Chair, Chief Executive Officer & President, Northrop Grumman Corp
U.S. Defense Manufacturing Outlook w/ Northrop Grumman CEO Kathy Warden | Hill Nation Summit 2025
Kathy Warden (CEO, Northrop Grumman) in conversation with Julia Manchester (National Political Reporter, The Hill) Hill Nation ...
About Kathy Warden
Kathy Warden, chair, CEO, and president of Northrop Grumman, reported first quarter 2026 organic sales growth of 5% and a record backlog of $92.8 billion. Warden stated that the company finalized an agreement with the Air Force to increase the annual production rate of the B-21 by 25%, and that for the Sentinel program, the company agreed to an acceleration that would target first flight in 2027 and initial operating capability early in the 2030s. She noted that the administration submitted a $1.5 trillion defense budget request for fiscal year 2027, which she described as emphasizing modernization and representing a 44% increase over current funding levels. Throughout 2025, Warden highlighted strong demand signals from global customers and growth in international sales, which rose 18% year-over-year in the second quarter. She discussed investments in solid rocket motor and munition technologies, stating that tactical SRM production capacity had already doubled with further expansion expected by 2027. Warden also addressed challenges on the B-21 program, acknowledging a $477 million pre-tax loss in the first quarter of 2025 related to higher manufacturing costs and material prices, which she attributed largely to inflationary factors. She expressed optimism about the company's positioning amid growing global defense budgets and the potential for additional defense funding through the reconciliation process.
Transcript (24 segments)
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Julia Manchester0:00
Now, please welcome The Hill's National Political Reporter, Julia Manchester, in conversation with Northrop Grumman CEO Kathy Warden.
Hello everyone. You know, sometimes you just have to learn how to pivot with these things. I was just running to do one of our coffee talk chats that you'll see during the break, but very excited that we can have this conversation now and talk about defense manufacturing in the United States. Thank you again everyone for coming and joining us, and thank you Kathy again. I want to jump into that subject of manufacturing. Obviously, Northrop Grumman is a leader in aerospace manufacturing, defense space systems, etc. And we know that the administration has focused quite a bit on this in their focus on manufacturing. So let's start with that. What grade would you give the administration when it comes to focusing on manufacturing over the last six months?
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Kathy Warden1:11
Well, I give the administration an A. Clearly, the focus on bringing manufacturing into the United States is a really important element of our foundation and success as a nation. To be able to have both the capability and capacity to manufacture in the US and create great jobs for people who are committed to this country. And we have been doing that at Northrop Grumman for many decades. We are an aerospace and defense company and about 95% of our workforce is in the United States. Although we sell product all around the globe, we largely build here and we work with suppliers who build in the United States. And we're proud of that heritage and it's good to see the revival of the trades and the focus on manufacturing in the US.
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Julia Manchester2:03
Obviously, that's been a big point of the Trump administration, making sure there's more products made in the United States. Another focus point of the administration has been bolstering the United States in terms of leveling up with its rivals. We're seeing China really start to broaden its grip on the Pacific and some of its military capabilities, etc. How competitive would you say the United States is against our global rivals right now?
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Kathy Warden2:36
Again, I think the United States is incredibly strong and in many cases, the technologies that we are working on are more advanced than even the commercial sector is developing because they are giving our military or our decision makers that advantage and edge over what nations like China are developing. That's our job as an industry and we are at the forefront of technology. That too has been true for many decades. There was a time when the government expended more on R&D than it does today and most R&D today in technology is funded by the commercial sector including our own. But the reality is that the requirements that the government has that really set the bar for technology innovation are often more pressing than the commercial sectors. And so the kind of innovation that we're doing in our industry is outpacing other industries and it's outpacing the world. That is the point of the work that we do. And when you look at the most important technology advancement in our industry, it's often classified for good reason because we are developing things that we wouldn't want other nations to have access to and even be aware of. And I'm very proud of what our country is investing in both the government and our industry that give us that edge.
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Julia Manchester4:06
So you mentioned a lot of this information is classified, obviously, but what is the United States getting right and what is it getting wrong when it comes to having that edge over those other countries in terms of defense?
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Kathy Warden4:19
What the US gets right is getting all the players on the field. So in this economy, we basically incentivize companies to invest, innovate and get a return on that investment. And that drives entrepreneurship. And not just with new startups, but even in a company like ours, we're constantly working to outpace ourselves, to out innovate ourselves, to replace existing technology with that of the future. And it's what's driven the tech advancement that we have seen in this nation and why this nation continues to be the leader worldwide for technology innovation. That is core to who we are. I think what we need to ensure is that we keep a balance of investment, private, public, and that that investment together is working toward the advantages that this nation relies on today and ensure that they're here 10, 20, 30 years from now, just like we demonstrated most recently with the operation midnight hammer in Iran. This country having the ability to project power and show strength is what peace is built upon and we believe that and that peace through strength comes from having a technology edge amongst other things.
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Julia Manchester5:47
Right. Right. And I want to talk about that operation midnight hammer. Obviously Northrop's B2 stealth bombers were used in that operation last month. America has employed bombers in past wars, including the ones in Iraq and Afghanistan, but can you tell us how this attack was unique in particular in terms of how these B2 stealth bombers were used?
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Kathy Warden6:12
Well, this operation included more assets than ever before to be able to conduct an operation undetected and give us that element of surprise and to be able to position at the time of the president's choosing in the way that the military commanders outlined an operation that went off flawlessly. And it is that kind of power projection anywhere in the world that is unique to the United States. And the B2 is an asset that is a good example of technology innovation at its finest. We're the first nation to have the flying wing concept. That is the basis for stealth technology and it is providing that advantage today, but it will well into the future as we are modernizing the B2 now with the B-21 which is also in production.
