Lockheed Chief Pledges Lower Costs for F-35 Fighter Jet and Add 1,800 Jobs

The chief executive of Lockheed Martin, Marillyn A. Hewson, said on Friday that the company was “very close to a deal” to reduce the cost of the new F-35 fighter jet, after weeks of talks with President-elect Donald J. Trump and his team about the plane.

Ms. Hewson, speaking after a meeting with Mr. Trump at Trump Tower, also pledged to add 1,800 jobs at the Lockheed Martin’s Fort Worth location, although she did not provide specifics.

The government’s next contract in the F-35 project would cover 90 planes, compared with 57 in the previous batch. The increase was in the works before Mr. Trump was elected, and other Lockheed officials said the added positions would come as production increases.

“I certainly share his views that we need to get the best capability to our men and women in uniform and we have to get it at the lowest possible price,” Ms. Hewson said of Mr. Trump.

Lockheed Martin depends on the F-35 for nearly a quarter of its revenue. But the cost of building the next-generation fighter jet, the F-35 Joint Strike Fighter, has been a sore point for the Defense Department for years. Mr. Trump has criticized the cost and promised to make changes to the program.

At an estimated $400 billion over 15 years for 2,443 planes — which are being built in different versions for the Air Force, Marines and Navy — the high-tech fighter is by far the military’s largest weapons project, and it is long overdue.

But even before Ms. Hewson’s announcement on Friday, the price of the plane had typically been dropping with each batch produced. In November, days before the election, the Pentagon said it had unilaterally imposed a 3.7 percent price cut on the average cost per plane over those produced in the previous batch after Lockheed refused to agree to that decrease. The contract for the 57-plane batch is valued at $6.1 billion

Even without Mr. Trump exerting pressure, the Pentagon would probably have pushed for further price cuts. The president-elect has been pressing the cost issue publicly in various ways, including on Twitter and in meetings with military contractors. In a Twitter post in December, he criticized the cost overruns for the F-35 and pledged to save money.

At one point, Mr. Trump said he had asked Lockheed Martin’s rival, Boeing, for a price quote on the most comparable version of its older F/A-18 Super Hornet, although military analysts do not see the two planes as equivalent.

Mr. Trump is the latest in a long line of critics from both parties who have assailed the 15-year project only to see it survive, owing to its deep political support across the country. Lockheed Martin has spread work on the F-35 to hundreds of subcontractors in most of the 50 states, and members of Congress typically oppose cuts that would cost jobs in their states or districts.

The F-35 was conceived as a state-of-the-art aircraft for all branches of the military, with the goal of overwhelming adversaries with technological superiority. The jet is designed to be able to evade radar and dodge sophisticated antiaircraft missiles while giving pilots a better picture of enemy threats advancing toward them.

Marillyn A. Hewson, the chief executive of Lockheed Martin, leaving a meeting with President-elect Donald J. Trump at Trump Tower on Friday. Credit Kevin Hagen for The New York Times


Lockheed Tells Trump It Will Cut F-35 Costs, Create New Jobs

Lockheed Martin Corp.’s chief told President-elect Donald Trump it’s close to a deal with the Pentagon to lower costs “significantly’’ for the next production lot of its F-35 fighter jet and will boost hiring at the Texas factory where the advanced aircraft is made.

Marillyn Hewson, chief executive officer of the world’s largest defense contractor, said she assured Trump in a Friday meeting that “I certainly share his views that we need to get the best capability to our men and women in uniform and we need to get it at the lowest possible price.’’

Lockheed Martin and the F-35, the costliest U.S. weapons system, have been favorite Trump targets on Twitter, injecting new uncertainty into contracting practices at a time when defense spending is expected to rise. “The F-35 program and cost is out of control,” Trump wrote in a December tweet. “Billions of dollars can and will be saved on military (and other) purchases after January 20th,” inauguration day.

