Why N.C. Is Poised to Lead the Nation in Defense Innovation

Thank you for joining us this Saturday morning.

In February, defense strategist Peter Singer noted that North Carolina ranks just 20th nationally in Department of War contracting and 21st in military R&D spending – despite having the fourth-largest active-duty military population in the country.

But since we last wrote about North Carolina’s defense innovation ecosystem, there’s been a flurry of activity: a billion-dollar magnet facility, public- and private-sector defense industry initiatives, a new estimate of the untapped lithium reserve sitting in North Carolina rocks, and more.

Add it all up, and they position North Carolina to move from a state with a lot of military bases to one of the nation’s leading defense-innovation hubs. 

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Start with our existing institutions. Fort Bragg is already the largest Army base in the country, and the brass show no signs of slowing down. In December, the Army activated its new Western Hemisphere Command at Fort Bragg, combining Army Forces Command, Army North, and Army South into a “single four-star headquarters” – a permanent concentration of authority in Fayetteville. And just last month, the Army selected Fort Bragg as one of five installations for a new nuclear microreactor program.

North Carolina’s university and community college systems are expanding their footprint, too. NC State announced in February plans for a “new defense and national security-focused institute” to attract more federal defense research dollars. This comes as the university has already seen a 45% increase in defense funding since just 2019. NCInnovation has also backed defense research initiatives across the UNC System.

State government is getting in on the action, too. The Stein administration launched NC ALIGN this year to make North Carolina a “leading destination for defense research, innovation, advanced manufacturing, and technology commercialization.” The NC Chamber and the North Carolina Critical Technologies Alliance launched a parallel effort, the First in Defense Coalition, to recruit defense manufacturers and accelerate critical-technology entrepreneurship using the state’s universities, workforce, and factories. 

Institutional expansion is well and good, but it’s all in service of eventual private investment. That’s where the story really takes off. In November, Vulcan Elements announced a $1 billion facility in Benson that will manufacture rare-earth magnets for drones, satellites, submarines, and robotics – good for 1,000 jobs and 10,000 metric tons of annual capacity. 

The NC Utilities Commission expedited a transmission last month just to serve the plant. Johnston Community College received more than $3.6 million from the Golden LEAF Foundation to build Vulcan-specific training capacity, and Johnston County stood up its own Economic Development Advisory Board to chase more defense manufacturers and supply-chain investment.

Private defense-tech firms are expanding, too. Anduril’s Triangle footprint has grown to more than 100,000 square feet in RTP. And in Greensboro, JetZero broke ground in June on a $4.7 billion blended-wing aircraft plant expected to create more than 14,500 jobs – commercial on its face, with clear military applications and a role as an anchor of the Carolina Core. Just across the South Carolina border, USA Rare Earth broke ground on a $1+ billion rare-earth metal and magnet plant in Blacksburg, about 45 miles west of Charlotte.

But it’s the critical minerals side of the story that adds even more intrigue to the sector’s potential in North Carolina. 

China still dominates the rare-earth supply chain that modern defense technology depends on. The International Energy Agency put China’s 2024 share at 60% of mined magnet rare earths, 91% of refined output, and 94% of sintered permanent-magnet production. Every drone, satellite, and guided munition the Pentagon wants to build runs through a supply chain Beijing effectively controls.

Washington has spent years trying to address that vulnerability, and our region sits on some of the raw material needed to do it. USGS reckons the southern Appalachians hold 1.43 million metric tons of undiscovered, economically recoverable lithium oxide – enough to replace two centuries of U.S. lithium imports at the 2025 rate.

The federal government is placing bets accordingly. The Department of Energy chose Albemarle’s Kings Mountain lithium site to launch a $16 million mining and critical-minerals workforce initiative, aimed at expanding domestic training in the industry. 

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If you think this seems like a lot of different things all happening at the same time, you’re right – and that’s a very good sign. 

Washington’s defense-industrial priorities have been coming into focus for a while: reshore critical minerals, rebuild defense innovation supply chains, and modernize command structures for a multi-theater world. 

North Carolina is right in the thick of it all and is poised to reap the benefits.