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Julia Manchester7:04
Well, that brings me to my next question on the B-21 bombers. What can you tell us about the production of those bombers and if the government's demand for them can be met by Northrop Grumman?
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Kathy Warden7:17
We absolutely can meet the demand. We're in active conversations with the government to accelerate the production and this administration has been a real advocate for looking at how to remove barriers that would prevent us from moving faster. Speed is important in this environment. One, because technology is advancing more quickly and we want to incorporate the best into our product lines, but capacity is equally important. We've seen this in the munition space in particular as Ukraine is being armed to support themselves in the fight against Russia. And so as we look at both capability and capacity and speed being so important, this administration's willingness to work with industry and fund those ideas, including B-21 production ramp increase, are really positive signs of how resources, taxpayer resources, which we take very seriously, that that's what we are expending for the work that we do are used effectively and smartly so that we have the capabilities we need but that we're getting them as quickly as possible and cost efficiently as possible.
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Julia Manchester8:25
You used a phrase earlier, out innovate ourselves. Could you talk about how the US, how Northrop Grumman is doing that or if there's a particular area you're particularly excited about where there's out innovation happening?
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Kathy Warden8:40
We have a very diverse portfolio and I don't like to choose favorites because there is advancement happening on so many fronts right now. You know, whether you think about the future of computing and Moore's law and moving beyond Moore's law with new technologies in microprocessing, and that is a core technology that's embedded in just about everything our military relies on from assets in space to aircraft to undersea. We rely on increasingly hardware enabled software to control these military assets. And so microprocessing is incredibly important. But space it still is the next frontier. And as we think about how crowded space has become, but how space has become a domain that is absolutely essential both in peace time and potentially in war time, and having an advantage in space is going to be critical to the US. So many dimensions upon which we can innovate and provide that advantage.
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Julia Manchester9:52
What's something with space in particular? What's something we should watch out for? I understand that the Golden Dome in particular has to do with that realm, but what should we be watching out for when it comes to this next era?
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Kathy Warden10:09
Well, the Golden Dome has become an increasingly important piece of work by the United States to defend the homeland partly because space has become more contested. And in order to now protect ourselves, it's not just the tyranny of distance and being surrounded by friendly allies in oceans. There are abilities for adversaries from far to reach our homeland. And so that is why Golden Dome is so important. And certainly if you think about the layer in space, a space-based interceptor to be able to defend the homeland, that's going to be an important capability. But there are multiple layers to Golden Dome in providing defense to the homeland, many of which rely on existing capabilities today being fielded within the United States.
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Julia Manchester10:57
And I imagine Golden Dome is keeping you busy. I would love to hear the role you expect Northrop to have in this project.
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Kathy Warden11:05
Yes, our company like many others are able to provide capability today that are being used to protect our military who are forward deployed. The concept is to bring some of that to the homeland and protect our critical assets here. But there are also new innovations like space-based interceptors that would be part of the golden dome architecture where we have to expand both the capability and capacity of those technologies. I think the important point for the American people is that this project, and I don't think of it as a single program or asset, but it's really a vision that the administration has that'll be fulfilled from a number of different angles, is complex and it is likely to be costly in the near term, but it will provide safety for generations to come. Much like was envisioned with the triad that we have that has sustained peace and stability for the last 60 years in the B-21, the intercontinental ballistic missile defense systems that we have as well as our submarines. And so when you think about that triad and what it has done and it being modernized, Golden Dome in my vision is another layer of defense that helps to keep peace and stability.
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Julia Manchester12:29
I want to talk about China. Obviously, China has been a big focus of this administration in terms of keeping in past administrations as well as keeping the United States ahead or level with China. Do you think China is gaining ground anywhere on the United States when it comes to defense technology and if so where?
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Kathy Warden12:49
I would say the movement that we've seen from China is as much in capacity as it is in capability. When I compare our capabilities against the Chinese industrial base, I believe that we maintain the edge. When you look at how much the Chinese government has been spending to build out their capacity, number of ships, number of aircraft, different variants of these satellites that have been launched and operating today. It's that pace at which they are deploying military assets that should have us all paying close attention to why and how those assets will be used in the future and how the US will counter.
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Julia Manchester13:35
Absolutely. You know, finally, Kathy, you answered this question once with space, but looking forward into the future besides space, is there anything you're most excited about in terms of innovation and manufacturing when it comes to the defense industry?
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Kathy Warden13:52
Really, in many ways, it's about how we do this work. The innovation is happening in our company with partners including partners outside of the traditional aerospace and defense industry. We are embracing technologies not just as innovations and inventions that go into our products, but the ways we produce with additive manufacturing and utilizing more digital technologies to enable our workforce to move faster and to operate with high standards of quality that our military deserves. Because what we field has to work and it has to work every time and it has to work in contested environments where constantly an adversary will be working to defeat it. These are really interesting engineering challenges that our workforce navigates, but it also requires a standard and discipline in our manufacturing processes that we have refined over many decades, but that we innovate at pace to keep up and introduce new technologies as they become available. It really is an interesting ecosystem that I wish more people could see into, but again, the classified nature of it means that we can't talk about some of the most interesting technologies that are being developed in our space.
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Julia Manchester15:11
And I feel like we could talk about this ecosystem and the development of those technologies for much longer, but unfortunately we only have 15 minutes and our time is up. Kathy Warden, CEO of Northrop Grumman, thank you so much for joining us.
K
Kathy Warden15:25
Thank you so much.
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Julia Manchester15:30
Thank you to all of our guests so far this morning. Please enjoy a short coffee break and we'll see you back here in 10 minutes.