Business Is Booming for Lockheed and Other US Bombmakers
May 3, 2017
Marcus Weisgerber / Defense One
In February 2016, the Pentagon announced it was starting to run low on the smart bombs used in its 9,000-plus airstrikes against Islamic State in Iraq and Syria and Barack Obama asked Congress toe for $1.8 billion to buy 45,000 new bombs. With the bombing campaign costing about $11.2 million per day, Lockheed and other bombmakers back in the US were registering record profits and expanding its munition factories to meet rising demand -- from fighting ISIS to building new weapons for Great Power wars at sea.
Pentagon Running Low on
Smart Bombs for ISIS Campaign
Marcus Weisgerber/ Defense One
(February 2, 2016) -- In a preview of the Pentagon's 2017 budget, Defense Secretary Carter signals a coming acceleration of the 18-month-old bombing effort.
The Pentagon is starting to run low on the smart bombs and guided missiles it has used in the 9,000-plus airstrikes against Islamic State militants in Iraq and Syria over the past 18 months, US Defense Secretary Ash Carter said Tuesday.
Because of that, President Barack Obama will ask Congress next week to approve $1.8 billion to buy 45,000 new bombs. The spending request is part of $7.5 billion the Pentagon says it will need to bomb ISIS and train Iraqi security forces in 2017.
"This will be critical as our updated coalition military campaign plan takes hold," Carter said of the request for the Pentagon's war chest.
The secretary, in a speech to the Economic Club of Washington, outlined major themes within the Pentagon 2017 spending plan, which the Obama administration will send to Congress next week.
Carter said the Pentagon is at "a major inflection point" and that its $583 billion 2017 budget takes "the long view."
He also announced a host of new technological projects to address near-term and strategic threats. Among them is the "arsenal plane, which takes one of our oldest aircraft platforms, and turns it into a flying launch pad for all sorts of different conventional payloads."
While he did not specify the platform, it is likely the B-52 bomber, which has undergone a multitude of upgrades since it first flew in the 1950s.
"In practice, the arsenal plane will function as a very large airborne magazine, networked to 5th-generation aircraft that act as forward sensor and targeting nodes -- essentially combining different systems already in our inventory to create wholly new capabilities," Carter said.
Since August 2014, the Pentagon has conducted more than 9,000 airstrikes against ISIS. As of Dec. 31, the Pentagon used $1.3 billion worth of bombs and missiles. Those airstrikes have destroyed more than 20,000 ISIS targets.
The bombing campaign against ISIS is costing about $11.2 million per day, Air Force Times reported earlier this month.
The increase in the Pentagon's war budget signals that the US military's campaign against ISIS will accelerate over the next two years.
Still, the ISIS money is only a fraction of the Pentagon's war chest. For the current fiscal year, Congress approved $59 billion, $8 billion more than the Pentagon requested, for the 9,800 troops that remain in Afghanistan and continue the airstrike against ISIS in Iraq and Syria.
The war budget, formally called the Overseas Contingency Operations (OCO) account, is the conduit for unexpected expenses in the military's fights overseas and related training stateside. But critics say it is too often used as a way to get around Pentagon spending caps.
Lt. Gen. John "Mick" Nicholson, President Barack Obama's pick to lead American forces in Afghanistan, told senators last week during his confirmation hearing that he would review the planned troop drawdown in the country. US forces are supposed to leave Afghanistan by the end of 2017, but a resurgence in Taliban attacks has put that in question.
"[W]e're in this for the long run," Carter said of Afghanistan at a briefing last week. "The president has made a commitment, and all the coalition members have to stick with Afghanistan. That's not just for the year 2016. It's the year 2017 and beyond."
Carter said last week that the Pentagon's 2017 war budget would include funding, as it has in the past, for Afghan security forces. He also said would make "contributions" as well.
Lawmakers have tried to use the war budget to skirt Pentagon spending caps, but the Obama administration has rejected those attempts.
The budget deal struck by Congress for this year and next stipulated the Pentagon will get at least $59 billion in 2017, but that account is not capped and they could get more.
"At this point, trying to project OCO costs is complicated because OCO includes so much more than war-related costs for Iraq and Afghanistan," said Todd Harrison, a budget analyst with the Center for Strategic and International Studies.
"OCO has become a semi-permanent addition to the base budget, effectively a catch-all for priorities that don't fit within the . . . budget caps. The level of OCO funding has become more of a political calculation than a budgetary calculation."
Bombs Away! Lockheed Expanding Missile Factories,
Quadruples Bomb Production for ISIS Long Haul
Marcus Weisgerber / Defense One
(March 16, 2016) -- The Hellfire maker is boosting production for an era of conflict with no end in sight.
Lockheed Martin is expanding various munition factories to meet rising demand from the US and its partners fighting the Islamic State -- and to start equipping American warplanes for great-power wars at sea.
"We are seeing a lot of international demand for our product set," Frank St. John, Lockheed's vice president of tactical missiles, said Tuesday. "That's causing us to do a lot of work in international partnerships and co-production and we're very excited about those opportunities."
In particular, US and allies are burning through their stocks of Lockheed's Hellfire missile, the signature weapon of Predator and Reaper drones. Helicopters and fixed-wing planes also carry the versatile laser-guided weapon.
"It requires a little bit of investment on our part to expand the factories, but the demand is there and we're keeping up with it [and] we're staying ahead of it," St. John said.
It also requires Pentagon funding. Last June, the US Army gave Lockheed $18 million to boost Hellfire production from 500 to 650 missiles per month. St. John said the company has added tools, test equipment, and floor space to its Hellfire production line.
Lockheed has also "quadrupled our production capacity" at the Archbald, Pennsylvania, factory to meet demand from the US and its allies for Paveway II laser-guided bombs.
With top military officials predicting that the ISIS campaign will run for years, demand for missiles and bombs is expected to remain high.
"I don't see events in the world changing dramatically over the next couple of years," St. John said. "[T]he conflicts that are requiring the use of our systems are lingering, so anticipate that we'll be producing at a pretty high level for some period of time."
Between August 2014 and February 2016, the latest month for which Pentagon data is available, American warplanes dropped more than 39,715 bombs, worth some $1.5 billion, on ISIS targets in Iraq and Syria.
Last month, Defense Secretary Ash Carter said he had asked Congress for $1.8 billion to buy 45,000 smart bombs in fiscal 2017. In all, the Pentagon plans to spend $1.89 billion on JDAM, Hellfire, and Small Diameter bombs next year, up $337 million for those three weapons this year.
On Wednesday, Air Force Secretary Deborah Lee James told the House Armed Services Committee, "We . . . need to invest more in munitions."
NATO and Middle Eastern allies are also believed to want to buy these weapons, Roman Schweizer, an analyst with Guggenheim, said in a March 7 note to investors. Saudi Arabia, United Arab Emirates, Bahrain, and Jordan have all struck ISIS targets in Syria.
Meanwhile, Lockheed is also preparing to build a new generation of weapons that might fight future wars. The firm has added 60,000 square feet to the Troy, Alabama, factory where it builds the Joint Air-to-Surface Standoff Missile, a stealthy cruise missile, St. John said.
That expansion will make room to build 110 Long-Range Anti-Ship Missiles, now under development for Navy Super Hornet fighters and Air Force B-1B bombers.
Marcus Weisgerber is the global business editor for Defense One, where he writes about the intersection of business and national security. He has been covering defense and national security issues for more than a decade, previously as Pentagon correspondent for Defense News.
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