SAN DIEGO—Defense contractors are too focused on stock buybacks and other gimmicks that line their pockets and not enough on investing in shipyards or shoring up the defense industrial base, Navy Secretary Carlos del Toro said Thursday. “Overall, many of you are making record profits—as evidenced by your quarterly financial statements,” Del Toro told the crowd at the AFCEA West conference here. He said such antics give the impression that certain contractors are seeking to “prioritize stock prices that drive executive compensation rather than making the needed fundamental investments in the industrial base at a time when our nation needs us to be ‘all ahead flank’.
The sheer size of the shipbuilding gap suggests that while the United States might narrow the gap but won’t be able to close it completely. Defense One asked Del Toro if the United States might be better served by doubling down on a strategy of more easily-manufactured unmanned systems to cut the time for full-scale deployment down from a decade-plus. The secretary called the idea “nonsense.”Del Toro said that “of course” the United States has to invest in unmanned technology but he pointed to legislative tools that could incentivize domestic shipbuilding. “I discovered a law, that’s Title 46, where the Secretary of the Navy and the Secretary of Transportation today have the authorities, actually, if we deem that a particular ship has dual-military use, to be able to provide a set of funding for that. So if a ship costs, say, $100 million to build here and it costs $80 million to build overseas, we could actually incentivize that U.S. shipbuilder with $20 million of investment so they can be built here with American jobs. That’s just one small example.”
