US defense industry braced for tech shake-up under Trump

Financial Times01-16

American defense executives are braced for a Donald Trump return to the White House that could be more disruptive than his first term, when he showed a willingness to shake up the status quo and ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nUS defense industry braced for tech shake-up under Trump\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-01-16 13:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/us-defence-industry-braces-tech-050017028.html><strong>Financial Times</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>American defense executives are braced for a Donald Trump return to the White House that could be more disruptive than his first term, when he showed a willingness to shake up the status quo and ...</p>\n\n<a href=\"https://finance.yahoo.com/news/us-defence-industry-braces-tech-050017028.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4023","symbol_name":"应用软件","start_time":0,"source_url":"https://finance.yahoo.com/news/us-defence-industry-braces-tech-050017028.html","article_id":"2503919079","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2503919079","pubTimestamp":1737003617,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"American defense executives are braced for a Donald Trump return to the White House that could be more disruptive than his first term, when he showed a willingness to shake up the status quo and personally intervened in procurement decisions.His insistence in 2018 on a cut-price contract for two new Air Force One planes left Boeing , the long-term provider of the presidential aircraft, nursing heavy losses. This time, industry executives and investors fear the Trump administration will disrupt the established defense hierarchy by giving lucrative contracts to newer players.Since Trump’s election victory in November, shares in most of the main US defense groups have underperformed the wider S&P 500 index amid uncertainty over what a second term holds for defense spending and weapons programmes.U.S. President-elect Donald Trump speaks as PayPal co-founder and Facebook board member Peter Thiel and Apple Inc CEO Tim Cook look on during a meeting with technology leaders at Trump Tower in Ne","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4023":"应用软件","BK4516":"特朗普概念","BK4564":"太空概念","NYSE":"纽交所","LU1861558580.USD":"日兴方舟颠覆性创新基金B","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU1244550577.SGD":"FTIF - Franklin Global Multi-Asset Income A (Mdis) SGD-H1","BK4187":"航天航空与国防","BK4585":"ETF&股票定投概念","LU1244550494.USD":"FRANKLIN GLOBAL MULTI-ASSET INCOME \"A\" (USDHEDGED) ACC","LHX":"哈里斯公司","LMT":"洛克希德马丁","LU1929549753.HKD":"FRANKLIN INCOME \"A\" (HKD) INC","LU1429558221.USD":"Natixis Loomis Sayles US Growth Equity RA USD","BK4543":"AI","LU1861559042.SGD":"日兴方舟颠覆性创新基金B SGD","LU1435385759.SGD":"Natixis Loomis Sayles US Growth Equity RA SGD-H","BK4588":"碎股","PLTR":"Palantir Technologies Inc.","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","BK4551":"寇图资本持仓","IE00BFXG1179.USD":"BNY MELLON U.S. EQUITY INCOME \"B\" (USD) INC","BK4547":"WSB热门概念","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","BA":"波音","LU2326559502.SGD":"Natixis Loomis Sayles US Growth Equity P/A SGD-H"},"translate_title":"美国国防工业为特朗普领导下的技术变革做好准备","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PLTR":1,"NYSE":1,"LHX":1,"BA":1,"LMT":0.9},"content_text":"American defense executives are braced for a Donald Trump return to the White House that could be more disruptive than his first term, when he showed a willingness to shake up the status quo and personally intervened in procurement decisions. \nHis insistence in 2018 on a cut-price contract for two new Air Force One planes left Boeing (BA), the long-term provider of the presidential aircraft, nursing heavy losses. This time, industry executives and investors fear the Trump administration will disrupt the established defense hierarchy by giving lucrative contracts to newer players.\nSince Trump’s election victory in November, shares in most of the main US defense groups have underperformed the wider S&P 500 index amid uncertainty over what a second term holds for defense spending and weapons programmes. \nThe emergence of defense technology groups such as Palantir (PLTR), co-founded by tech billionaire Peter Thiel, and drone maker Anduril, which have already been aggressively vying for a large slice of the $850bn defense budget, has also unnerved investors in traditional contractors. \n\n“I think there’s definitely an interest in the incoming administration in encouraging new entrants into the defense space,” said Stacie Pettyjohn, director of the defense programme at the Center for a New American Security think-tank. \n\n\n\n\n  U.S. President-elect Donald Trump speaks as PayPal co-founder and Facebook board member Peter Thiel and Apple Inc CEO Tim Cook look on during a meeting with technology leaders at Trump Tower in New York U.S., December 14, 2016. REUTERS/Shannon Stapleton\n \n\n  REUTERS / Reuters\n \n\nDuring his confirmation hearing on Tuesday, Pete Hegseth, Trump’s defense secretary pick, emphasised the need to speed up weapons development through competition and innovation. \n\nHe criticised the Pentagon for becoming “too insular”, trying “to block new technologies”, while praising Silicon Valley, which “for the first time in generations, has shown a willingness, desire and capability to bring its best technologies to bear at the Pentagon”.\n\nAn added unknown is how big an impact the Department of Government Efficiency’s war on waste will have on the defense department and how procurement might change. \n“For industry and investors it can be very destabilising — no one has a clear crystal ball about what is going to happen in terms of US defensespending and how the sector might change,” said Byron Callan, managing director of research group Capital Alpha Partners.