The Trump Administration is considering partial government ownership of key US defence manufacturers, specifically citing fighter aircraft and munitions provider Lockheed Martin.
In an interview with broadcaster CNBC on 26 August, US Secretary of Commerce Howard Lutnick left open the door to Washington taking an equity stake in suppliers of critical defence products, describing them as already being de facto government entities.
“There is a monstrous discussion about defence,” Lutnick says.
“Lockheed Martin makes 97% of their revenue from the US government. They are basically an arm of the US government,” the commerce secretary adds.
Lutnick’s comments came one day after the Trump Administration announced it is taking a 10% ownership stake in struggling US chip manufacturer Intel. Washington has separately moved to increase its control over producers of other strategic materials, including steel and rare earth minerals.
The White House approved a Japanese acquisition of US Steel earlier this year only after Nippon Steel agreed to grant the US government a so-called “golden share” in the company that gives Washington veto authority over key business decisions.
In July, the US Department of Defense became the largest shareholder in the USA’s only operational miner of rare earth minerals, which are a key input to military weapons and aircraft.
The $400 million purchase of preferred stock in MP Materials is being used by the company to expand rare earth refining capacity and build a second domestic facility for the production of magnets, which are essential components to defence articles like the F-35.
Amidst that trend of increasing government control in private companies, Lutnick was asked by CNBC if defence firms were also being considered, prompting his claims about Lockheed.
However, the revenue figure cited by Lutnick appears to be highly inaccurate.
Lockheed’s latest 10-K filing with US securities regulators indicates that 73% of its 2024 sales came from US government contracts. International orders comprised 26% of net sales for that period, with a roughly even split between Europe and Asia.
Overseas contracts made up a significant portion of 2024 sales across multiple Lockheed divisions, including 29% of Missiles and Fire Control and 32% of Aeronautics, which includes the F-35, F-16 and C-130J.
International customers are key to sustaining production on the F-35 and F-16 assembly lines.
In Lockheed’s recent second quarter earnings call, chief executive James Taiclet cited “strong international demand for the F-35” from the UK and elsewhere as giving him confidence in the outlook for ongoing production of the fifth-generation stealth fighter.
“I’m confident the F-35 production rate will stay strong,” Taiclet said in July.
Long-range precision missiles are also a major source of international business for Lockheed. In July, the company received a $4 billion contract for the Long-Range Anti-Ship Missile (LRASM) and AGM-158 Joint Air-to-Surface Standoff Missile (JASSM), which includes weapons for Finland, Japan, the Netherlands and Poland, as well as the USA.
Munitions are apparently a key point of the discussions happening within the White House, as the USA and its allies undertake a historic expansion in the production and stockpiling of key long-range weapons systems.
“There’s a lot of talking that needs to be had about how do we finance our munitions acquisitions,” Lutnick says. “The way it has been done is a giveaway.”
The Pentagon has awarded billions of dollars in contracts to Lockheed and fellow missile producer Raytheon in recent months, covering munitions for both the US military and overseas allies, who contribute funds through the Pentagon’s Foreign Military Sales system.
It is unclear how the US government taking an equity stake in prime defence manufacturer like Lockheed would impact operations at those companies, should the White House move forward.
In practise, major US defence firms already work in close coordination with the Pentagon on a range of matters, with executives and programme managers regularly citing customer restrictions on what topics they can and cannot discuss.
Decisions made within the Pentagon and US Congress are already central to how defence manufacturers like Lockheed plan out their internal investments and production capacity.
After the outbreak of the Russia-Ukraine War in 2022, Raytheon restarted the long-dormant production of FIM-92 Stinger shoulder-fired anti-aircraft missiles, at the behest of the Pentagon.
Lockheed built a second facility for the production of the JASSM and LRASM cruise missiles only after the US government indicated it would support the expanded capacity with future orders.
The US government already maintains veto power over the export of any sophisticated or high-value defence products, occasionally taking action to restrict sales on national security grounds.
Washington famously axed the sale of F-35 fighters to NATO ally Turkey after Ankara opted to purchase a Russian air defence system.
