How Pennsylvania Became a Defense Hub
In federal fiscal year 2024, direct defense spending in Pennsylvania reached $24.3 billion. The total economic impact was $48.8 billion, and the jobs figure was 181,300. Those are the numbers in the 2025 annual report from the Pennsylvania Military Community Enhancement Commission, a state commission charged with protecting military installations, based on Defense Department data. The 181,300 jobs are not direct employment but a modeled total that includes indirect and induced effects. Direct Defense Department personnel number about 53,000. Pennsylvania ranks sixth in the nation in defense spending. The northeastern state between New York and Washington, D.C., is known for steel and coal. How did a state like that become a defense hub?
The answer begins with war. In the 1940s and 1950s, at its peak, Pittsburgh produced nearly 20 percent of America’s steel. Bethlehem Steel is credited with building more than 1,100 warships during World War II. At the Frankford Arsenal in Philadelphia, 22,000 people worked at the wartime peak, and 47,000 to 50,000 worked at the Philadelphia Naval Shipyard. Pennsylvania’s factories were built for war.
But that foundation collapsed. Bethlehem Steel poured its last iron on Nov. 18, 1995, and went bankrupt in 2001. The Frankford Arsenal closed in 1977. The Philadelphia Naval Shipyard closed in 1995 after a 1991 Base Realignment and Closure decision, and about 7,000 jobs disappeared. Across five rounds of base closures, Pennsylvania lost 18,913 direct jobs.
The state learned to organize from that loss. Gov. Tom Ridge created a base retention committee in 1996, and Gov. Ed Rendell created the Pennsylvania Base Development Committee ahead of the 2005 base closure round. A 2014 law made the Military Community Enhancement Commission a permanent body. Letterkenny Army Depot survived a 1995 realignment threat, and Tobyhanna Army Depot took on work from depots that closed. The 911th Airlift Wing in Pittsburgh survived closure threats twice, in 1995 and 2005.
The Map Today, Depots and Primes
Today Pennsylvania’s defense map is drawn in depots and factories. Letterkenny Army Depot, near Chambersburg in south-central Pennsylvania, maintains missile and air defense systems, and more than 1,500 people work there, according to the commander’s biography. Tobyhanna Army Depot, in the Pocono Mountains, is the Defense Department’s largest electronics maintenance facility, with about 3,300 people working there, and it is the largest industrial employer in northeastern Pennsylvania. The Army ammunition plant in Scranton, in northeastern Pennsylvania, makes the bodies of 155mm artillery shells and employs about 300 people. The Naval Surface Warfare Center in Philadelphia, the Navy’s ship research and development center, employs about 2,700 civilian engineers and scientists working on ship machinery and cybersecurity. The Defense Logistics Agency, the Defense Department’s logistics arm, runs its Susquehanna distribution center near New Cumberland, outside the state capital of Harrisburg, and it is the department’s largest strategic distribution platform.
Above them sit the large prime contractors. The Boeing plant in Ridley Park, a suburb southwest of Philadelphia, assembles CH-47 Chinook helicopters and builds fuselages for the V-22 Osprey. Completed Ospreys are assembled in Amarillo, Texas. The BAE Systems plant in York, in south-central Pennsylvania, produces the Army’s Armored Multi-Purpose Vehicle, or AMPV, the Marine Corps’ Amphibious Combat Vehicle, or ACV, and the M109A7 self-propelled howitzer. Bradley fighting vehicles there are not new builds but remanufacture and upgrade work. The Lockheed Martin site in King of Prussia, a suburb northwest of Philadelphia, builds no aircraft. It develops software for space and missile defense. The Lockheed Martin site near Archbald, outside Scranton, announced more than $60 million in investment and more than 700 new jobs in July 2026.
Below the primes sit thousands of suppliers. According to an Exiger report published in July 2026, Pennsylvania has 8,939 defense companies, and 5,415 of them hold contracts directly with the Defense Department. More than 288,000 parts come from a single source, and they go into about 2,000 weapon systems. Federal subcontracting rules require small-business subcontracting plans on defense contracts above a certain size. More than 1,300 American suppliers take part in producing the AMPV, and about 20 percent of the Columbia-class submarine supply chain sits in the Philadelphia area. But no statewide figure confirms how much prime contract money flows to small suppliers.
The state of that supply chain can be seen at the Scranton shell plant. In March 2022, the Defense Department set out a plan to raise 155mm shell production to 100,000 rounds a month by Oct. 1, 2025. The starting point was about 14,000 rounds a month. Actual production in March 2026 was 36,000 rounds a month, 36 percent of the goal. One cause named in a Defense Department inspector general report dated July 9, 2026, was the new plant in Mesquite, Texas. The Army spent $469 million on it, and by March 2026 it had not produced a single part that met specifications. Scranton itself produced 15,000 rounds a month, short of the planned 35,000. On Sept. 22, 2024, Ukrainian President Volodymyr Zelenskyy visited the Scranton plant and said 400 people had saved millions of Ukrainians.
