Tag: manufacturing

“Something is going wrong on the assembly lines of America’s arsenal of democracy, and it’s happening at a moment of crisis. The White House, Pentagon and America’s overseas allies are all demanding that defense companies ramp up production to meet the needs of a dangerous geopolitical moment. America is running short of missiles, munitions and battleships. Allies are waiting years for deliveries. Even the Pentagon has to stand in line and wait for delayed shipments of major weapons, like Hellfire missiles, Javelin rocket launchers and sophisticated air defense interceptors. America is trying to surge its military capacity to produce more munitions, missiles and ships, but to do so, it must rely almost entirely on a group of five Fortune 500 defense companies. And none of these companies seem to be on war footing.

Instead of hiring more workers and paying workers more in an effort to retain them, these companies are far more focused on meeting the demands of Wall Street, trying to entice investors and boost their stock price by cutting costs, as well as using billions of dollars in revenue to pay handsome dividends and buy back shares of stock. Last year, for example, Lockheed Martin gave $6.8 billion in buybacks and dividends directly to its shareholders, which amounted to nearly 10 percent of the company’s total revenue and was larger than the $5.3 billion it kept in profits. The same year, RTX (formerly called Raytheon) paid $3.7 billion to shareholders, General Dynamics paid $3 billion and Northrop Grumman paid $3.7 billion. The billions of dollars they send back shareholders each year means that there is less money to go toward paying, hiring or retaining their employees.

As a result, jobs in defense manufacturing are becoming less and less attractive at a time when they need to be getting far more attractive. Many workers are leaving the field or declining to enter it. A survey by the job recruiting firm Acara found that annual turnover in the defense and aerospace industry hit 13 percent in 2023, compared to an average U.S. rate of 3.8 percent. And this is happening just as the need for those skills is rising. Demand for advanced manufacturing skills in the sector is outpacing the number of trained employees, and 75 percent of defense companies are struggling to find qualified employees, the survey found.

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During the 2000s, the big defense contractors worked relentlessly to expand their profit margins, make their production lines as lean as possible and boost their annual sales. Raytheon’s stock price nearly quintupled from 2001 to 2021 while Northrop Grumman’s rose nearly 700 percent. Lockheed Martin did exceptionally well between 2001 and 2022, when the company’s stock price rose more than tenfold from $34.68 to $389.13 a share. The profitability came, in part, because Lockheed was focused on keeping labor costs low and supply lines trim.

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Masters said in 2022 that many of his employees could barely afford apartments in the Orlando area, and one of his new hires was sleeping in her car. That year, an entry-level employee at the factory earned a minimum of $15.45 an hour, which was less than some service-sector jobs in the area. In 2025, a local Buc-ee’s gas station advertised wages for “restroom crews” starting at $20 an hour and car wash employees at $21 an hour.

A lot of people joined Lockheed because they thought it would provide a good long-term career path, but Masters said they found it difficult to live off the wages as they worked their way up the ladder.

“We cannot keep people!” Masters said. “They bring them in on the low end of the pay scale. … They want cheaper wages. They want to keep the wage down. We’re up against profit over anything else.”

This system delivered plenty of profits and munitions over 20 years of the War on Terror, but it seemed to hit a breaking point after Russian President Vladimir Putin invaded Ukraine in 2022. The following years of grinding trench warfare created a bottomless appetite for munitions that the United States was suddenly giving or selling by the thousands to its allies.

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Tensions had also already been rising with another near peer country, China, which fueled worries of future munitions shortfalls. This means that Lockheed and its peers had to focus on producing more missiles at a faster rate than it did during the War on Terror.

The companies, and the Pentagon, did not seem up to the task. Spending constraints since 2011, triggered by debate over the debt limit, have led Congress to issue budgets largely through annual continuing resolutions, which undercuts efforts to begin multi-year commitments and contracts necessary that would allow companies like Lockheed to boost missile production. The current wait time for a new Hellfire missile is between two and three years from the time it’s ordered, according to the Department of Defense. The wait for a Javelin missile is about three years.

All of this has saddled Lockheed Martin and other companies with two mandates that are in opposition: If it wanted to dramatically increase its missile output and speed up deliveries, the company would need to invest billions of dollars to boost supply chains and hire workers. But this would cut into free cash flow and could hurt its profits, making the company less attractive to investors. The company might be incentivized to boost production if the Pentagon paid all the upfront costs for expansion. But the Pentagon has not done that, nor has it resorted to using more radical measures like forcing increased production through authorities like the Defense Production Act. This has left companies like Lockheed to work with what they have, trying to satisfy both the Pentagon and its investors at the same time.”

https://www.politico.com/news/magazine/2025/10/27/lockheed-martin-strike-orlando-weapons-missiles-00514386?ceid=273413&emci=d03704a3-37b4-f011-8e61-6045bded8ba4&emdi=80e8776f-b6b4-f011-8e61-6045bded8ba4