A Marilyn has once again seduced a president. This time, though, it’s not a movie star; it’s Marillyn Hewson, the head of Lockheed Martin, the nation’s top defense contractor and the largest weapons producer in the world. In the last month, Donald Trump and Hewson have seemed inseparable. They “saved” jobs at a helicopter plant. They took the stage together at a Lockheed subsidiary in Milwaukee. The president vetoed three bills that would have blocked the arms sales of Lockheed (and other companies) to Saudi Arabia. Recently, the president’s daughter Ivanka even toured a Lockheed space facility with Hewson.
On July 15th, the official White House Twitter account tweeted a video of the Lockheed CEO extolling the virtues of the company’s THAAD missile defense system, claiming that it “supports 25,000 American workers.” Not only was Hewson promoting her company’s product, but she was making her pitch — with the weapon in the background — on the White House lawn. Twitter immediately burst with outrage over the White House posting an ad for a private company, with some calling it “unethical” and “likely unlawful.”
None of this, however, was really out of the ordinary as the Trump administration has stopped at nothing to push the argument that job creation is justification enough for supporting weapons manufacturers to the hilt. Even before Donald Trump was sworn in as president, he was already insisting that military spending was a great jobs creator. He’s only doubled down on this assertion during his presidency. Recently, overriding congressional objections, he even declared a national “emergency” to force through part of an arms sale to Saudi Arabia that he had once claimedwould create more than a million jobs. While this claim has been thoroughly debunked, the most essential part of his argument — that more money flowing to defense contractors will create significant numbers of new jobs — is considered truth personified by many in the defense industry, especially Marillyn Hewson.
The facts tell a different story.
Lockheed Locks Down Taxpayer Dollars, While Cutting American Jobs
To test Trump’s and Hewson’s argument, we asked a simple question: When contractors receive more taxpayer money, do they generally create more jobs? To answer it, we analyzed the reports of major defense contractors filed annually with the U.S. Securities and Exchange Commission (SEC). Among other things, these reveal the total number of people employed by a firm and the salary of its chief executive officer. We then compared those figures to the federal tax dollars each company received, according to the Federal Procurement Data System, which measures the “dollars obligated,” or funds, the government awards company by company.
We focused on the top five Pentagon defense contractors, the very heartland of the military-industrial complex, for the years 2012 to 2018. As it happened, 2012 was a pivotal year because the Budget Control Act (BCA) first went into effect then, establishing caps on how much money could be spent by Congress and mandating cuts to defense spending through 2021. Those caps were never fully adhered to. Ultimately, in fact, the Pentagon will receive significantly more money in the BCA decade than in the prior one, a period when the American wars in Afghanistan and Iraq were at their heights.
In 2012, concerned that those caps on defense spending would cut into their bottom lines, the five top contractors went on the political offensive, making future jobs their weapon of choice. After the Budget Control Act passed, the Aerospace Industries Association — the leading trade group of the weapons-makers — warned that more than one million jobs would be at risk if Pentagon spending were cut significantly. To emphasize the point, Lockheed sent layoff notices to 123,000 employees just before the BCA was implemented and only days before the 2012 election. Those layoffs never actually happened, but the fear of lost jobs would prove real indeed and would last.
Consider it mission accomplished, since Pentagon spending was actually higher in 2018 than in 2012 and Lockheed received a sizeable chunk of that cash infusion. From 2012 to 2018, among government contractors, that company would, in fact, be the top recipient of taxpayer dollars every single year, those funds reaching their zenith in 2017, as it raked in more than $50.6 billion federal dollars. By contrast, in 2012, when Lockheed was threatening its employees with mass layoffs, the firm received nearly $37 billion.
So what did Lockheed do with those additional $13 billion taxpayer dollars? It would be reasonable to assume that it used some of that windfall (like those of previous years) to invest in growing its workforce. If you came to that conclusion, however, you would be sorely mistaken. From 2012 to 2018, overall employment at Lockheed actually fell from 120,000 to 105,000, according to the firm’s filings with the SEC and the company itself reported a slightly larger reduction of 16,350 jobs in the U.S. In other words, in the last six years Lockheed dramatically reduced its U.S. workforce, even as it hired more employees abroad and received more taxpayer dollars.
