WASHINGTON – Even before the Iran war was launched, Minnesota’s defense industry benefited from the Trump administration’s boost in military spending and was on track to make more money from the Pentagon than it did last year.
Now, the defense industry, which has a robust presence in Minnesota, is scrambling to meet the demands of a nation at war.
According to a MinnPost analysis of government contracts, Minnesota’s defense industry had about $24.5 billion worth of contracts with the Pentagon in fiscal year 2025, which ended Sept. 30 of last year.
Just about six months into the 2026 federal fiscal year, Minnesota’s defense contractors had more than $17.4 billion worth of military contracts and were well on their way to exceeding their performance in 2025.
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Most of those contracts were signed before the United States attacked Iran at the end of February, which is leading to a further escalation in Pentagon spending.
The United States, Israel and Iran had agreed to a temporary cease-fire late Tuesday and President Donald Trump backed off of a threat to escalate a war that had raged in the Middle East since the end of February. But the accord is fragile, and the U.S. military said on Sunday that it would blockade any ships “entering or departing Iranian ports and coastal areas.”
In any case, military spending, which has ramped up significantly since Trump assumed office for the second time, is expected to continue to increase as missiles, ammunition and other weapon stockpiles and systems need to be refurbished.
The “big beautiful” bill that funded Trump’s priorities last summer boosted Pentagon spending by $150 billion over the military’s $840 million annual budget in fiscal 2026.
That budget is about to grow again. The cost of war in Iran has prompted the White House to ask Congress for another large increase in military spending, about $200 billion.
The MinnPost analysis of the state’s defense contractors show that they provide the U.S. military with a wide range of goods — from medical supplies and hospital equipment to ammunition and explosives.
One of the state’s largest contractors is Northrop Grumman, a leader in aerospace. The company, which has a facility in Plymouth, has more than $2.7 billion worth of multi-year military contracts.
“At Northrop Grumman, we have a highly skilled workforce and take great pride in supporting local employment in Minnesota,” the company said in a statement.
In February, company CEO Kathy Warden told investors at a Citibank conference that higher international military spending, as well as ramped up domestic spending and greater need for missiles, interceptors and unmanned systems, were trends affecting her company.
“We are in an unprecedented demand cycle within defense, not just within the United States, but globally,” Warden said. “And it appears that this is going to be a sustaining demand signal.”
Warden was correct in predicting the “demand signal” would be sustained, with the Iran war costing the U.S. government between $1 billion and $2 billion a day.
BAE Systems is also among the state’s large defense contractors, with nearly $45 million worth of Pentagon contracts.
“We’re proud of the role our Minnesota team plays in supporting national security, the growing local economy, and the strength of the defense industrial base,” the company said in a statement. “We continue to see strong demand across the industry and remain focused on rapidly and reliably providing next-generation capabilities warfighters need on today and tomorrow’s battlefields.”
BAE opened a new 247,000 square-foot engineering and product development facility in Maple Grove in September.
The new site will support work on new naval guns, launching systems, advanced munitions, submarine components and combat vehicles, the company said. The company began its work in the state during World War II, when its facility in Fridley produced naval guns.
Making more – and faster
The Trump administration’s largess to the nation’s defense industry did not come without strings.
The president signed an executive order in January because he said he was committed to “ensuring that the United States military possesses the most lethal warfighting capabilities in the world.”
Trump said the United States “makes the most lethal military equipment in the world” but that “we do not make enough of it quickly enough to meet the needs of our military and our partners.”
Trump prohibited the nation’s defense contractors from offering stock buybacks and dividends to shareholders unless they are able to produce a “superior product, on time and on budget.”
“After years of misplaced priorities, traditional defense contractors have been incentivized to prioritize investor returns over the Nation’s warfighters,” Trump said.
So, the Trump administration pressed the nation’s defense industry to expand and speed up production shortly before it launched “Operation Epic Fury” at the end of February.
The billions of dollars spent by the Pentagon in Minnesota may not be readily apparent. Other than National Guard facilities, Minnesota does not have a military base, nor is it home to the headquarters of a major defense contractor.
But defense contractors like to spread their facilities across the United States in efforts to increase the number of their political allies in Congress. So they have a presence in Minnesota. And the Pentagon, which has the largest budget of any federal agency, needs to buy a lot of things besides weaponry to support its bases and fleets of planes, tanks and ships and soldiers, sailors and airmen.
That’s why the thousands of contracts the U.S. military entered into with Minnesota companies went to companies of all sizes, not just the subsidiaries of large defense companies.
For example, Polaris, a Medina-based company known for its snowmobiles and all-terrain vehicles, has entered into more than $7 million in contracts to make construction machinery and light trucks for the military.
Meanwhile, the Minnesota Wild Hockey Club has a multi-year advertising contract that is worth about $464,000. A spokesman for the Wild said the team has had contracts with the Army National Guard since 2008 to promote recruitment.
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Not all Defense Department spending in the state funds warmaking efforts.
According to the Treasury Department’s USASpending.gov, the largest contract the Pentagon signed, worth more than $13 billion, is with UnitedHealth Group, Inc., to provide health services to military members and veterans.
And the Pentagon is purchasing all kinds of other goods and services from Minnesota companies.
For instance, Duluth Lawn Care, a landscaping company, has a multi-year contract worth more than $57,000 to do work for the Army Corps of Engineers.
And All Washed Up, a laundromat in North Minneapolis, has a contract this year worth $27,000 to provide laundry and dry cleaning services to the Minnesota Army National Guard and the 934th Airlift Wing, an Air Force Reserve unit stationed at Minneapolis-St. Paul International Airport.
The Pentagon also spends millions of dollars each year on research and development at the University of Minnesota, the Mayo Clinic and other colleges and research facilities in the state.
