Industrial Policy and Wright’s Law: A New Perspective on Building the U.S. Drone Industry

At the AUVSI XPONENTIAL 2026 conference this week, Red Cat Holdings executive Brendan Stewart delivered one of the more historically grounded and economically detailed discussions of the event, arguing that rebuilding the U.S. drone industry will require long-term industrial policy, manufacturing scale, and patience.

Stewart, Senior Vice President of Regulatory and Government Affairs at Red Cat, spoke during a session titled “Industrial Policy: America’s Secret Weapon for Drone Dominance.”

Red Cat is a U.S.-based manufacturer focused on military and dual-use drone systems. During the session, Stewart framed the current drone manufacturing debate not as a short-term political issue, but as part of a decades-long shift in how nations approach industrial capacity.

He opened by comparing recent U.S. industrial policy with the state-supported manufacturing strategy enacted in China over the last several decades. Rather than focusing on politics, Stewart emphasized differences in manufacturing philosophy, long-term planning, and ecosystem development.

“Industrial policy built America,” Stewart said, referring to circa WWII policies that helped develop manufacturing in the US.

He argued that the United States gradually moved away from prioritizing domestic production.

“Factories became liabilities, Wall Street beat Main Street, offshoring became ‘strategy,’ and America got hooked on cheap and convenient,” Stewart said.

Stewart contrasted that with the manufacturing expansion that took place in China over the same period. “While America Financialized, China Industrialized,” he said.

Wright’s Law and the Scale Problem

At the center of Stewart’s argument was a manufacturing principle known as Wright’s Law.

Originally developed by aerospace engineer Theodore Wright in the 1930s, Wright’s Law holds that manufacturing costs decrease as production volume increases. As companies build more units, they gain efficiencies in sourcing, labor, tooling, and supply chains.

Stewart argued that this principle explains why scaling domestic drone manufacturing matters more than simply assembling small numbers of aircraft inside the United States.

“The labor gap doesn’t drive a significant proportion of the cost,” Stewart said. “The issue is that we’re buying parts in hundreds, not in the hundreds of thousands that could drive costs down.”

That idea formed the core of his broader argument for industrial policy. According to Stewart, governments often play a key role during the early stages of strategic industries because scale itself creates lower costs over time.

“Government takes initial risk and because it’s dual use, it scales everywhere,” Stewart said, referencing technologies like GPS that began as government-supported programs before becoming commercially ubiquitous.

Stewart also argued that the United States cannot rebuild manufacturing dominance instantly.

“That’s not something that happens just because you will it into existence,” he said.

He acknowledged the reality that increasing domestic production capacity may initially result in higher prices and slower timelines.

“We’re undoing 35 years of bad policy. Things will cost more and take longer for a while,” Stewart said.

Still, he maintained that scaling production is ultimately the only path toward 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,” Stewart said.

Beyond Defense Applications

Stewart acknowledged that recreational and prosumer drone users have borne much of the impact from restrictions and limitations placed on drones manufactured in China.

According to Stewart, expanding domestic manufacturing could eventually support a broader ecosystem that includes defense, enterprise, recreational, and prosumer markets alike.

The session offered a notably pragmatic perspective on the future of the U.S. drone industry. Rather than promising quick solutions, Stewart presented a historic model of industrial policy and manufacturing scale as long-term structural challenges that will require sustained investment and coordination across government and industry.

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