Recently, Defense News published its annual list of the top 100 global defense contractors. At the top was Lockheed Martin, which collected more than $68 billion in defense revenue, most of it from the U.S. military. The top 10 U.S. defense contractors earned a collective $273 billion in defense dollars last year.
Once you pay the warfighters, feed them, gas up tanks, much of the defense budget goes to folks like Lockheed. They exist because America lives in a dangerous world.
For more than 80 years, we have been a global superpower. We spend a trillion dollars annually on defense, a big chunk in North Carolina, where the military supports more than 650,000 jobs.
Most of the top 10 defense contractors get most of their revenues from the U.S. military budget and sales to allied militaries. For example, Lockheed Martin gets 96% of its revenue from the military. Northrop Grumman gets 89%. HII, which owns Newport News Shipbuilding in Hampton Roads, Virginia, gets 100%. There is one customer for the aircraft carriers, which have a sticker price of $13 billion. They sail the oceans, launching Lockheed Martin jets.
These contractors focus a lot of resources on ensuring that their programs stay funded.
DRONES AND AI
There is a great debate right now about whether these are the right weapons systems. The outcome of that debate has great implications for North Carolina, where 95,000 warfighters train on and maintain many of these systems, and thousands of civilians repair them. Drones and artificial intelligence were in their infancy when many systems were put into production. Now, drones and AI dominate the agendas of military conferences.
This is a challenge for the big defense contractors, who have built their businesses around legacy systems, even those that look very new.
Last month, the Pentagon sent 10 F-35 Lightning II fighter jets to patrol the Caribbean after a couple of Venezuelan F-16s buzzed a Navy ship there. F-35s are the fifth-generation fighter jets that Marine Corps pilots fly out of their air stations at Cherry Point in Havelock and Beaufort, South Carolina.
The F-35 has been a big part of Lockheed Martin’s revenue for years, and the U.S. is supposed to be buying new F-35s until the mid-2040s.
These aircraft cost $80 million to $100 million apiece coming off the assembly line in Fort Worth, Texas, and the supply chain for these includes 1,650 companies in 49 states with 290,000 workers. That chain includes 29 companies in North Carolina with nearly 4,000 jobs. That is just part of the impact. We are very invested in the F-35 in North Carolina and have a lot at stake in it.
All told, acquisition, upgrades and sustainment costs for the F-35 are expected to total more than $2 trillion over its lifespan. It is expected to be one of the cornerstones of America’s defense for the rest of this century. Imagine, in 1925, trying to predict what our main weapon system was going to be in the 1970s.
Such a commitment to a manned aircraft at a time of rapid growth in autonomy and artificial intelligence has drawn flak.
Last November, after the election, Elon Musk harshly criticized the F-35, suggesting that it should be replaced by uncrewed vehicles. “. . . (M)anned fighter jets are obsolete in the age of drones anyway,” he posted on X.
While procurement of the F-35 has slowed down for a variety of reasons, some 1,200 have been built and entered the air squadrons of the Navy, Marines and Air Force. Pilots have been trained to fly them. Logistics personnel have been trained to maintain them. Installations like Fleet Readiness Center East at Marine Corps Air Station Cherry Point, with its 4,000 engineers and technicians, have had facilities built to conduct regular overhauls of the F-35. There is a $200 million F-35 sustainment facility on the way for Cherry Point if Congress can get a budget passed.
The F-15 has been showing up at military air bases since around 2012. Periodically, you will hear about some F-35 news at MCAS Cherry Point, where the first one showed up two years ago.
Introducing a couple of thousand new fifth-generation fighter jets at bases around the country and the world does not happen fast. But it has been happening, because the old Marine Corps Harrier jets, those vertical takeoff-and-land marvels, are retiring. Cherry Point got its first AV-8B Harrier II in 1984; weapons systems last a long time. VMA-223 at Cherry Point is the last Harrier squadron in the Marine Corps, and it will keep flying them for another year.
The F-35 is the fighter jet that is the reason that Lockheed stays the world’s leading defense contractor. It is supposed to be flying, with constant upgrades, into the 2070s and probably into the next century.
MORE DEBATES
The debate over the F-35 commitment extends across the big weapons systems. There is a similar argument about aircraft carriers. They are our major power projection platform. They make a big impression when they show up in the Mediterranean or the Persian Gulf. But the next big war we are likely to fight is going to be with China, not a regional threat like Iran. China has many missiles that could be fired at our carriers and the ships that ride with them in their task forces. The very real question is whether our carriers — with decks full of F-35s — will be able to get close enough to make a difference in a large-scale conflict in the Western Pacific.
While the Navy has made a push toward the development of small uncrewed vessels, particularly to move supplies around the Pacific, it is still committed to big ships. Indeed, it wants more of them, seeking to expand the fleet from about 295 to 390. It is trying to get 250,000 more skilled trades workers into its shipbuilding supply chain. There’s a new group, the North Carolina Maritime Manufacturing Initiative, that is committed to helping the Navy achieve this. We have a lot at stake.
THE UKRAINE EFFECT
Wars have a big influence on weapon system debates, including two big drone wars in the past half-decade. The first one, between Azerbaijan and Armenia, received little attention in the West, except for military circles.
The second drone war, in Ukraine, has had a big impact on discussions in the U.S., and may have an impact on our bases. Lots of aircraft with rotors exist at the 82nd Combat Aviation Brigade at Fort Bragg and Marine Corps Air Station New River, including many Ospreys that can fly like planes and take off and land like helicopters.
During a recent change of command ceremony for the 82nd Airborne Division at Fort Bragg, one of the highlights was a flyover. The helicopters included one big Chinook, two Black Hawks and two Apaches. It was impressive. They were also the type of aircraft that has been flying since the 1960s (Chinooks), the 1970s (Black Hawks) and 1980s (Apaches). They have been upgraded and overhauled for decades.
The drones are coming. All the services are trying to get autonomous systems into their formations. But we have a big investment in legacy systems. That is our strength and our challenge. ■
