Treasury Secretary Slams Defense Giants for Delays

Treasury Secretary Scott Bessent delivered a sharp critique of the US defense industry during a high-profile appearance at the World Economic Forum in Davos. He accused major defense contractors of failing to meet their obligations to the nation.

Bessent's comments focused on two critical areas: the inability of defense giants to deliver military equipment on schedule and the economic vulnerability posed by foreign semiconductor manufacturing. His statements align with the Trump administration's broader agenda to strengthen domestic industrial capacity.

During a livestreamed conversation, Scott Bessent took direct aim at the performance of US defense contractors. He argued that these companies, which owe their existence to government military needs, have fallen short of their patriotic duty.

"These defense contractors have let down the American people,"

Bessent stated. He highlighted that the industry is lagging significantly behind schedule, noting that major firms are five, six, seven years behind on the fulfillment of their contracts.

The Treasury Secretary did not mince words regarding executive compensation within the sector. He criticized the high salaries paid to leaders who are overseeing these delays.

"These CEOs are making $30, $50 million a year for failing the American people,"

he remarked. Company filings indicate that the bosses of the big five defense contractors—Lockheed Martin, RTX, Northrop Grumman, Boeing, and General Dynamics—each earned more than $18 million in total compensation in 2024.

Bessent outlined specific consequences for contractors that continue to underperform. He suggested that restrictions should remain in place until production levels normalize.

"So I do not think it is unreasonable to tell them that until further notice, you need to build more factories and buy back less stock,"

Bessent said. He indicated that these limitations would only be reconsidered once the backlog is reduced to a normalized level, potentially two to three years.

These comments appear to support recent actions taken by President Donald Trump. Earlier this month, the President issued an executive order directing the Pentagon to take specific measures against underperforming contractors.

The executive order aims to:

• Limit stock buybacks and dividends
• Link executive pay directly to production and delivery metrics
• Bolster output and investment in critical sectors

President Trump previously summarized his concerns on Truth Social, writing, "MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH." He specifically singled out RTX, the maker of Tomahawk cruise missiles, warning that the company must step up its production facilities or risk losing government business.

Bessent expanded the discussion beyond defense contractors to address broader economic security concerns. He identified a critical vulnerability in the global supply chain for high-end technology.

According to Bessent, the concentration of microchip manufacturing in Taiwan represents the "single biggest threat to the world economy." He described it as the greatest point of single failure in the current global market.

The potential consequences of a disruption in this region are severe. Bessent issued a stark warning regarding the stability of the region.

"If that island were blockaded, that capacity destroyed, it would be an economic apocalypse,"

he stated. In response to this threat, the administration is actively pursuing a strategy to bring these critical capabilities back to American soil.

Bessent confirmed that the administration is reshoring the semiconductor industry to the United States. This initiative is part of a larger effort to strengthen domestic companies in sectors deemed critical to national security, including semiconductors and rare-earth minerals.

The statements made by Scott Bessent signal a continued aggressive stance by the administration toward the defense industry and foreign supply chain dependencies. The focus remains on enforcing accountability for production delays and reducing economic reliance on foreign manufacturing.

Key areas to watch in the coming months include the implementation of the executive order limiting buybacks and the progress of the semiconductor reshoring initiative. Defense contractors will likely face increased pressure to expand domestic factory capacity and align executive compensation with production targets.