WASHINGTON — In a stark warning to America's top defense contractors, U.S. Defense Secretary Pete Hegseth declared on Friday that companies like Lockheed Martin Corp., RTX Corp., Northrop Grumman Corp., Boeing Co., and General Dynamics Corp. must accelerate their weapons development and production or face obsolescence in an increasingly competitive global landscape.
Speaking at the National War College in Washington, Hegseth outlined a series of reforms aimed at overhauling the Pentagon's procurement processes, emphasizing the need for speed and efficiency amid rising geopolitical tensions. The announcement comes as the U.S. seeks to bolster its military capabilities and support allies facing threats from adversaries like China.
Hegseth, a former Army National Guard officer, announced the creation of a specialized “deal team” within the new Wartime Production Unit. According to a tweet from the Department of War, this initiative is designed to transform production capacity through innovative business agreements. “These large defence [groups] need to change the focus on speed and volume and invest their own capital to get there… if they do not, those big ones will fade away,” Hegseth told industry executives, as reported by Benzinga.
The defense secretary's remarks targeted major players in the industry, including Lockheed Martin (NYSE: LMT), RTX (NYSE: RTX), Northrop Grumman (NYSE: NOC), Boeing (NYSE: BA), and General Dynamics (NYSE: GD). He stressed that these firms must adapt to a faster-paced environment or risk being sidelined by more agile competitors.
To facilitate this shift, the Pentagon plans to slash regulations, including contract requirements, reporting standards, testing rules, and oversight measures. Hegseth described the department’s bureaucracy as an “adversary,” drawing a parallel to comments made by former Defense Secretary Donald Rumsfeld during his tenure.
Jerry McGinn, director at the Center for Strategic and International Studies (CSIS), supported Hegseth's approach. McGinn said Hegseth was “right to focus on changing incentives,” noting that current regulations have gone too far and stifled innovation in the defense sector.
The reforms are part of a broader effort to attract private capital investment and encourage new competitors to challenge the legacy aerospace firms that dominate the market. According to industry data cited in the announcement, there are now only five major contractors in the U.S., a sharp decline from 51 in 1990, largely due to post-Cold War budget cuts that led to consolidations and reduced competition.
Hegseth also highlighted the importance of foreign military sales, calling it a “top priority” to assist President Donald Trump in securing deals for American hardware. He pledged to expedite U.S. arms sales to allies, stating that such transactions are “critical to our strategic vision on the global landscape.”
This focus on international partnerships was underscored by Hegseth's recent activities. Last week, during multilateral defense talks in Kuala Lumpur, he pledged U.S. technological support to help Southeast Asian nations counter Chinese threats. The commitment reflects ongoing concerns about Beijing's military expansion in the region, including territorial disputes in the South China Sea.
“These large defence [groups] need to change the focus on speed and volume and invest their own capital to get there… if they do not, those big ones will fade away,” Hegseth said, addressing executives from the targeted companies.
The push for faster production comes at a time when the U.S. defense industry is under scrutiny for delays in key programs. For instance, Boeing has faced challenges with its production timelines for aircraft and missiles, while General Dynamics has been involved in shipbuilding projects that have experienced setbacks. Hegseth's warning echoes broader criticisms within the Trump administration about inefficiencies in government contracting.
Experts note that the consolidation of the defense industry since the end of the Cold War has created a landscape where a handful of companies hold significant power, potentially leading to higher costs and slower innovation. The reduction from 51 major contractors in 1990 to just five today has been attributed to mergers and acquisitions driven by shrinking defense budgets in the 1990s and early 2000s.
In response to these challenges, the new “deal team” is expected to negotiate agreements that prioritize rapid prototyping and scaled production. The Wartime Production Unit, a newly established entity, will oversee these efforts, aiming to mirror the urgency of wartime mobilization in peacetime operations.
Hegseth's comments also tie into President Trump's economic agenda, which has emphasized American manufacturing and job creation in the defense sector. A related story from Benzinga noted that Trump's approval rating is at a second-term low, with a potential government shutdown overshadowing record stock market performance, but defense reforms could bolster support among key constituencies.
Looking ahead, the implications of these changes could reshape the U.S. defense industrial base. By easing regulations and encouraging private investment, the Pentagon hopes to foster a more dynamic environment that attracts startups and innovative firms. However, critics within the industry have expressed concerns that deregulation might compromise safety and quality standards, though no specific opposition was detailed in the available reports.
As the reforms unfold, allies in Southeast Asia and beyond are likely to benefit from accelerated access to U.S. technology. Hegseth's pledge in Kuala Lumpur last week signals a proactive stance against Chinese influence, potentially leading to increased arms deals in the region. The overall strategy aligns with the administration's focus on great power competition, as outlined in national security documents.
In summary, Hegseth's address at the National War College marks a pivotal moment for U.S. defense contractors, urging them to evolve or perish in a fast-changing world. With the creation of the deal team and a push for deregulation, the Pentagon is positioning itself to enhance production speed and global alliances, setting the stage for what could be a transformative era in American military procurement.