President Donald Trump announced Monday that weeks of negotiation with Lockheed Martin prompted the defense contractor to cut about $600 million from the F-35 program.
Trump failed to clarify how the savings were calculated or if the contract with Lockheed will change. He did say the savings will apply to the next lot of 90 jets, after which Boeing will step in as a potential competitor for future fighter jet contracts.
“There were great delays, about seven years of delays, tremendous cost overruns,” Trump told reporters in a press conference Monday morning “We’ve ended all that. We’ve got that program really, really now in good shape.”
And only days after Defense Secretary James Mattis ordered a side-by-side comparison of Lockheed's F-35 program with Boeing's F-18 fighter jet program, Trump confirmed Boeing could step in to compete for contracts.
"I appreciate Boeing for coming in and competing, and they will be competing during the process for the rest of the planes. There are thousands of more planes coming," Trump said.
As for the F-35 program, Trump did not explain where the $600 million in savings came from or address the possibility that Lockheed Martin may have already planned some of those savings.
During Lockheed's quarterly call with investors, CEO Marillyn Hewson went into detail on Lockheed Martin's cost reduction strategy, which has reduced F-35 per-unit costs by about 60 percent since 2006. This model makes use of supply chain efficiencies and mass production to cut costs and is projected to continue reducing per-unit pricing until it reaches $85 million in 2018.
“I have welcomed the opportunity to talk to [Trump], because it gives me the opportunity to share with him what we have been doing in terms of bringing the costs down,” Hewson said during the company's quarterly conference call.
“I have also had the opportunity to share with him things that the Department of Defense can do and how they might buy the aircraft differently in the future to continue to drive costs down. He welcomed that discussion.”
In a statement released early Monday, Lockheed Martin was similarly ambiguous as to the savings.
“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 Martin wrote in a statement.
Lockheed Martin is a Maryland-based global aerospace and defense company with locations in Denver, Englewood and Littleton.
Multimedia business & healthcare reporter Chloe Aiello can be reached via email at [email protected] or twitter.com/chlobo_ilo.
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