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Budget Matters: Congress Continues to Kick Appropriations Can
Budget Matters: Congress Continues to Kick Appropriations Can
Four of the Pentagon’s top defence contractors have warned that persistent parts and labour shortages could continue into 2024, just as they invest in accelerating weapons production and orders related to the war in Ukraine roll in.
Boeing, Lockheed Martin, Northrop Grumman and Raytheon Technologies have contended with snarled supplies since the start of the coronavirus pandemic, and they are now confronting widespread cost inflation. These factors have combined to slow production rates, weigh on revenues and in some cases cause outright losses.
Northrop Grumman, which makes weaponry including the B-2 stealth bomber, expects supply chain delays to run throughout 2023, with some disruptions lasting up to two years, longer than the company’s earlier forecasts.
“I don’t expect them to get significantly better,” Kathy Warden, Northrop’s chief executive, told analysts during an earnings call on Thursday. The company reported $915mn in net profit, $27mn less than analysts expected.
Raytheon chief executive Greg Hayes said that of the group’s 13,000 suppliers, roughly 400 “are a problem for us”.
“We’re fully prepared that next year is going to be kind of a hand to mouth on the supply chain,” Hayes told analysts after the company reported earnings this week.
The US aerospace and defence industry is expected to grow as the country and its allies increase budgets to bolster their own arsenals and replenish stockpiles of weaponry sent to the Ukrainian military.
But the industry’s struggles with obtaining necessary parts and raw materials will “throttle” companies’ expansion, and “it is going to take longer to replenish those inventories”, said Ron Epstein, an analyst at Bank of America. Supply chains were “not even close” to being “in a wartime posture”, he said.
[snip]
GD seems to be rather optimistic there, methinks.General Dynamics, which specialises in battle tanks and ships, has had trouble hiring speciality engineers and experienced shipbuilders but does “not see labour as a constraint for our revenue growth at the moment”, chief executive Phebe Novakovic said on Wednesday, as the company has been bolstered by its commercial private jet business.
With inflation moving like it is, those $1 trillion would be more like $750 B today.![]()
The annual military budget could hit $1 trillion by 2027 - Responsible Statecraft
The push for China competition, along with a lack of fiscal discipline, places an increasing burden on the American taxpayer.responsiblestatecraft.org