Lockheed Agrees To Cut F-35 Price Below $100 Million In Latest Victory For Trump

Tyler Durden's picture

Less than a month after president-elect Trump first tweeted about the F-35's high costs, and a week after he brought up the F-35 in his first press conference, Reuters reports that The U.S. Department of Defense and Lockheed Martin are close to deal for a contract worth almost $9 billion as negotiations are poised to bring the price per F-35 below $100 million for the first time.

The Washington Post notes that 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.

And then, after emerging from a meeting with President-elect Donald Trump at Trump Tower in New York last 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.”

Which leads to tonight's news, via Reuters, that they are close to deal for a contract worth almost $9 billion as negotiations are poised to bring the price per F-35 below $100 million for the first time, people familiar with the talks said Wednesday.

Talks are still ongoing for the tenth batch of stealthy fighter jets with a deal for 90 planes expected to be announced by the end of the month, three people said on condition of anonymity.

 

A Lockheed representative declined to comment and a representative for the fighter program said negotiations are ongoing.

 

The U.S. Defense Department expects to spend $391 billion in the coming decades to develop and buy 2,443 of the supersonic warplanes. Though the F-35 program has been criticized by Trump as too expensive, the price per jet has already been declining. Lockheed, the prime contractor, and its partners have been working on building a more cost-effective supply chain to fuel the production line in Fort Worth, Texas.

 

The overtures from the incoming administration may have had some effect, but Lockheed's F-35 program manager Jeff Babione said last summer that the price of the F-35A conventional takeoff and landing version of the jet would drop to under $100 million per plane in this contract for the 10th low-rate production batch.

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Another victory for Trump? Or as John Harwood would say, this would probably have happened anyway...

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Save_America1st's picture

whatever...geez at this point who fuckin' cares.  I'm cool as fuck w/ Mr. T.  But still....Trump and nobody else is going to stop the inevitable economic collapse which mainly means the loss of the US dollar as the world reserve currency. And what happens when that happens, bitchez??? Phyzz gold and silver skyrocket. Lockheed won't have a rocket or a jet more powerful than that. Keep stackin' now on the cheap while you still can.

Starvation 2017's picture

Do we really need to make everything about justifing our precious metal investments?

Seriously, it just comes off as choice-supportive bias.

oncefired's picture

I thought I recently read an article that the Fucking Fighter Jet Doesn't Work!

New England Patriot's picture

This is great!

Can Trump also get the F-35 additional wing area and a functional cannon?

The Saint's picture

Would that be the new F-35 with the 1,000 lb. thrust engine?  I guess it won't be dog fighting anything invented in the last 70 years.

 

Pinto Currency's picture

12 years ago the price 'cap' was $35M.

IndyPat's picture

And it was a fuckin pig at that price.

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) IndyPat Jan 19, 2017 12:46 AM

Hooray MIC!  Let's all go shopping.

sushi's picture

USN is all upset as the F-35C has a problem with nose wheel / strut vibrations on carrier landings. entire front landing gear assembly needs to be redesigned.

 

For a price of 100m per unit you get an AS-IS-WHERE-IS aircraft. For an aircraft that meets the proper design and usabilty spec that will be another 150m with a delivery date sometime in the 2030's

 

Creative_Destruct's picture

"For a price of 100m per unit you get an AS-IS-WHERE-IS aircraft."

Having worked long in the industry and knowing how it operates, particulary Lockheed- Martin, this is almost certainly the case. L-M are MASTERS at milking the government with change orders and add-ons for problems with the customers hardware. The negotiated base price is mostly for show, and the added expense to fix all the defects in design and assembly to meet functional requirements are HUGE. A pretty safe bet is that the final operational out the door cost will be AT LEAST DOUBLE the 100 mil.

Typical way L-M puts it: "(Fill-in-Blank Here of the Armed Service), we have a problem with YOUR hardware" which is out of scope of the current contract. We need more $$$$$$. Never mind they (L-M) designed it and built it and their design-build doesn't function or perform correctly.

To be fair to L-M, this is the way most defense contractors operate. L-M is just particularly skilled at this way of doing business.

SubjectivObject's picture

What is the US$ equivalent cost for the latest Russian variants?

There's a credible standard for you Don, with cross border cost adjustments included, of course.

I Write Code's picture

Adjusted for inflation that would be about $70m in today's Obamabux.  Add in a little typical overrun and mission creep, and something in the $90m range is pretty much to be expected.

Vatican_cameo's picture

 

When you're getting a "Price cut to $100 million" on an Aircraft that can be defeated by a MiG-15 (Korean war era aircraft), there is a BIG FUCKING PROBLEM SOMEWHERE.

The Soviets are selling Sukhoi SU-35's for $48 million each (fully operational).  That is the most impressive A/C in the world and will literally fly circles around ANYTHING.  Screw Lockheed and the MIC, let's Outsource and see how quickly they change their tune.

 

musimann's picture

So now the piece of junk is cost effective? 276 major flaws and all. What a deal. We should buy Russian jets like the SU-35.

The central planners's picture

This plane barely reach 6g's turns if it get to a visual dogfight with a S-35 sm is a dead man.

Nexus789's picture

Does not matter how cheap it is if it does not work. 

Dennisen's picture

Yeah...but now it doesn't work at a price you can't afford to pass up!

Victor von Doom's picture

That's because it doesn't. Complete piece of shit from conception to its current state.

Trump should be scrapping the project altogether - not delivering these deathtraps to American pilots at a cheaper price!

He might know about business. War? I don't know - but greenlighting this purchase is not promising.

