Is Defense Work Worth It? The Hidden Costs + Untapped Opportunities for Machine Shops | Ep. 57

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Defense manufacturing is supposed to be a massive opportunity for American machine shops. The government needs more domestic suppliers, existing weapons systems need replacement parts, and emerging defense companies are looking for manufacturers who can scale production. So why aren’t more shops jumping in? For me, the answer comes down to a question we ask all the time on Buy the Numbers: Does the opportunity actually make financial sense?

In this episode, Jason Davis joins me as co-host for a conversation with Lana Smith, founder of The Oakley Office. Lana spent much of her career supporting the Army’s industrial operations, from rebuilding M1 Abrams tanks at Anniston Army Depot to working at Army Materiel Command.

Today, she helps manufacturers navigate the defense industrial base, identify opportunities, and understand what it actually takes to compete for government business. And as someone who’s been hesitant to pursue much defense work myself, I had plenty of questions.

We dig into the financial realities that don’t always make it into the conversation about strengthening American manufacturing. Between CMMC certification, ITAR requirements, cybersecurity investments, administrative overhead, and unpredictable order volumes, the cost of entry can be substantial.

If compliance costs your shop $100,000 or more, how much defense revenue do you need just to justify the investment? And do you spend that money before the work exists, or wait until you have enough business to support it?

But Lana also opened my eyes to opportunities I hadn’t fully considered. From supplying replacement parts for existing weapons systems to helping newer defense technology companies move from prototypes into production, there’s more than one way into this market.

We also discuss programs designed to expand domestic manufacturing capacity, the value of having someone help navigate the process, and what government incentives could make participation more realistic for smaller shops.

I’m not against defense manufacturing. I’d love to support our country’s national security and help strengthen our industrial base. But patriotism doesn’t pay the bills.

The question isn’t whether defense manufacturing is important. It’s whether your shop can participate profitably, and what needs to change to make that possible.

What’s Covered in this Episode

• (0:00) The growing opportunity for machine shops in defense manufacturing
• (1:03) Welcoming Jason Davis back as co-host
• (2:00) Lana Smith’s background and the mission of The Oakley Office
• (3:48) Rebuilding military equipment and the challenges of aging supply chains
• (5:54) How disappearing small manufacturers threaten the defense industrial base
• (7:07) Jason’s experience supplying the defense industry
• (8:55) Why defense contracts aren’t always as profitable as they appear
• (9:22) Navu can help answer your customer’s questions clearly and quickly
• (10:43) Identify government contracting opportunities (and the challenges that arise)
• (13:36) The true financial cost of CMMC, ITAR, and other compliance requirements
• (15:56) When does investing in defense certification make financial sense?
• (17:50) Finding additional customers for parts you’re already manufacturing
• (19:57) The Civil Reserve Manufacturing Network and opportunities for domestic shops
• (22:01) Finding the right military customers, funding, and contracting channels
• (24:35) Technology readiness levels and SBIR funding opportunities
• (26:27) How government contracts can create serious cash flow challenges
• (27:54) The opportunity to help defense startups scale from prototypes to production
• (29:21) Increase your spindle uptime with the Hennig WorkFlow Automation system
• (30:12) Why navigating defense manufacturing may require outside expertise
• (34:46) How to determine whether your shop is ready for defense work
• (36:26) How military working capital funds operate
• (37:41) Kennametal tooling helps manufacturers cut faster and run longer
• (38:30) What government could do to reduce barriers for smaller manufacturers
• (40:49) Could tax credits make defense manufacturing more accessible?

Resources Mentioned

• The Manufacturing Blueprint
• The Civil Reserve Manufacturing Network
• Defense Logistics Agency (DLA)
• DLA Internet Bid Board System (DIBBS)
• SAM.gov
• Cybersecurity Maturity Model Certification (CMMC)
• Small Business Innovation Research (SBIR)

How to Connect with Lana Smith

• Connect with Lana on LinkedIn
• The Oakley Office