North Korea's leader says his rocket forces are ready "to settle accounts with the U.S." in response to U.S. nuclear-capable B-2 bombers joined military drills with South Korea.

Kim Jong-un's comments in a meeting with senior generals early Friday are part of a rising tide of threats meant to highlight anger over the drills and recent U.N. sanctions over Pyongyang's nuclear test.

State media says Kim signed a rocket preparation plan and ordered rockets on standby to strike the U.S. mainland, South Korea, Guam and Hawaii.

Many analysts say they've seen no evidence that Pyongyang's missiles can hit the U.S. mainland. But it has capable short- and mid-range missiles.

Despite the rhetoric, a lucrative North Korean industrial plant operated with South Korean know-how is running normally.

America flexes muscles

In a show of force following weeks of North Korean bluster, the U.S. took the unprecedented step earlier today of announcing that two of its nuclear-capable B-2 bombers dropped munitions on a South Korean island as part of joint military drills.

U.S. Forces Korea said in a statement that the B-2 stealth bombers flew from a U.S. air base in Missouri and dropped munitions on a South Korean island range before returning home. It was unclear whether America's stealth bombers were used in past annual drills with South Korea, but this is the first time the military has announced their use.

The statement follows an earlier U.S. announcement that nuclear-capable B-52 bombers participated in the joint military drills.

North Korean soldiers with weapons attend military training in an undisclosed location in this picture released by the North's official KCNA news agency in Pyongyang March 11, 2013. North Korean soldiers with weapons attend military training in an undisclosed location in this picture released by the North's official KCNA news agency in Pyongyang March 11, 2013. (KCNA/Reuters)

North Korea has already threatened nuclear strikes on Washington and Seoul in recent weeks. It said Wednesday there was no need for communication in a situation "where a war may break out at any moment." Earlier this month, it announced that it considers void the armistice that ended the Korean War in 1953.

But Pyongyang would have gone beyond words, possibly damaging its own weak finances, if it had blocked South Koreans from getting in and out of the Kaesong industrial plant, which produced $470 million worth of goods last year.

South Korean managers at the plant reported no signs of trouble Thursday.

Fears of localized conflict

Analysts see a full-blown North Korean attack as extremely unlikely, though there are fears of a more localized conflict, such as a naval skirmish in disputed Yellow Sea waters. Such naval clashes have happened three times since 1999.

North Korean workers continue to work at border-area industrial parks run by South Korean companies despite the latest tensions between the countries.North Korean workers continue to work at border-area industrial parks run by South Korean companies despite the latest tensions between the countries. (Lee Jae Won/Reuters)

The Kaesong plant, just across the heavily fortified Demilitarized Zone that separates the Koreas, normally relies on a military hotline for the governments to coordinate the movement of goods and South Korean workers.

Without the hotline, the governments, which lack diplomatic relations, used middlemen. North Korea verbally approved the crossing Thursday of hundreds of South Koreans by telling South Koreans at a management office at the Kaesong factory. Those South Koreans then called officials in South Korea.

Both governments prohibit direct contact with citizens on the other side, but Kaesong has separate telephone lines that allow South Korean managers there to communicate with people in South Korea.

Factory managers at Kaesong reached by the Associated Press by telephone at the factory said the overall mood there is normal.

"Tension rises almost every year when it's time for the U.S.-South Korean drills to take place, but as soon as those drills end, things quickly return to normal," Sung Hyun-sang said in Seoul, a day after returning from Kaesong. He is president of Mansun Corporation, an apparel manufacturer that employs 1,400 North Korean workers and regularly stations 12 South Koreans at Kaesong.

"I think and hope that this time won't be different," Sung said.

Technically, the divided Korean Peninsula remains in a state of war. North Korea last shut down communications at Kaesong four years ago, and that time some workers were temporarily stranded.

North Korea could be trying to stoke worries that the hotline shutdown could mean that a military provocation could come any time without notice.

South Korea urged the North to quickly restore the hotline, and the U.S. State Department said the shutdown was unconstructive.

North Korea's latest threats are seen as efforts to provoke the new government in Seoul, led by President Park Geun-hye, to change its policies toward Pyongyang. North Korea's moves at home to order troops into "combat readiness" also are seen as ways to build domestic unity as young leader Kim Jong-un, who took power after his father's death in December 2011, strengthens his military credentials.

The Kaesong complex is the last major symbol of inter-Korean cooperation. Other rapprochement projects created during a previous era of detente stopped as tension rose in recent years.

War games

At the border Thursday, a trio of uniformed South Korean soldiers stood at one side of a gate as white trucks rumbled through, carrying large pipes and containers to Kaesong. At Dorasan station, a South Korean border checkpoint, a green signboard hung above the trucks with the words "Kaesong" and "Pyongyang" written in English and Korean.

The stalled hotline, which consists of two telephone lines, two fax lines and two lines that can be used for both telephone and fax, was virtually the last remaining direct link between the rival Koreas.

Although North Korea has vowed nuclear strikes on the U.S., analysts have found no proof that North Korean scientists have mastered the technology required to build a nuclear warhead small enough to mount on a missile. Although North Korea has vowed nuclear strikes on the U.S., analysts have found no proof that North Korean scientists have mastered the technology required to build a nuclear warhead small enough to mount on a missile. (KCNA/Reuters)

North Korea in recent weeks cut other phone and fax hotlines with South Korea's Red Cross and with the American-led U.N. Command at the border. Three other telephone hotlines used only to exchange information about air traffic were still operating normally Thursday, according to South Korea's Air Traffic Center.

In 2010, ties between the rivals reached one of their lowest points in decades after North Korea's artillery bombardment of a South Korean island and a South Korean warship sinking blamed on a North Korean torpedo attack. A total of 50 South Koreans died.

There is still danger of a confrontation or clash. Kim Jong-un may be more willing to take risks than his father, the late Kim Jong Il, said Yoo Ho-yeol, a North Korea expert at Korea University in South Korea.

Although North Korea has vowed nuclear strikes on the U.S., analysts outside the country have seen no proof that North Korean scientists have yet mastered the technology needed to build a nuclear warhead small enough to mount on a missile.

President Park so far has outlined a policy that looks to re-engage North Korea, stressing the need for greater trust while saying Pyongyang will "pay the price" for any provocation. Last week he approved a shipment of anti-tuberculosis medicine to the North.

Since 2004, the Kaesong factories have operated with South Korean money and know-how, with North Korean factory workers managed by South Koreans.

Inter-Korean trade, which includes a small amount of humanitarian aid sent to the North and components and raw materials sent to Kaesong complex to build finished products, amounted to nearly $2 billion in 2012, according to South Korea's Unification Ministry.