So where is all that additional taxpayer money actually going, if not job creation? At least part of the answer is contractor profits and soaring CEO salaries. In those six years, Lockheed’s stock price rose from $82 at the beginning of 2012 to $305 at the end of 2018, a nearly four-fold increase. In 2018, the company also reported a 9% ($590 million) rise in its profits, the best in the industry. And in those same years, the salary of its CEO increased by $1.4 million, again according to its SEC filings.
In short, since 2012 the number of taxpayer dollars going to Lockheed has expanded by billions, the value of its stock has nearly quadrupled, and its CEO’s salary went up 32%, even as it cut 14% of its American work force. Yet Lockheed continues to use job creation, as well as its employees’ present jobs, as political pawns to get yet more taxpayer money. The president himself has bought into the ruse in his race to funnel ever more money to the Pentagon and promote arms deals to countries like Saudi Arabia, even over the nearly unified objections of an otherwise incredibly divided Congress.
Lockheed Is the Norm, Not the Exception
Despite being this country’s and the world’s top weapons maker, Lockheed isn’t the exception but the norm. From 2012 to 2018, the unemployment rate in the U.S. plummeted from roughly 8% to 4%, with more than 13 million new jobs added to the economy. Yet, in those same years, three of the five top defense contractors slashed jobs. In 2018, the Pentagon committed approximately $118 billion in federal money to those firms, including Lockheed — nearly half of all the money it spent on contractors. This was almost $12 billion more than they had received in 2012. Yet, cumulatively, those companies lost jobs and now employ a total of 6,900 fewer employees than they did in 2012, according to their SEC filings.
In addition to the reductions at Lockheed, Boeing slashed 21,400 jobs and Raytheon cut 800 employees from its payroll. Only General Dynamics and Northrop Grumman added jobs — 13,400 and 16,900 employees, respectively — making that total figure look modestly better. However, even those “gains” can’t qualify as job creation in the normal sense, since they resulted almost entirely from the fact that each of those companies bought another Pentagon contractor and added its employees to its own payroll. CSRA, which General Dynamics acquired in 2018, had 18,500 employees before the merger, while Orbital ATK, which General Dynamics acquired last year, had 13,900 employees. Subtract these 32,400 jobs from the corporate totals and job losses at the firms become staggering.
by Nia Harris, Cassandra Stimpson, and Ben Freeman, Naked Capitalism | Read more:
On July 15th, the official White House Twitter account tweeted a video of the Lockheed CEO extolling the virtues of the company’s THAAD missile defense system, claiming that it “supports 25,000 American workers.” Not only was Hewson promoting her company’s product, but she was making her pitch — with the weapon in the background — on the White House lawn. Twitter immediately burst with outrage over the White House posting an ad for a private company, with some calling it “unethical” and “likely unlawful.”
None of this, however, was really out of the ordinary as the Trump administration has stopped at nothing to push the argument that job creation is justification enough for supporting weapons manufacturers to the hilt. Even before Donald Trump was sworn in as president, he was already insisting that military spending was a great jobs creator. He’s only doubled down on this assertion during his presidency. Recently, overriding congressional objections, he even declared a national “emergency” to force through part of an arms sale to Saudi Arabia that he had once claimedwould create more than a million jobs. While this claim has been thoroughly debunked, the most essential part of his argument — that more money flowing to defense contractors will create significant numbers of new jobs — is considered truth personified by many in the defense industry, especially Marillyn Hewson.The facts tell a different story.
Lockheed Locks Down Taxpayer Dollars, While Cutting American Jobs
To test Trump’s and Hewson’s argument, we asked a simple question: When contractors receive more taxpayer money, do they generally create more jobs? To answer it, we analyzed the reports of major defense contractors filed annually with the U.S. Securities and Exchange Commission (SEC). Among other things, these reveal the total number of people employed by a firm and the salary of its chief executive officer. We then compared those figures to the federal tax dollars each company received, according to the Federal Procurement Data System, which measures the “dollars obligated,” or funds, the government awards company by company.
