Economy

Lockheed CEO pledges to cut cost of F-35, create 1,800 jobs

On Friday the CEO of Lockheed Martin announced the company's intention to lower the cost of the F-35 Lighting aircraft and to create 1,800 jobs in Texas.

Naval flight students are shown a US Marine F-35B Joint Strike Fighter Jet during a roll-out ceremony at Eglin Air Force Base in Florida, in 2012.
Michael Spooneybarger/Reuters/File
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Following a Friday meeting with President-elect Donald Trump, Lockheed chief executive Marillyn Hewson told reporters that the aerospace giant is close to a contract which would lower the cost of the F-35 fighter jet and create 1,800 jobs at the company's facility in Fort Worth, Texas.

The meeting, which took place at Trump Tower in Manhattan, was the latest in a string of conversations between Ms. Hewson and Mr. Trump over the cost of the top-of-the-line fighter jet.

Trump initially expressed his displeasure with the enormous cost of the high-tech fighter jet via Twitter. Several weeks later he was joined by Ms. Hewson and Boeing chief executive Dennis Muilenburg at his Mar-a-Lago resort on Friday to discuss contracts and military spending.

“We’re trying to get costs down, costs,” Trump told reporters after the meeting at his resort. “Primarily the F-35. That program is very, very expensive.”

The F-35 deal, which was previously estimated in at $400 billion over 15 years for 2,443 planes, is easily the military’s largest weapons project. 

Even before Mr. Trump took to Twitter, the price of the F-35 had been decreasing with each order produced.

Back in November, days prior to the election, the Pentagon announced a 3.7 percent price cut on the average cost per plane over those produced in the previous batch. The new contract, valued at $6.1 billion for the following 57 fighter jets, represented an overall 58 percent decrease from the cost of the planes on the original 2011 order, according to AviationPros.

Lt. Gen. Chris Bogdan, the F-35 program executive officer, said the contract represents a "fair and reasonable deal" for the government, as well as the international partnership involved and the industry as a whole. "We will continue to negotiate in good faith with industry to keep the F-35 affordable and provide the best possible value for our customers," Bogdan said in a statement.

But Mr. Trump used his online presence to continue drawing attention to the F-35 deal, even asking Lockheed’s competitor, Boeing, for a price quote on their most-similar model, the older F/A-18 Super Hornet. 

According to authorities, the aircraft are not exactly comparable, as the F-35 is a stealth fighter while the F/A-18 is not. But Mr. Trump’s message seemed to resonate with Hewson.

“I had a very good conversation with President-elect Trump this afternoon and assured him that I’ve heard his message loud and clear about reducing the cost of the F-35,” she said the following Friday, as reported by The New York Times. “I gave him my personal commitment to drive the cost down aggressively.”

"It's way, way behind schedule and many, many billions of dollars over budget," Trump said in a press conference in New York on Wednesday. "I don't like that.... We're going to do some big things on the F-35 program and perhaps the F-18 program. We're going to get those costs way down."

Following that press conference, Lockheed Martin share prices fell over 1 percent. Two days later Hewson was in Manhattan meeting with Mr. Trump. “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 from the lobby of Trump Tower following their meeting, as reported by Reuters.

Hewson also said the deal included an additional 1,800 jobs at the company's location in Fort Worth, Texas, although she added no further details as to what exactly those positions will entail. According to estimates by Lockheed Martin, the company’s program currently accounts for 38,900 jobs in Texas and contributes an overall $3.4 billion to the state economically, according to the company's website dedicated to the F-35 Lightning II.

Lockheed Martin share prices had gone up about one percent following Friday’s announcement in which Hewson also said she would add “thousands and thousands of jobs” across the company’s 45-state supply chain.