Reevaluating Industrial Policy and Wright’s Law in the Development of the U.S. Drone Industry
Red Cat Holdings Executive Discusses U.S. Drone Industry at AUVSI XPONENTIAL 2026
During the AUVSI XPONENTIAL 2026 conference, Brendan Stewart, Senior Vice President of Regulatory and Government Affairs at Red Cat Holdings, presented a detailed analysis of the U.S. drone industry, emphasizing the need for long-term industrial policy, manufacturing scale, and patience in rebuilding the sector.
Industrial Policy and Manufacturing Philosophy
Stewart’s remarks were part of a session titled “Industrial Policy: America’s Secret Weapon for Drone Dominance.” He positioned the current debate on drone manufacturing within a broader historical context, arguing that it reflects a significant shift in national approaches to industrial capacity over decades.
He compared U.S. industrial policy with the state-supported manufacturing strategies implemented in China, highlighting differences in manufacturing philosophy and long-term planning. “Industrial policy built America,” he stated, referencing World War II-era policies that fostered domestic manufacturing.
Stewart noted a gradual shift away from prioritizing domestic production in the U.S., stating, “Factories became liabilities, Wall Street beat Main Street, offshoring became ‘strategy,’ and America got hooked on cheap and convenient.” He contrasted this with China’s manufacturing expansion, asserting, “While America Financialized, China Industrialized.”
Wright’s Law and the Importance of Scale
Central to Stewart’s argument was Wright’s Law, a principle that suggests manufacturing costs decrease as production volume increases. He explained that as companies produce more units, they achieve efficiencies in sourcing, labor, tooling, and supply chains.
Stewart argued that scaling domestic drone manufacturing is crucial, stating, “The labor gap doesn’t drive a significant proportion of the cost. The issue is that we’re buying parts in hundreds, not in the hundreds of thousands that could drive costs down.”
He emphasized the role of government in the early stages of strategic industries, noting that initial risks taken by governments can lead to lower costs over time. “Government takes initial risk and because it’s dual use, it scales everywhere,” he said, citing technologies like GPS that transitioned from government-supported programs to commercial use.
Challenges in Rebuilding Manufacturing Dominance
Stewart acknowledged that rebuilding U.S. manufacturing dominance is not an instantaneous process. “That’s not something that happens just because you will it into existence,” he remarked. He pointed out that increasing domestic production capacity may initially lead to higher costs and longer timelines, stating, “We’re undoing 35 years of bad policy. Things will cost more and take longer for a while.”
Despite these challenges, he maintained that scaling production is essential for achieving lower-cost American-made systems. “Like planting a tree, the best time to start a drone industry was 18 years ago. The second best time is today,” he concluded.
Expanding Beyond Defense Applications
Stewart also addressed the impact of restrictions on drones manufactured in China, particularly on recreational and prosumer users. He suggested that expanding domestic manufacturing could support a broader ecosystem encompassing defense, enterprise, recreational, and prosumer markets.
The session provided a pragmatic outlook on the future of the U.S. drone industry, framing the challenges of industrial policy and manufacturing scale as long-term structural issues that will require ongoing investment and collaboration between government and industry.