Treasury Secretary Scott Bessent issued a stinging rebuke of US defense companies on Tuesday, saying they’ve fallen short of their patriotic duty by not delivering weapons on time.
“These defense contractors have let down the American people,” Bessent said during a livestreamed conversation at the World Economic Forum in Davos, Switzerland.
Bessent said they were “five, six, seven years behind on fulfillment of their contracts,” despite owing their existence to the US government’s need for military supplies.
“So I do not think it is unreasonable to tell them that until further notice, you need to build more factories and buy back less stock,” said Bessent, a former partner at Soros Fund Management.
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Bessent also jabbed at defense executives’ pay, saying “these CEOs are making $30, $50 million a year for failing the American people.”
Company filings show the bosses of the big five defense contractors — Lockheed Martin, RTX (formerly known as Raytheon), Northrop Grumman, Boeing, and General Dynamics — each earned more than $18 million in total compensation in 2024.
“Once they get to some normalized level of backlog — I don’t know whether it’s two years, three years — then we can talk about removing those restrictions,” Bessent added.
He was likely referring to President Donald Trump’s recent executive order directing the Pentagon to limit buybacks and dividends at underperforming defense contractors, link executive pay to production and delivery, and take steps to bolster their output and investment.
Earlier this month, Trump summed up his concerns on Truth Social, writing: “MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH.”
He singled out RTX, the maker of Tomahawk cruise missiles, writing that “either Raytheon steps up” and builds more facilities and equipment, or they’ll “no longer be doing business with” the US government.
During his conversation at Davos, Bessent spoke more broadly about how the Trump administration is working to strengthen and reshore companies in sectors it sees as critical to national security, including semiconductors and rare-earth minerals.
He said the “single biggest threat to the world economy” and greatest “point of single failure” is that the vast majority of high-end microchips are made in Taiwan.
“If that island were blockaded, that capacity destroyed, it would be an economic apocalypse,” Bessent said. “So we are reshoring the semiconductor industry to the US.”
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