The invasion of Ukraine launched by Russia’s Vladimir Putin could re-order U.S. military spending and ripple across Connecticut’s extensive network of Pentagon suppliers.
It’s a switch from just 16 months ago when military analysts and some in Congress questioned whether then-President Donald Trump’s military budget should be pared by Joe Biden, who had yet to be elected president, to make room for funding for COVID-19 relief and other domestic demands.
“This whole idea that defense is in decline, all we have to do is look across at eastern Europe and see that is not the case,” Greg Hayes, chief executive officer of defense and aerospace giant Raytheon Technologies Corp., said this week at a meeting with industry analysts.
“I know everybody was panicked two years ago with the Biden administration that budgets are coming down,” he said. “Budgets aren’t going down.”
Hayes said he expects military spending to rise by 4% or 5% next year, bringing the total to more than $770 billion, though part of the increase would be offset by inflation. Raytheon Technologies, which posted revenue of $64.4 billion last year, manufactures missiles, radar equipment, aviation equipment and other military systems and components.
It’s the Waltham, Massachusetts-based parent company of Pratt & Whitney, the East Hartford manufacturer of engines for the F-35 fighter jet made by Lockheed Martin Corp. in addition to engines for commercial airlines.
Shares of Raytheon Technologies; Lockheed Martin, which also is the parent company of helicopter manufacturer Sikorsky Aircraft; and General Dynamics Corp., of which submarine manufacturer Electric Boat is a subsidiary, ended the day higher in volatile trading.
Rep. Joe Courtney, D-2, and a member of the House Armed Services Committee, said that Hayes has a point.
“Events in Ukraine have changed the environment for the need for defenses spending,” Courtney said.
However, he said the “most critical response” would be for Congress to pass an omnibus spending bill to replace what’s known as a continuing resolution, or stop-gap funding. Temporary spending measures cripple the departments of Defense and State and intelligence-gathering, Courtney said.
Sen. Richard Blumenthal, D-Conn., a member of the Senate Armed Services Committee, said spending may not necessarily increase by 4% or 5%, “but the hateful, inhumane aggression by Putin may require us to increase our commitment.”
“Whether it’s 1% or 5% I wouldn’t say,” he said.
Blumenthal said the U.S. may commit to more aid to Ukraine beyond $750 million in the current budget. Military and economic aid are “going to rise dramatically,” he said.
He said he would back supplying Ukraine with military equipment such as stinger and javelin missiles and small arms. Blumenthal credited U.S. military supplies in the 1980s that helped resistance fighters in Afghanistan drive out the Soviet Union that invaded in 1979.
Connecticut’s defense industrial base received $18.3 billion in Pentagon contracts in 2020, according to the state Office of Military Affairs. The sum is conservative and accounts for contracts with a value of $7 million or more. It does not include thousands of contracts below that threshold, the state agency said.
Defense spending in Connecticut has risen from $6 billion to $14 billion in 2007, the Office of Military Affairs said. “Recently, however, there have been years that soared above this range,” the agency said.
It cited U,S. Navy contracts to build two Virginia-class submarines a year and the start of Columbia-class submarine construction at Electric Boat, Pratt & Whitney engines for the F-35 aircraft and logistics and support and Black Hawk, heavy lift and presidential helicopters made by Sikorsky Aircraft based in Stratford.
The Department of Defense ranks Connecticut as 6th among the states in defense spending, according to the Office of Military Affairs.
Regardless of how much money Congress and Biden eventually spend to counter Russia’s invasion, Raytheon Technologies has a $63 billion backlog in defense work, Hayes said.
“All we have to do is execute there. We will see solid growth for the next three years,” he said.
