SANDOVAL COUNTY — Castelion, a three-year-old startup based in Torrance, California, broke ground on a 1,000-acre manufacturing campus in Sandoval County, New Mexico, in January. The facility will produce hypersonic missiles under firm-fixed-price contracts with all major U.S. military branches.

The company is applying a business model similar to SpaceX to the production of hypersonic missiles. Castelion has secured contracts with each of the major service branches for its first weapons system, known as Blackbeard. The agreements specify delivery of at least 500 missiles per year, with the potential for thousands more.

Castelion is funding its vertically integrated manufacturing operation through private capital, having raised more than $550 million to date. Under firm-fixed-price contracts, the government pays a set price regardless of the company's manufacturing costs, which shifts cost risks to the contractor.

Three alumni of Elon Musk's space technology and AI company are behind Castelion. Bryon Hargis, co-founder and CEO, previously led SpaceX's national security product development. Sean Pitt, co-founder and chief operating officer, is a former SpaceX director of commercial sales and also previously served as an aide to Senator Dick Durbin, Democrat of Illinois, who is a member of the Defense Appropriations Subcommittee.

Andrew Kreitz, co-founder and chief financial officer, was formerly an investment banker at Goldman Sachs before becoming a senior finance manager at SpaceX. Kreitz led a year-long search for the manufacturing facility's location, which considered sites in Arizona, Tennessee, and New Mexico. The Sandoval County campus is located approximately 30 miles north of Albuquerque.

Kreitz said New Mexico stood out among the potential locations. He said the state provided a combination of available land, a ready-to-develop site, and a talent base to staff the factory. New Mexico has a history in defense production and possesses a talent pool from Sandia and Los Alamos National Laboratories.

The state of New Mexico and Castelion estimate the project will cost $220 million and create 300 high-paying jobs. They also project a $650 million economic impact over the next ten years.

Why It Matters

Castelion's new manufacturing campus in New Mexico represents an expansion of domestic production capabilities for hypersonic missiles, a critical component of the U.S. military's arsenal. The company's approach of using private capital and firm-fixed-price contracts differs from traditional defense procurement models, which often rely on government appropriations and cost-plus contracts. This model aims to accelerate the delivery of advanced weapon systems to the U.S. military branches by focusing on high-volume manufacturing.

The selection of Sandoval County for the 1,000-acre facility leverages New Mexico's existing defense industry infrastructure and skilled workforce, potentially contributing to regional economic growth through job creation and investment. The move to establish a large-scale manufacturing operation under these financial conditions indicates a strategic shift towards commercial manufacturing strategies within the defense sector to increase production rates.