We focused on the top five Pentagon defense contractors, the very heartland of the military-industrial complex, for the years 2012 to 2018. As it happened, 2012 was a pivotal year because the Budget Control Act (BCA) first went into effect then, establishing caps on how much money could be spent by Congress and mandating cuts to defense spending through 2021. Those caps were never fully adhered to. Ultimately, in fact, the Pentagon will receive significantly more money in the BCA decade than in the prior one, a period when the American wars in Afghanistan and Iraq were at their heights.
In 2012, concerned that those caps on defense spending would cut into their bottom lines, the five top contractors went on the political offensive, making future jobs their weapon of choice. After the Budget Control Act passed, the Aerospace Industries Association — the leading trade group of the weapons-makers — warned that more than one million jobs would be at risk if Pentagon spending were cut significantly. To emphasize the point, Lockheed sent layoff notices to 123,000 employees just before the BCA was implemented and only days before the 2012 election. Those layoffs never actually happened, but the fear of lost jobs would prove real indeed and would last.
Consider it mission accomplished, since Pentagon spending was actually higher in 2018 than in 2012 and Lockheed received a sizeable chunk of that cash infusion. From 2012 to 2018, among government contractors, that company would, in fact, be the top recipient of taxpayer dollars every single year, those funds reaching their zenith in 2017, as it raked in more than $50.6 billion federal dollars. By contrast, in 2012, when Lockheed was threatening its employees with mass layoffs, the firm received nearly $37 billion.
So what did Lockheed do with those additional $13 billion taxpayer dollars? It would be reasonable to assume that it used some of that windfall (like those of previous years) to invest in growing its workforce. If you came to that conclusion, however, you would be sorely mistaken. From 2012 to 2018, overall employment at Lockheed actually fell from 120,000 to 105,000, according to the firm’s filings with the SEC and the company itself reported a slightly larger reduction of 16,350 jobs in the U.S. In other words, in the last six years Lockheed dramatically reduced its U.S. workforce, even as it hired more employees abroad and received more taxpayer dollars.
So where is all that additional taxpayer money actually going, if not job creation? At least part of the answer is contractor profits and soaring CEO salaries. In those six years, Lockheed’s stock price rose from $82 at the beginning of 2012 to $305 at the end of 2018, a nearly four-fold increase. In 2018, the company also reported a 9% ($590 million) rise in its profits, the best in the industry. And in those same years, the salary of its CEO increased by $1.4 million, again according to its SEC filings.
In short, since 2012 the number of taxpayer dollars going to Lockheed has expanded by billions, the value of its stock has nearly quadrupled, and its CEO’s salary went up 32%, even as it cut 14% of its American work force. Yet Lockheed continues to use job creation, as well as its employees’ present jobs, as political pawns to get yet more taxpayer money. The president himself has bought into the ruse in his race to funnel ever more money to the Pentagon and promote arms deals to countries like Saudi Arabia, even over the nearly unified objections of an otherwise incredibly divided Congress.
Lockheed Is the Norm, Not the Exception
Despite being this country’s and the world’s top weapons maker, Lockheed isn’t the exception but the norm. From 2012 to 2018, the unemployment rate in the U.S. plummeted from roughly 8% to 4%, with more than 13 million new jobs added to the economy. Yet, in those same years, three of the five top defense contractors slashed jobs. In 2018, the Pentagon committed approximately $118 billion in federal money to those firms, including Lockheed — nearly half of all the money it spent on contractors. This was almost $12 billion more than they had received in 2012. Yet, cumulatively, those companies lost jobs and now employ a total of 6,900 fewer employees than they did in 2012, according to their SEC filings.
In addition to the reductions at Lockheed, Boeing slashed 21,400 jobs and Raytheon cut 800 employees from its payroll. Only General Dynamics and Northrop Grumman added jobs — 13,400 and 16,900 employees, respectively — making that total figure look modestly better. However, even those “gains” can’t qualify as job creation in the normal sense, since they resulted almost entirely from the fact that each of those companies bought another Pentagon contractor and added its employees to its own payroll. CSRA, which General Dynamics acquired in 2018, had 18,500 employees before the merger, while Orbital ATK, which General Dynamics acquired last year, had 13,900 employees. Subtract these 32,400 jobs from the corporate totals and job losses at the firms become staggering.