After previous, inconclusive discussions with Trump, Hewson’s comments Friday may hit the sweet spot that has prompted approving tweets from the next president following his meetings with other corporate executives -- both promising to cut costs to taxpayers and create jobs.

“Marillyn Hewson is doing the right thing,” said Richard Aboulafia, a defense analyst with Teal Group. “This is embarrassing on a national level, on a defense contracting level. But this is the right thing for Lockheed.”

The shares rose 0.9 percent to $254.81 at 3:13 p.m. in New York.

Production Increase

After her brief visit to Trump Tower in New York, Hewson told reporters the company is close to a deal that would break an impasse with the Pentagon over the 10th and largest-yet order for the F-35 Lightning II.

The contractor also plans to add 1,800 jobs in Fort Worth, Texas, where the F-35 is assembled, Hewson said. That’s 1.8 percent of the 98,000 employees Lockheed currently employs, based on data on its website. The hiring spree promised by Hewson comes as Lockheed plans to step up production of the aircraft.

Retired Marine General James Mattis, Trump’s nominee for defense secretary, said at his confirmation hearing this week that the president-elect “is serious about getting the best bang for the dollar” with programs such as the F-35. But Mattis also told the Senate Armed Services Committee that “many of our allies have bet their air superiority on the F-35 program, and it binds us tightly together with them.”
The Pentagon provided Lockheed Martin with a $1.28 billion down payment in November to continue production while the two sides hammer out a contract valued at as much as $7.19 billion for 90 aircraft.


Lockheed Martin CEO tells Trump the cost of F-35 will be ‘significantly’ lower

Emerging from a meeting with President-elect Donald Trump at Trump Tower in New York on Friday, Lockheed Martin chief executive Marillyn Hewson told reporters that the Bethesda, Md.-based defense giant is close to a new contract deal that would cut the cost of the F-35 Joint Strike Fighter program and also create jobs.

“We had the opportunity to talk to [Trump] about the F-35 program, and I certainly share his views that we need to get the best capability to our men and women in uniform and we have to get it at the lowest possible price,” Hewson said. “So I’m glad I had the opportunity to tell him that we are close to a deal that will bring the cost down significantly from the previous lot of aircraft to the next lot of aircraft and moreover it’s going to bring a lot of jobs to the United States.”

She went on to say that the company would create 1,800 jobs related to the program in Fort Worth as part of the new contract deal. Lockheed Martin estimates the program accounts for 38,900 jobs in Texas, and the plane’s supply chain touches 45 states. Lockheed shares climbed nearly 1 percent on the news.

“I also had the opportunity to give him some ideas on things we think we can do to continue to drive the cost down on the F-35 program, so it was a great meeting,” Hewson said.

In recent months, the president-elect has not been shy about taking to social media to criticize or heap praise on individual companies and military programs. A Dec. 6 tweet bashed Chicago-based Boeing for what he referred to as the “out of control” cost of the Air Force One presidential airplane. Weeks later he turned in Boeing’s favor at the expense of Lockheed, tweeting that he had asked the company to “price out a comparable F-18 Super Hornet” because of the F-35’s high costs.

He also briefly brought up the F-35 in a Wednesday news conference intended to clarify his business conflicts, saying he would “do some big things” with the program and find a way to trim costs and improve the plane.

Voices on both sides of the political aisle criticized the F-35 program’s cost long before Trump took up the issue. Each plane costs more than $100 million, though Lockheed expects the price to fall as the program matures. The 15-year-old program has been beset by delays, and the fighter has never flown in combat.

Still, Trump’s pick for defense secretary, James N. Mattis, told lawmakers the president-elect remains a supporter of program.

“Many of our allies have bet their air superiority on the F-35 program, and it bonds us tightly together with them,” he said during a hearing on his nomination this week. “The president-elect has talked about the cost of [the F-35], but he has in no way shown a lack of support for the program. He just wants the best bang for the buck.”

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