It appears the so-called 'Twitter-spanking' approach of president-elect Trump is working. First Carrier, then Ford, and now, following his earlier jab at Lockheed's F-35 costs by asking Boeing to price-out a comparable F-18, Lockheed Martin CEO Marillyn Hewson has reportedly given Trump her "personal commitment" to "aggressively" drive down costs of the F-35 program. The question is what was the quid-pro-quo in this instance?
Following this tweet from Trump...
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!— Donald J. Trump (@realDonaldTrump) December 22, 2016
CNBC reports that:
Lockheed Martin CEO Marillyn Hewson speaks with Trump, says she "gave him my personal commitment" to drive down F-35 program cost "aggressively"
As yet again Trump appears to have won. It is perhaps no wonder though given that 78% of Lockheed's net sales were from the US Government... As LMT's Annual report shows:
The F-35 program is our largest program, generating 20% of our total consolidated net sales, as well as 59% of Aeronautics’ net sales in 2015.
In 2015, 78% of our $46.1 billion in net sales were from the U.S. Government, either as a prime contractor or as a subcontractor (including 58% from the Department of Defense (DoD)), 21% were from international customers (including foreign military sales (FMS) contracted through the U.S. Government) and 1% were from U.S. commercial and other customers.
So your biggest customer - by a country mile - is putting pressure on you to cut costs or he will cease his purchases of your biggest revenue producer to your biggest competitor... what would you do?
Maybe having a "dealmaker" in The White House won't be so bad after all?