On March 6, US President Donald Trump hosted executives from seven of the country’s top defense companies at the White House, as part of his administration’s attempt to bolster the sector as the war against Iran intensifies.
The conflict has highlighted existing tensions in the US defense sector, with concerns about the country’s stockpile of long-range missiles and air defense interceptors, as well as the sector’s ability to increase production in the event of a protracted conflict.
Trump said he had discussed “production and production schedules” with companies meeting at the White House, specifically Lockheed Martin, RTX (formerly Raytheon), BAE Systems, Boeing, Honeywell Aerospace and Northrop Grumman.
However, there are reports that negotiations between the Pentagon and the country’s largest defense contractors have not been closed as quickly as the White House would like, amid the current tensions.
Tensions with Trump
Byron Callan, a defense equity analyst at Capital Alpha Partners in Washington, says a recurring criticism of large U.S. defense companies is that they have been “risk averse,” focusing on paying dividends to shareholders rather than reinvesting.
“The main US defense contractors were criticized for their inertia, for not anticipating needs, not investing and not taking risks,” he told DW.
Before the United States began its aerial bombardment of Iran, tensions had been growing between the Trump administration and major American defense suppliers. Trump has frequently lashed out at defense companies for, he believes, prioritizing shareholder dividends and executive salaries over investment in infrastructure and production.
Trump has also criticized companies for missing production deadlines and going over budget. Previously, he had singled out RTX—one of the main manufacturers of air defense missiles and interceptors used by the US military in the conflict with Iran—as “the slowest company to increase its production volume and the one that spends the most on its shareholders rather than on the needs and demands” of the US military.
He threatened to exclude them from government contracts if they did not increase investments in their factories.
Doubts about the defense budget
Philip Sheers, a research associate at the Defense Program at the Center for a New American Security, says investment in the U.S. defense industrial base is increasing, particularly in munitions and air defense. However, he warns that it will take time for these investments to translate into increased production rates.
“Starting up new facilities or increasing the supply of raw materials can take years, and we have seen this with many of the facilities still being built in the wake of the war in Ukraine,” he told DW.
However, he noted that much of the blame for any slowdown in production must lie with the US government, for its usual inability to agree budgets on time amid political infighting.
“If the US government wants to move the defense industrial base forward quickly, it needs to approve and allocate budgets on time so that contracts can be signed, resources allocated, and industry incentivized to get moving,” he said, adding that “the continued failure to approve budgets on time has become a geopolitical own goal of potentially historic proportions.”
Iran: an endless war?
The defense sector is also now preparing for the possibility that the war in Iran could last much longer than expected.
When the Iraq War began in 2003, Kenneth Adelman, the US ambassador to the UN during President Ronald Reagan’s administration, firmly believed it would be a quick and easy victory for the US.
However, the way the war dragged on and became a quagmire for the US military transformed its political outlook. Despite remaining a Republican, Adelman is now a staunch critic of Trump and believes the Iranian conflict could take on a similar dynamic.
“Iran has been planning this for a long time,” he told DW. “It’s already gone on longer than the Pentagon anticipated. And I don’t trust how the Pentagon plans for these things after what I saw in Iraq.”
(gg/rml)
