Washington is effectively investing billions of dollars in a "necessary" outcome of recent wars: it is better to have the world's most sophisticated missiles, if they can't be produced quickly enough to match the rate at which modern wars destroy them.

The agreement is in effect for five years, with two additional years of options, and is supposed to significantly ramp up SM-6 production and re-stock the SM-6 inventory. The SM-6 has the very unique feature of being able to conduct air defence, terminal ballistic-missile defence and anti-surface operations all with the same missile family. It can be launched from warships equipped with the Aegis and is also fitted for shore-launch.

This versatility also makes a problem, as there are multiple missions vying for the same missile.

With continuous American military activity in the Middle East, the pressure is now more noticeable. The new procurement push is driven, in part, by replenishing depleted stocks, Reuters reported this week. The SM-6 deal comes on top of a $20.7 billion Raytheon contract for air-to-air missiles called AMRAAM and the Pentagon's long campaign for massive orders of Patriot interceptors and Tomahawks.

It's more of an industrial war than a technological one.

Western defence procurement had been based for years on fairly routine peacetime orders. Governments believed that inventories could be reduced, since high quality weapons, precision targeting and technological advantage could make up for them, and allowed factories to run at modest levels. Ukraine, the Red Sea and the rest of the Middle East have upset that assumption. It takes years to make, certify, and deliver a sophisticated interceptor, but just minutes for operational forces to fire missiles.

Production capacity of approximately 200 SM-6 rounds per year was planned for earlier by the US Navy. For FY2027, the Navy requested 540 SM-6s, and there was about $4.33 billion for the proposed procurement. That tremendous growth is indicative of the significant shift in need.

Economics is thus significant. A $24.4-billion ceiling does not necessarily imply that $24.4 billion are being paid; similarly, the division of the contract value by an educated guess regarding the number of missiles cannot yield a reliable unit price. The agreement will be a multi-year industrial action contract that includes missiles, production capacity and other requirements. What counts commercially is only the visibility it provides suppliers.

It would be impossible for a missile manufacturer to just turn the heads of the arms industry around and say, "Hey, give me more orders.A missile manufacturer can't go out and say to the machinery and metal of the arms industry, "Hey, give me more orders! Requires specialized equipment, energetics, rocket motors, electronics, trained personnel and suppliers that can supply parts to military specifications. To stay ahead of production constraints, Raytheon believes it's boosted its workforce, deepened relationships with suppliers and raised automation, the company says.

The funds then go much further than Raytheon. In the past, SM-6 production has been done by facilities and suppliers all over Arizona, Arkansas, Connecticut, Maryland, Ohio, Alabama, New York and Britain. Earlier this year a contract modification was awarded by the Navy that split a lot of work between Tucson and East Camden and used several other production locations.

This makes replenishment of missiles an issue of an industrial policy. The long-term contracts give the suppliers the opportunity to purchase equipment, hire employees and order components years in advance, rather than having to wait for the annual appropriations by the Pentagon. That said, there is also a huge warning: Industry officials have said that expansion does require Congress to approve the funds. A contract ceiling is not a sum of money that has already been appropriated and spent.

There's an international demand problem, too.

The Japanese Navy is equipping their Maya-class Aegis destroyers with SM-6. Germany has requested up to 173 SM-6 Block I missiles in its proposed order along with 577 SM-2 Block IIIC missiles valued at $3.5 billion. Meanwhile, the Army is using SM-6 in its Typhon ground-based system in addition to Tomahawk.

The same production ecosystem is then required to meet the needs of the US navy, land-based deployments, and allied needs.

There is a larger strategic implication. Pentagon is trying to build up stocks at the same time it is planning contingencies in multiple theatres. Drones, cruise missiles and ballistic threats are threats to American naval forces in the Middle East. In Europe, missiles are an element of NATO deterrence. But in the Indo-Pacific, the planners have to take into account a much more challenging landscape with numerous Chinese warplanes, missiles and ships.

That's why “magazine depth” has become a term that is no longer defence jargon but rather a strategic must. New radar and combat systems won't change the fact that a destroyer has a limited amount of interceptors in its vertical-launch cells, and a specific balance of their types. When those magazines have gone, there is no technology that can replace ammunition.

There's another lesson for India and other big military powers. The degree of a country's defence self-reliance is not just based on its capability of designing a missile. The more difficult question is one of capacity: can its industrial complex produce the more complex weapons at high rates, can it replace the cost of the weapons in combat quickly, can it hold a stockpile, and can it increase production in a crisis.

So America's $24.4-billion SM-6 contract should not be seen as just a contract for a better missile. It's an effort to buy something that is far more difficult to construct: industrial strength.