July 21 (Bloomberg) -- The U.S. Senate voted to end production of Lockheed Martin Corp.’s F-22 fighter jets at the 187 now on order after President Barack Obama threatened to veto any measure containing money to build more.

Senators voted 58-40 for an amendment striking $1.75 billion for seven more F-22s from a defense spending measure. The amendment was sponsored by Carl Levin, a Michigan Democrat and chairman of the Armed Services Committee, and John McCain of Arizona, the panel’s ranking Republican.

“The time has come to end the F-22 line,” Levin said on the Senate floor before the vote. “This is a difficult decision but one we are comfortable with.”

Obama said he is “grateful” to members of the Senate who voted to end production of the F-22. “At a time when we’re fighting two wars and facing a serious deficit, this would have been an inexcusable waste of money,” Obama said at the White House.

The overall measure authorizes $680.4 billion for spending by the Defense Department in fiscal 2010. The Senate plans to pass the legislation later this week. It must be reconciled with the House version passed June 25 that provides $369 million as a down-payment for 12 more fighters.

Lawmakers seeking to continue production of the fighter argued that ending it would cost thousands of jobs.

“We are told that there are at least 25,000 direct jobs and 95,000 indirect jobs at stake” if the production ends, said Democrat Chris Dodd of Connecticut, where F-22 engines are made.

‘We Do Not Need’

The president, in a letter to Levin and McCain on July 13, said he would veto any budget bill that contains money for more F-22s. Defense Secretary Robert Gates and the military leadership “determined we do not need these planes,” he said.

The bill the Senate is considering authorizes spending. The Senate and House committees that appropriate money for approved spending haven’t acted on the Pentagon’s budget.

Lockheed will “support the U.S. government’s final decision on the F-22 program,” company spokesman Jeff Adams said in an e-mail.

Lockheed fell $6.98 or 8.5 percent to $75.13 at 4:04 p.m. in New York Stock Exchange composite trading. United Technologies declined $1 or 1.8 percent to $53.97. Boeing rose 82 cents or 1.9 percent to $43.02.

Gates, in a July 13 letter, told lawmakers that the Pentagon preferred the F-35 Lightning II or Joint Strike Fighter, also made by Lockheed, because it’s a “half-generation newer aircraft than the F-22 and more capable in a number of areas such as electronic warfare and combating enemy air defenses.”

Buying F-35s

The Defense Department plans to buy 500 F-35s during the next five years and about 2,400 over the life of the program, Gates said. If the Pentagon is forced to buy more F-22s it will come at the expense of other Air Force and military programs, Gates said in the letter.

Pentagon spokesman Geoff Morrell said in an e-mail that Gates understood that “for many members this was a very difficult vote, but he believes the Pentagon cannot continue with business as usual when it comes to the F-22 or other programs in excess to our needs.”

Ending the F-22 program wouldn’t be a negative for Bethesda, Maryland-based Lockheed because the company will more than make up for it with rising production of the F-35 or Joint Strike Fighter, said James McIlree, a New York-based analyst with Collins Stewart LLC.

Efficiencies

“If you fund the F-22, you might end up taking money out of the F-35 to pay for it,” McIlree said. “You can get manufacturing efficiencies with F-35 volumes. The more you take away from F-35, the longer you wait for the margin improvement on that program.” He recommends buying the stock.

Todd Harrison, a defense analyst in Washington, said the F- 22’s capabilities weren’t the central issue in today’s vote.

“This debate was about whether having more F-22s is worth having less of something else,” said Harrison, of the Center for Strategic and Budgetary Assessments.

Pratt & Whitney, a unit of Hartford, Connecticut-based United Technologies Corp., makes the F-22 engines in Middletown, Connecticut. About 2,000 jobs there are tied to the program.

If no more F-22s are ordered, Pratt & Whitney “would be required to halt orders from our long-lead suppliers in months,” company spokesman Matthew Perra said in an e-mail. “As this production requirement is satisfied, we will scale down our workforce as required.”

Northrop, Raytheon

Los Angeles, California-based Northrop Grumman Corp. and Waltham, Massachusetts-based Raytheon Co. co-produce the F-22 radar system.

Democratic Senator Patty Murray of Washington state, where Chicago-based Boeing Co. builds part of the F-22 fuselage, decried the attempt to stop production. “If we end the F-22 program, we are cutting a link in technology that we will not be able to repair overnight,” she said.

Three labor unions -- the International Association of Machinists and Aerospace Workers, the United Steel Workers and the AFL-CIO -- pressed senators to extend production.

The plane supports 25,000 direct jobs and 70,000 indirect jobs in 40 states, the unions said in letters to senators. “Ending the F-22 will result in immediate layoffs,” R. Thomas Buffenbarger, president of the Machinists union, said in a July 9 letter.

The Machinists union said in a statement today it will “continue fighting for additional funding” for more F-22 planes.

Export Version

Senator Saxby Chambliss, a Georgia Republican who voted to fund additional F-22s, said in a statement the plane’s supporters in Congress will continue to press for an export version that U.S. allies may be interested in purchasing.

Gates had denied the Air Force’s request to buy 60 more F- 22s and said Congress’s desire to continue making the fighter is a “big problem.”

“To be blunt about it, the notion that not buying 60 more F-22s imperils the national security of the United States, I find completely nonsense,” Gates said June 18.

On July 16, the defense secretary told the Economic Club of Chicago that backers of the F-22 were using “far-fetched” arguments about its utility to prevent the Obama administration from curtailing production.

“If we cannot bring ourselves to make this tough decision, where do we draw the line?” Gates said.

The F-22 was designed at the height of the Cold War to counter the Soviet Union.

To contact the reporters on this story: Gopal Ratnam in Washington at gratnam1@bloomberg.net; Tony Capaccio in Washington at acapaccio@bloomberg.net

Last Updated: July 21, 2009 17:01 EDT