Lockheed Tells Trump It Will Cut F-35 Costs, Create New Jobs

Updated on
  • President-elect has criticized fighter jet as ‘out of control’
  • CEO Hewson comments after a meeting at Trump Tower in New York

Lockheed Martin Corp.’s chief told President-elect Donald Trump it’s close to a deal with the Pentagon to lower costs “significantly’’ for the next production lot of its F-35 fighter jet and will boost hiring at the Texas factory where the advanced aircraft is made.

Marillyn Hewson, chief executive officer of the world’s largest defense contractor, said she assured Trump in a Friday meeting that “I certainly share his views that we need to get the best capability to our men and women in uniform and we need to get it at the lowest possible price.’’

Lockheed Martin and the F-35, the costliest U.S. weapons system, have been favorite Trump targets on Twitter, injecting new uncertainty into contracting practices at a time when defense spending is expected to rise. “The F-35 program and cost is out of control,” Trump wrote in a December tweet. “Billions of dollars can and will be saved on military (and other) purchases after January 20th,” inauguration day.

After previous, inconclusive discussions with Trump, Hewson’s comments Friday may hit the sweet spot that has prompted approving tweets from the next president following his meetings with other corporate executives -- both promising to cut costs to taxpayers and create jobs.

“Marillyn Hewson is doing the right thing,” said Richard Aboulafia, a defense analyst with Teal Group. “This is embarrassing on a national level, on a defense contracting level. But this is the right thing for Lockheed.”

The shares rose 0.9 percent to $254.81 at 3:13 p.m. in New York.

Production Increase

After her brief visit to Trump Tower in New York, Hewson told reporters the company is close to a deal that would break an impasse with the Pentagon over the 10th and largest-yet order for the F-35 Lightning II.

The contractor also plans to add 1,800 jobs in Fort Worth, Texas, where the F-35 is assembled, Hewson said. That’s 1.8 percent of the 98,000 employees Lockheed currently employs, based on data on its website. The hiring spree promised by Hewson comes as Lockheed plans to step up production of the aircraft.

Retired Marine General James Mattis, Trump’s nominee for defense secretary, said at his confirmation hearing this week that the president-elect “is serious about getting the best bang for the dollar” with programs such as the F-35. But Mattis also told the Senate Armed Services Committee that “many of our allies have bet their air superiority on the F-35 program, and it binds us tightly together with them.”

The Pentagon provided Lockheed Martin with a $1.28 billion down payment in November to continue production while the two sides hammer out a contract valued at as much as $7.19 billion for 90 aircraft.

— With assistance by Anthony Capaccio

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