Last week, we looked at Ursa Major, a company applying additive manufacturing across liquid engines, solid rocket motors, and complete missile systems.

This week, were continuing the discussion on Solid Rocket Motors with a Brief look at the Ammonium Perchlorate problem.

As always, your feedback shapes our coverage—reply directly with insights or questions.

This isn't from today's paper. It's from a January 1995 Office of Inspector General report entitled "Restoration of the Industrial Base for Ammonium Perchlorate Production."

The U.S. built redundancy into the ammonium perchlorate industrial base during the Cold War. Then demand collapsed and so did the redundancy. We are now back to a single point of failure.

In May 1988, an explosion and fire at the PEPCON facility in Henderson, Nevada eliminated roughly half of U.S. ammonium perchlorate (AP) production capacity in a single afternoon. The remaining producer, Kerr-McGee, could not absorb the lost volume.

The government's response was not to nationalize production or build a state-run facility. Instead, it made private capital formation viable.

Through guaranteed purchase agreements and coordinated demand between NASA and DoD, the government underwrote the economics of a new facility in Cedar City, Utah. Seventeen months after the PEPCON explosion, the U.S. had two merchant AP producers again: WECCO (now AMPAC) and Kerr-McGee.

Then after the Cold-War drawdown, procurement volumes collapsed again. Kerr-McGee exited the market in 1998, and the U.S. spent the next twenty-five years with a single merchant source, the same structural vulnerability the PEPCON response had been designed to prevent.

No private actor will finance a second AP facility if demand is tied to a narrow set of programs and the downside risk is fully borne by the operator. The solution is to change what the investor is being asked to underwrite.

Think of it the way Delta Air Lines thought about jet fuel in 2012. The company was spending roughly $4 billion a year on fuel with no ability to influence the input cost. So Delta purchased the Trainer Refinery in Pennsylvania.

Delta still has to buy jet fuel on the open market just like every other airline.  If the spread between crude and jet fuel widens, most airlines have to just absorb that cost entirely. But Delta captures a portion of that spread and the profit from refining stays within the company rather than flowing to outside suppliers.

Delta accepted the operational complexity of running a refinery because the strategic value of not being entirely dependent on external suppliers exceeded that cost.  Even knowing that when spreads narrow, the refinery becomes a drag rather than an asset.

First, like in the 1980s, base load contracts — multi-year, program-agnostic offtake commitments that guarantee a minimum level of AP demand. Not tied to a single missile program, but structured across the portfolio to flex with demand: flowing to high-use programs like Navy Standard Missiles and maintaining offtake through periods of lower consumption.

Second, capacity retainer payments. The government should pay not just for production but for maintained capacity even when demand drops. Yes, there is potential for rent-seeking behavior, but redundancy that is not funded will not exist. Kerr-McGee's exit proved that.

This is not solely a government problem to solve. Companies can do more to right-size production facilities, streamline inefficiencies, and modernize. And that work should not wait for a government contract to justify it.

But at the end of the day, this is not a cost optimization problem. It is a risk acceptance decision. Either the U.S. pays to maintain redundant AP capacity during peacetime, or it accepts that a single disruption will halt solid rocket motor production for 18 to 24 months.

There is no third option where redundancy exists without cost.