Unions and Politics, Two Sides of a Swing State
Another layer of the defense hub is labor unions. According to the Bureau of Labor Statistics, Pennsylvania’s union membership rate was 10.9 percent in 2025, higher than the national rate of 10.0 percent. The Scranton ammunition plant is represented by Machinists union Local 847, BAE York by Steelworkers union Local 7687, Boeing Ridley Park by Auto Workers union Local 1069 and Tobyhanna by federal employees union Local 1647. On Oct. 1, 2025, a rule ending a decades-old pay disparity for hourly federal workers took effect, benefiting more than 2,100 hourly federal workers in Pennsylvania. Sen. John Fetterman, a Democrat, and former Sen. Bob Casey led the effort, and Republican House members followed with their own bills.
Defending the bases is bipartisan work. The fiscal year 2026 National Defense Authorization Act, the annual law that sets defense spending, authorized $91.5 million for Letterkenny, $68 million for Tobyhanna, $94.1 million for the naval supply facility near Mechanicsburg, outside Harrisburg, and $90 million for the New Cumberland warehouse. Rep. Rob Bresnahan, a Republican, pushed for an expansion of the Tobyhanna radar test range, and Fetterman took up the depots’ pay issue. The federal employees union AFGE endorsed Bresnahan and Rep. Brian Fitzpatrick, a Republican, for reelection in 2026.
Pennsylvania is a swing state, one where either party can win, with 19 electoral votes, the votes a state casts for president. Donald Trump won it in 2016, Joe Biden in 2020 and Trump again in 2024. But no verified evidence shows that being a swing state brings in more defense money. What is verified is that lawmakers from both parties defend the same bases, and that presidents and presidential candidates visit Pennsylvania’s defense sites. Zelenskyy’s visit to Scranton also drew partisan criticism in the final weeks of the 2024 campaign.
Shipyards and Startups, the Next Turn
The next turn is at the shipyard. Hanwha Ocean and Hanwha Systems bought Philly Shipyard for $100 million on Dec. 19, 2024. On Aug. 26, 2025, they announced a $5 billion multiyear investment plan. Four of five training ships for the Maritime Administration have been delivered, and the fifth is due in 2027. But as of late 2026, the yard had never built a Navy warship. Its first Navy shipbuilding contract came on Oct. 29 and 30, 2026, for one Medium Landing Ship at $269 million. On Oct. 27, 2026, Hanwha Defense USA took a 60 percent stake. The yard employs about 2,500 people as of September and October 2026. South Korea’s $150 billion shipbuilding investment pledge, known as MASGA and part of a U.S.-South Korea shipbuilding partnership, includes loans and guarantees, and reports of a funding dispute have also emerged.
Another turn is in startups. The Defense Innovation Unit, or DIU, is the Pentagon organization that brings commercial technology in quickly, and AFWERX is the Air Force innovation organization that manages the Small Business Innovation Research program, or SBIR. The path into the Defense Department for Philadelphia startups runs through AFWERX SBIR awards, not DIU. Ghost Robotics, a University of Pennsylvania spinoff, makes the Vision 60 four-legged robot, and on July 29, 2024, South Korea’s LIG Nex1 bought a 60 percent stake for $240 million. Exyn Technologies, another University of Pennsylvania spinoff, listed on Nasdaq in May 2026. ZeroEyes, in Conshohocken near Philadelphia, makes AI gun detection software, has won several AFWERX SBIR awards and announced a $10 million investment and more than 100 jobs in July 2026. The center of this story is not the Navy Yard but the University of Pennsylvania’s Pennovation Works campus in Grays Ferry, Philadelphia. The Navy Yard’s real innovation channel is the Liberty Tech Bridge, launched on May 3, 2022.
The story continues on Friday, Nov. 20, when a NATO in America conference on how the alliance affects Pennsylvania opens at 9 a.m. in Philadelphia. The Atlantic Council’s Transatlantic Security Initiative and the University of Pennsylvania’s Perry World House are hosting the all-day event, which will feature Gov. Josh Shapiro, NATO spokesperson Allison Hart and Hanwha Group’s Alex Wong. An afternoon panel will take up local economies and the transatlantic defense industrial base.
In the end, Pennsylvania did not become a defense hub. It is a state that remained one. The legacy of steel and arsenals, the organization that followed the base closure losses, the map of depots and primes and the limits of the shell surge made today what it is. The next 10 years rest on two bets, whether the Hanwha shipyard wins Navy warship certification by 2028 and whether the Pennovation dual-use startups move past evaluation into real production contracts. The Chinook line at Boeing Ridley Park faces the same question. Boeing says 18 aircraft a year is the minimum to sustain it. Construction of the Medium Landing Ship starts in the fourth quarter of 2027, with the first delivery set for 2030. Pennsylvania’s defense story is not over yet.