\nDespite Trump’s unpredictability, industry experts said they saw several battles playing out that would shape US — and by extension European — defense this year.\nCuts in some of the large weapons programmes are possible — especially if the Pentagon looks to release spending for new types of defense technology focused on artificial intelligence or software. \nLockheed Martin’s (LMT) F-35 — the world’s largest defense programme — is seen as the biggest target following Elon Musk’s criticism of the stealth aircraft last year in social media posts. It accounts for more than 25 per cent of Lockheed’s sales alone. \n\n“Proposing to cut a Virginia-class submarine or 24-36 F-35s buys a lot more autonomous weapons and the networks to operate them,” said Callan. \n\nThe war in Ukraine has turbocharged the development of drones and other unmanned systems, all of which play to the strengths of the likes of Palantir and Anduril. \nThe latter, along with General Atomics, was selected last year by the US Air Force to build and test drone prototypes for the next phase of the service’s collaborative combat aircraft programme, which seeks to build a fleet of unmanned aerial vehicles. The companies were chosen over Lockheed, Boeing and Northrop in what was seen as a seminal moment for the industry. \nEven before the war in Ukraine, the Pentagon had been working to diversify its industrial base. Two years ago it established an Office of Strategic Capital, which makes private capital available to companies with technological innovations that can be used for national security. \nSuch efforts are expected to accelerate under Trump. His nominee for the number two role at the Pentagon, billionaire investor Stephen Feinberg, “comes from the Wall Street community so understands the [venture capital-backed defense tech groups] and how they operate. This should help facilitate the bringing in of new capabilities from new players”, said Cynthia Cook, who heads the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies, a US think-tank.\nOther connections link Trump’s cabinet picks and tech billionaires. Vice-president JD Vance has close ties to Palantir’s Thiel. \nSome of the large defense groups have agreed collaborations with the new technology contractors but, given the latter’s ambitions, these relations could well tip into full-scale competition. Last October, Palantir published a “treatise”, titled “The Defense Reformation”, on reshaping the Pentagon’s procurement, stoking the ire of many industry veterans. \nExecutives at some of the large contractors have publicly said little about the tech groups’ aspirations. \nHowever, one industry adviser pointed to rising concerns among executives. “What I do think [the large contractors] are worried about is whether or not the DOD puts their finger on the scale to help [newer players]” and try to help develop new, rival defense groups, he said. \nChris Kubasik, chair and chief executive of L3Harris Technologies (LHX) — which agreed a strategic partnership with Palantir last year — on Wednesday wrote to Musk and other leaders about the new efficiency drive with its proposed reforms to modernise America’s defense ecosystem. \nKubasik says in the letter that America’s procurement systems are “slow and bureaucratic” and do not provide “our warfighters with new capabilities at the speed of relevance to the threats they are facing”. \nKubasik’s reforms include easing reporting and accounting standards for defense contractors and setting up a “central contracting arm” within the office of the defense secretary to manage joint procurement programmes. \nMuch of what happens with the defense budget will depend on Congress, controlled by Republicans. But some congressional Republicans are still hawkish on defense spending, not to mention lawmakers with traditional defense manufacturing in their districts who would not want to put jobs and regional economies at risk. \n\n\n\n  Chris Kubasik, president and COO of L3Harris, is interviewed by CNBC on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 1, 2019. REUTERS/Brendan McDermid\n \n\n  REUTERS / Reuters\n \n\nWith the US budget expected to be constrained over the near-term, procurement will “come down to the decisions that are made by the administration on how those dollars are allocated”, said Sheila Kahyaoglu, analyst at Jefferies. This will affect the growth that contractors see and the investments that are made in the public and private markets, she added.\nEurope’s response to Trump’s new administration is also being closely watched. US defense exports to Europe could be at risk as governments focus on bolstering their domestic industrial base. \nOliver Dörre, chief executive of German radar and sensor maker Hensoldt, told the Financial Times last month that Europe should emulate the US by pushing for more local procurement. Others, however, believe governments — and industry — will keep their reliance on US players. \nDespite the noise, analysts warn, drones and autonomous systems are today no replacement for fighter jets, submarines or ships. Pettyjohn questioned the wisdom of walking away from established programmes. A shift away from weapons such as the F-35 would be neither “feasible, nor . . . smart”, she added.\nRobert Stallard at Vertical Research Partners, also played down the potential impact from the tech entrants: “I just cannot see the US military taking the risk of giving major programmes to these start-ups without a lot more time and experience under their belts.\n\n“Unlike in tech or whatever, the military cannot take unacceptably high levels of risk,” he noted, adding: “Elon can blow up a rocket or two, but if the US military loses a war, it is terminal.”\n\nCopyright The Financial Times Limited 2023\n© 2023 The Financial Times Ltd. All rights reserved. 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