Save_America1st's picture

it's not about justifying it at this point...it's just common fucking sense.  I'm well past the point for years now of trying to convince most people to stack.  I didn't make my comment just now to try to convince or justify to anyone to stack.  I was basically stating a fact of the situation and giving all us regular stackers some normal positive reinforcement.

I'm done giving a fuck about anyone at all who hasn't listened to or read all the info I've tried to give out about the necessity of stacking phyzz regularly over about the last 4 to 5 years.  Done.  Completely done.  done I say....done. ;-)  lol

Whatever...yep...I'm bias towards my choice to stack.  Fuck everyone else then if they can't or haven't figured it out yet. 

Everyone else on here who have read my posts consistently for the past nearly 6 years knows where I stand. 

bitchez ;-)

balolalo's picture

hahahaha!   

great so instead of buying 200 of them we can buy 205!

this is not a victory for trump or the people. 

this is a victory for the military industrial genocidal complex.

suckers #maga

 

hibou-Owl's picture

One tweet saved what?

Obumhole must have been asleep at the wheel, or just didn't care.
That's the reason national debt has more than doubled, no questions, no follow up, no investigation.

Just a stupid chimp!

Vinividivinci's picture

F-35's are worth about the same as that mall in Pittsburg.

Cabreado's picture

The greatest fear and the most lethal enemy of the Self-Absorbed -- the Narcissist and Sociopath -- is simply exposure.

Enter Trump...

There is no more simple, critical and poignant example than that of the MIC...

which, since this game isn't over, includes a thoroughly corrupt and defunct Congress.

PoppinFresh's picture

So why do we want some crappy jets the manufacturer is cutting corners on to keep costs low?

 

 

thegekko's picture

Trump has probably created more manufactuiring jobs before he's even inaugurated, than the puppet Obama did in 8 years. In Australia years ago there used to be ads on TV for Don's Smallgoods, the catchry was, "Is Don, is good". I recommend you Americans adopt the catchcry, maybe the Trumpster should buy the company just so he can own the ads. Cheers!

wisehiney's picture

Malls on sale, fighter jets on sale.

When are they going to put whiskey and a new liver on sale?

Vinividivinci's picture

China can help you with that...
Imitation whiskey and rural chinese livers...

user2011's picture

I am sure plane is lower in price but there there will be other items that add back up the total cost of ownership and operation.     Look at the total price tags before declaring a win.

Salsa Verde's picture

Build more A-10's

 

BRRRRRRRRRRRT!!!

Tennessee Patriot's picture

Verde,

I agree.  An A-10 is the baddest motherfucker with wings & an engine. 

musimann's picture

Not much of a fighter though.

CRM114's picture

..and how many fighters does ISIS have?

Duc888's picture

 

 

Since we created and funded and trained ISIS...you'd have to add up the US armed forces of aircraft for that answer.

ghengis86's picture

Uh, it's not for dog fighting or AtA combat. It's a fucking flying tank, meant to provide low altitude air support and ground clearing. It's giant mother fucking Vulcan cannon had to be mounted offset due to the angular momentum generated when it rips off a few hundred rounds every blip of the trigger, shredding tanks and armored vehicles in the process. They can ran a beating, returning from missions missing engines and parts of the wings and fuselage. Ask any jarhead what he thinks about the A-10 softening up the ground in front of him.

yttirum's picture

Dog fights are so rare, they are almost non existent. A10 with some F-18 escorts? Look the fuck out.

American Snipper's picture

Agreed, had a chance to hear the fart of the Wart Hog live in Fort Hood target practice driving a butter bar around directly beneath them! Devastating!

skinwalker's picture

Can't do that. The A10 is actually useful. America might win a war for once, and then how can mega profits be guaranteed?

sheikurbootie's picture

And the liberals continue to say Obama was "great".  Yea, right.  A community organizer with no experience in ANYTHING. 

 

 

Phillyguy's picture

Why are taxpayers shelling out $100 million per aircraft for a plane that does not work? This is quintessential crony capitalism.

Yars Revenge's picture

A shitty plane reduced to $100 million is still a shitty plane

ebworthen's picture

Shit, we could get 200 A-10's for 1 piece of shit F-35.

CRM114's picture

For taking out terror camps and the like, the A-10 is a very useful element. However, the politics of pilots being captured is a big driving factor these days. 

mary mary's picture

Well, we in government can't have pesky political questions, can we?  So let's just break ALL the taxpaying citizens, if that's what it takes to avoid those questions.

CRM114's picture

Last thing I'll be doing is defending politicians ;)

CRM114's picture

Umm..each succeeding lot was always planned to cost less than the previous one. This batch was planned to be under $100m a copy 5 years ago.

It's not clear how much, if anything, has actually been saved, nor whether this has been achieved simply by pushing back capability to later dates. There appears to have been a 7 month delay announced since last month.

http://www.washingtonexaminer.com/f-35-delayed-again-despite-ceos-promis...

Plus there's every indication that the B model will exceed weight limits for vertical landing with stores, which is basically unfixable. Together with a very long list of other faults and delays; sixty two pages worth (and that's the summary).

http://www.dote.osd.mil/pub/reports/FY2016/pdf/dod/2016f35jsf.pdf

I think the jet is now 9 years late and 93% over budget.

skinwalker's picture

Seems like a better idea to crank out 400 disposable drones at 250k a piece. Have em swarm the target and saturate it with fire. Not much can withstand that.

CRM114's picture

Not feasible at the moment. Problems with comms, AI, target ID, and flexibility. Cruise missiles can already be used for known fixed targets such as airfield fuel dumps, command centers etc, but most other targets aren't so easy to be sure of.

That will likely be the next generation of aircraft. There may be an intermediate version in about 15 years where each F-35 goes in with a bunch of drones around it under its orders.