Lockheed Martin rolls out the first F-35 fighter jet built for Japan. (Star-Telegram/Rodger Mallison) rmallison@star-telegram.com
Lockheed Martin rolls out the first F-35 fighter jet built for Japan. (Star-Telegram/Rodger Mallison) rmallison@star-telegram.com

Business

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

maxbaker@star-telegram.com

January 30, 2017 10:00 AM

UPDATED January 30, 2017 05:13 PM

Lockheed Martin has trimmed about $600 million in cost from its next Pentagon contract for F-35 fighter jets, President Trump said Monday, telling reporters that the program is now “in great shape.”

Speaking at the White House, Trump said the savings apply to the next lot of 90 planes, which the two sides have been negotiating for months. But he said it would lead to billions in savings as hundreds of planes are produced.

“I appreciate Lockheed Martin for being so responsive,” he said.

The complimentary words are in stark contrast to past tweets from Trump, who publicly criticized Lockheed Martin after his election and called the F-35 program “out of control.” That sparked personal meetings with Lockheed’s CEO Marillyn Hewson, who pledged to drive down the cost and hire more than 1,800 workers in Fort Worth as production ramps up.

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Citing years of delays and cost overruns in the F-35 program, Trump said, “We’ve ended all of that. We’ve got that program really, really now in great shape.”

In a statement, Lockheed 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 employs about 14,000 in west Fort Worth, where it builds the F-35, including 8,800 who work on the stealth fighter program.

Lockheed and the U.S. government have been working to bring down the cost of the F-35 program for years, long before Trump arrived on the scene. Costs for the stealth fighter jet, with different versions being designed and built for the Air Force, Navy and Marines, initially ballooned as the company encountered technical problems and delays developing the plane.

In 2011, the two sides took steps to “reset” the program when it was six years behind schedule and $13 billion over budget. And in 2014, Lockheed and its corporate partners announced a plan to spend $170 million through 2016 to bring down the cost of the fighter from more than $100 million apiece to about $80 million by the end of the decade.

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 previous order and an overall 58 percent cut from what was paid when the first planes were produced.

Lockheed has been negotiating a contract for the next batch of 90 F-35s for more than a year. As recently as last week, Hewson said the individual price for the next 90 aircraft would soon be less than $100 million.

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

Defense industry analysts said Trump likely played a small role in driving down the cost, by using his bully pulpit to speed negotiations. But they said the big reduction will come as more planes being built, which drives the cost per aircraft down.

“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.”

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.” Trump has also asked Boeing to develop a new version of its F-18 Super Hornet to compete as an alternative.

Is Trump responsible?

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

“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.

Steve Kaskovich: 817-390-7773, @stevekasko

Max B. Baker: 817-390-7714, @MaxbakerBB

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