Friday, 23 December 2016

Trump Meets With Lockheed CEO About F-35 Cost, Then Asks Boeing to Price Comparable F-18

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Following his meeting with Lockheed Martin’s CEO Marilyn Hewson on Wednesday, President-elect Donald Trump asked Boeing if they could beat Lockheed’s price on the frightfully expensive F-35 Joint Strike Fighter (shown). The Pentagon has plans to order 2,443 of the fighter aircraft at a cost of $112 million apiece. That's $273.6 billion for the total order!

During negotiations with Hewson, Trump learned that, over time, Lockheed could bring down the cost to around $85 million for each aircraft as a result of potential cost savings and manufacturing efficiencies as they build them.

Those negotiations apparently were a lot tougher than those Trump had earlier in the day with Boeing’s CEO Dennis Mullenburg over the Air Force One aircraft it is building. When the meeting was concluded, Hewson issued this statement:

I had a productive meeting with President-elect Trump this afternoon. I appreciated the opportunity to discuss the importance of the F-35 program, and the progress we’ve made in bringing costs down. The F-35 is a critical program to our national security, and I conveyed our continued commitment to delivering an affordable aircraft to our U.S. military and our allies.

In other words, if Trump thought she was going to roll over the way Mullenburg did earlier that day, he was mistaken. Trump’s statement following the meeting implied his disappointment:

[We focused on] trying to get costs down ... because it’s a program that’s very very expensive.

We are going to get the costs down and get it done beautifully. [Lockheed has] great people, amazing people. I’m very impressed with them and [they are] very good negotiators.

On Thursday he delivered a message both to Boeing and to Lockheed: there’s a new purchasing manager in town, and there are new rules in play. Trump tweeted,

Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!

Whether the F-35 program is too far along to kill is an open question, as is Boeing’s ability to beat Lockheed’s price. But the incoming president isn’t going to just allow the Pentagon to order a new aircraft regardless of cost. Nor is he going to allow cost overruns to be paid automatically.

There is indeed a new purchasing manager in town with new rules, come January 20.

Photo of Lockheed Martin F-35 at unveiling ceremony in 2006: AP Images

An Ivy League graduate and former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at LightFromTheRight.com, primarily on economics and politics. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Related article:

Trump Persuades Boeing to Cut Cost of New Air Force One

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