Supply and Demand: HIMARS Prices Reaches a New High

Back in July, there was much debate on whether the HIMARS was just overhyped and overpriced, but the Ukraine-Russia war proved to be the best marketing stage for Lockheed Martin to showcase the full potential of this rocket system. So now, they’re introducing a price increase, and countries like Taiwan are trying to catch the best deal.

In new reports, Taiwan has ordered another batch of eleven HIMARS multiple-launch rocket systems (MLRS) for the US to deliver to their military as part of its bid to strengthen its defense protocols amid China’s threats. Last month, Taiwan also ordered 29 HIMARS and MQ-9B unmanned aerial vehicles (UAVs). In addition, legislator Wang Ting-yu of the Democratic Progressive Party (DPP) also announced that they had signed a contract with the US for the SeaGuardian UAVs in a deal that’s worth $555 million.

As for the HIMARS deal was initially slated at $300.9 million, but new reports show the US has increased the deal to $313.3 million. The initial rollout of HIMARS was supposed to start in 2024, but as analysts measure ongoing threats from China, there is a possibility that Taiwan could request an expedited delivery, looking at the HIMARS reserve in the US.

This could be one of the reasons why the deal amount was increased. On another note, Taiwan’s need for these HIMARS is generally stronger than its intention to save a couple million. Seeing how Ukrainians made this massive push simply because of HIMARS, they would not back down on a deal that could help them win against China.

Additionally, the Taiwan Army noted that they also ordered 864 “precision rockets” and 84 MGM-140 Army Tactical Missile System (ATACMS) missiles. These will be used with the HIMARS.

Lockheed Cranks Up Production Line

As new deals were locked in, Lockheed Martin is reportedly speeding up their production process for the HIMARS. Not only are they looking for the delivery timeline of these new deals, but there is a priority placed on Ukraine.

The company is set to increase its production to 96 HIMARS annually, up from its current 60-a-year production count. CEO Jim Taiclet announced this increase during a quarterly call with Lockheed Investors. Taiclet also noted that they’re also looking to supply HIMARS to Estonia and Poland (aside from Taiwan and Ukraine).

“We’re putting the best and newest manufacturing technology into some of these product lines first so that when the ramp comes, we can pivot to it quicker,” Taiclet said.

This is a “good” problem for the company, though. With this announcement, Lockheed Martin invested another $65 million for the optimization and scaling of its manufacturing process. Taiclet also said they want to expand their factory in Camden, Ark.

“We’re cross-training our skilled workforce across a bunch of product lines,” so that as demand grows for HIMARS or the Guided Multiple Launch Rocket System, people can move between building different types of weapons, Taiclet said.

As of last week, the US has committed 38 HIMARS to Ukraine. So far, according to the Defense Department’s factsheet, only 20 HIMARS have been supplied, while the department is completing the purchasing process of the remaining 18 HIMARS as part of the $1 billion arms package fund for Ukraine.

Doug Bush, US Army’s acquisition chief, said it would take time to deliver the remaining HIMARS, and they are working closely with Lockheed to secure these slots. However, Bush added that we have to look at a more realistic timeline for this weaponry so nations like Taiwan, Ukraine, and Poland can make more grounded strategies around attack and defense.

“All that is underway and will all be foundational to supporting Ukraine and its conflict, but also replenishing ourselves and setting us up to support our allies,” Bush told reporters.

“I don’t know how long the conflict’s going to last,” he said. “We are doing things though to ensure that if it goes on a long time, we’re going to be in a place to support it based on the best information we have. War as an uncertain enterprise.”