The giant U.S. defense contractors who sell bombs, jets and other advanced weaponry to Saudi Arabia have said little amid a weeks-long international uproar over the death of journalist Jamal Khashoggi at a Saudi consulate in Turkey earlier this month, even as other prominent U.S. business leaders rebuke the kingdom.
That silence was broken Tuesday morning when Lockheed Martin chief executive Marillyn Hewson explained to investors that her company, the world’s largest manufacturer of military weaponry, would defer to the U.S. government’s decisions regarding relations with kingdom. In response to a question from Bernstein investment analyst Doug Harned, Hewson noted that her company’s international arms deals are negotiated between the U.S. government and its military allies.
“Most of these agreements that we have are government-to-government purchases, so anything that we do has to follow strictly the regulations of the U.S. government,” she said, touting a recent $450 million contract for combat ships for Saudi Arabia that her company received in July. “Beyond that, we’ll just work with the U.S. government as they’re continuing their relationship with Saudi."
The kingdom has spent nearly $90 billion on weapons systems from U.S. defense contractors since the 1950s, including nearly $5.5 billion last year.
Lockheed has done business with the kingdom since 1965, when it first sold C-130 Hercules military transport aircraft. More recent business opportunities for Lockheed include a pair of advanced communications satellites as well as a Terminal High Altitude Area Defense (THAAD) anti-ballistic-missile system that Lockheed is building for the Saudi military.
Defense analysts say it is unlikely that the U.S. government will halt those sales or future ones unless the political situation changes significantly. President Trump said on CBS' “60 minutes” that he wants to continue selling arms to the kingdom in order to protect U.S. jobs.
“I don’t want to lose an order like that,” he said.
And in Tuesday’s earnings call, Lockheed chief financial officer Bruce Tanner said the financial benefits of the THAAD sale are already “very much pushed to the right," meaning the won’t materialize until much later, because the system depends on a Saudi radar update that won’t happen for years. He expects the system to be operational in Saudi Arabia by 2023.
He noted that the company’s sales in Saudi Arabia for 2019 and 2020 add up to about $900 million. Lockheed Martin made about $14.3 billion in the third quarter of 2018.