rebuilding the initiative specifically, they want them ASAP. And I wonder how prepared the defense industrial base and the supply chain is to meet that moment now, or if there are areas in which more serious investment is crucially needed.

**Kathy Warden** (1:32)
There's certainly the need for more investment, but I will say that we have been investing. When you look at the work that we've been doing in our company, we didn't start this last year, even a couple of years ago.
Certainly, as we saw increases in national security spending, both by the US and our partners around the globe, we started to plan for and build capacity for that moment. We just in the last two years alone have added two million more square feet of manufacturing space. We've opened those facilities they are producing today. I'll be at a facility tomorrow walking the floor, and it is a buzz with activity in our manufacturing plants today. So that work has been under way and is delivering results today. With that said, there is more capacity expansion planned because to your point, the administration sees the need for far more, sometimes two times, four times, the amount of capacity that we have in place at this moment.

**Kailey Leinz** (2:32)
Well, and when you consider what they're trying to ramp up, things like that and Patriot systems, because we've been using them for air defenses in the Middle East, how much of that is about expanding factory footprint versus being reliant on specific components like solid rocket motors being able to be ramped up quickly?

**Kathy Warden** (2:49)
We build solid rocket motors, as you know, and we have seen that that area of the supply chain had limitations, because in most cases, each weapon only had one company qualified to produce.
When you have an expectation to very dramatically increase capacity, one company trying to do that across multiple weapons systems obviously has limitations. So the government has sought more sources, and for tactical missiles, Northrop was not a primary provider, and we're getting the opportunity now to become a second source supplier for solid rocket motors in that area. We had focused more on strategic missiles, I think, bigger solid rocket motors, and now we are getting qualified to produce some of the smaller ones for products like PAC-3.

**Kailey Leinz** (3:40)
Do you see more room to grow in the munitions space specifically, since it seems that that is an area of acute focus for the Pentagon right now?

**Kathy Warden** (3:48)
Yes, we believe that's going to be one of the fastest growing parts of our market, if not the fastest growing market, and we are positioned with capacity. I mentioned that 2 million square feet of manufacturing space.
Some of that is dedicated to solid rocket motor production, and we had a head start there. We started that investment more than three years ago. So we've already doubled capacity. We have another plant that we are building today that will take capacity to about 3x what it was when we started this expansion. So that positions us as we are signing these new contracts and becoming qualified to be a supplier, to be ready to go now.

**Kailey Leinz** (4:26)
Well, I want to go back to your point about how sometimes there's one supplier of one key component. Is that the biggest challenge in scaling up so much of this specific bottlenecks in the supply chain such as that and do you feel like you have enough visibility into the sub-tier parts of the supply chain?