Trump administration eyes stakes in defence firms, including Lockheed Martin
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An F-35A Lockheed Martin fighter jet landing on a motorway in Finland in 2023.
PHOTO: REUTERS
Follow topic:
- US ponders taking stakes in defence contractors such as Lockheed Martin, says Commerce Secretary Howard Lutnick.
- Intervention raises concerns as William Hartung warns it may prioritise Lockheed Martin's financial success over strategic considerations.
- Recent interventions include a stake in MP Materials and a chip deal brokered with Nvidia and AMD.
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WASHINGTON – The Trump administration is considering taking stakes in defence contractors, including Lockheed Martin, US Commerce Secretary Howard Lutnick said on Aug 26, as he defended President Donald Trump’s push for a greater government role in American business.
“They’re thinking about it,” Mr Lutnick told CNBC, citing Pentagon leaders, when asked if the administration was considering taking pieces of contractors such as Lockheed Martin, Boeing, or Palantir Technologies.
“There’s a lot of talking that needs to be had about, ‘How do we finance our munitions acquisitions?’.
“There’s a monstrous discussion about defence. Lockheed Martin makes 97 per cent of their revenue from the US government. They are basically an arm of the US government,” he added.
Lockheed Martin, whose shares rose 1.6 per cent following the remarks, said: “We are continuing our strong working relationship with President Trump and his administration to strengthen our national defence.”
Boeing declined to comment, while Palantir did not respond to a request for comment.
Boeing stock was up 2.8 per cent and Palantir reversed a small initial slide of about 1 per cent following the remarks and was up 1.4 per cent in midday trading.
Mr Lutnick’s comments are the latest example of the White House’s aggressive interventions in the private sector, with moves historically only undertaken during wartime, or to save struggling and strategic domestic companies during times of economic stress.
Mr William Hartung, a senior research fellow at the Quincy Institute for Responsible Statecraft, described the move as a bad idea because it might “incentivise the government to put financial success for Lockheed Martin ahead of more important strategic considerations... We need some healthy distance between the government and the companies it is supposed to regulate” he added.
Company stakes
The Trump administration last week announced a near-10 per cent stake in chipmaker Intel.
It previously intervened to complete the purchase
It also took a stake in rare earths company MP Materials, and brokered a deal with chipmakers Nvidia and AMD to take 15 per cent of revenue from sales to China of chips that had previously been prohibited.
On Aug 25, Mr Trump said he wants to make more US government investments in healthy American companies, even as critics warn that such a role for the government could limit corporate strategy and market agility, and questions are raised about the impact on consumers.
The unusual level of federal government intervention in the economy has created unexpected alliances, with liberal US Senator Bernie Sanders backing the stake in Intel.
Mr Lutnick on Aug 26 said companies that need federal assistance should be prepared to deal with Mr Trump.
“If a company comes to the United States of America government and says, ‘We need your help, we want to change everything’... I think that’s a question between the CEO and the President of the United States of whether he will listen to them and change the rules,” he told CNBC, citing the Nvidia deal.
“If we are adding fundamental value to your business, I think it’s fair for Donald Trump to think about the American people,” Mr Lutnick added. REUTERS
