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Trump says F-35 now 'in great shape' after $600 million cut from cost

By STEVE KASKOVICH | Fort Worth Star-Telegram | Published: January 30, 2017

FORT WORTH, Texas (Tribune News Service) — President Donald Trump said Monday that Lockheed Martin has trimmed about $600 million in cost from the next contract for the F-35 joint strike fighter program.

Speaking with reporters at the White House, Trump said the savings apply to 90 planes involved in the next lot, or government contract, which has been under negotiation for months.

Trump, who has publicly criticized Lockheed on Twitter since his election and called the program costs “out of control” just last month, now says the program is “in great shape” and called the F-35 “a great plane.”

“I appreciate Lockheed Martin for being so responsive,” he said. Citing years of delays and cost overruns, he said, “We’ve ended all of that. We’ve got that program really, really now in great shape.”

Just last week, U.S. Defense Secretary James Mattis ordered a new review of the F-35 program to “determine opportunities to significantly reduce the cost.”

Lockheed employs about 14,000 in Fort Worth, including 8,800 who work on the stealth fighter. To support full production of the jet, Lockheed plans to hire at least another 1,800 employees.

Lockheed has been involved in negotiation for the next batch of F-35s for more than a year and as recently as last week its CEO Marillyn Hewson said the individual price for the next 90 aircraft would soon be less than $100 million. The negotiations for the 10th batch of stealth fighters has not been completed.

In a statement released today, the company said: “We appreciate President Trump’s comments this morning on the positive progress we’ve made on the F-35 program. We share his commitment to delivering this critical capability for our men and women in uniform at the lowest possible cost to taxpayers.”

Lockheed did not address the $600 million cost cut referenced by Trump. A spokesman for the Pentagon F-35 program office did not immediately respond to a Star-Telegram request for comment.

The F-35 program, at $379 billion, is the most expensive weapon system in Pentagon history. Lockheed Martin has been working to reduce the cost of the F-35 to about $85 million by the 2019-2020 timeframe.

Cutting the cost of the F-35 also isn’t new from the Pentagon perspective, either. Late last year the Pentagon announced a $6.1 billion contract for the 57 F-35’s included in the ninth batch of jets. That represented a 3.7 percent reduction in the average price of the airplanes from what it paid in the last order and an overall 58 percent cut from what it paid when the first planes were produced.

Defense industry analysts said Trump played a minimal role, at best, in cutting the price of the F-35 by using his bully pulpit after meeting with Hewson several times. But the F-35’s price reduction has more to do with economics: build more planes and the cost per aircraft drops as the company gets more experience.

“I think what Trump’s message signals is that this is just the beginning of the cost reductions of the F-35 fighter,” said Loren Thompson of the Lexington Institute who has done consulting for Lockheed. “He may have played a minimal role in the next production line ... What this tells you is that Trump is watching the F-35 closely and the Pentagon needs to get the cost down.”

Lockheed has also said that F-35 costs can be cut not only by increasing the production rate, but by implementing multi-year contracts and eliminating redundancies, which the company said has added 20 percent to its overhead costs, Thompson said.

Richard Aboulafia, a military aircraft analyst with the Teal Group scoffed at the idea the Trump has had anything to do with the price reduction. He said there has been an F-35 budget plan in place for years and the only difference is that Trump is taking credit for it via Tweet.

“Heaven help us if Trump actually believes that nonsense,” Aboulafia said. “He is taking credit for something that has been in the works for quite some time.”

The F-35 has been plagued by cost overruns. Recently Sen. John McCain, R-Arizona, a frequent critic of the program, complained about a recent report that another $500 million may need to be added to pay for F-35 development. In a letter to Lockheed, he wrote that he had a hard time reconciling this with Hewson’s promises to “drive down” F-35 costs.

“This is yet another troubling sign for a program that has already nearly doubled in cost, taken nearly two decades to field, and has long been the poster child for acquisition malpractice,” McCain said in a statement.

“If Lockheed Martin believes it is possible to aggressively drive down the cost of the F-35, it is time for the company to reveal its plans to do so to the Congress and to American taxpayers,” McCain said.

Staff writer Max B. Baker contributed to this report.

©2017 the Fort Worth Star-Telegram
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In an October, 2016 file photo, a Lockheed Martin F-35B Lightning II aircraft is silhouetted against the sun during landing exercises on the amphibious assault ship USS America.
LOCKHEED MARTIN

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