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    F-35 Lightning II fighter jet

    CEO Tells Trump Lockheed Martin Committed to Cut Cost of F-35 Program

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    Lockheed Martin CEO Marillyn Hewson said in a statement she has promised US President-elect Donald Trump during a private conversation on Friday to reduce the cost of the F-35 multirole combat jet.

    WASHINGTON (Sputnik) — Earlier on Thursday, Trump said in a statement that he has asked the airplane manufacturer Boeing to list a price for the F/A-18 Super Hornet combat aircraft as a result of the sky-high cost of Lockheed Martin’s F-35 jet.

    "I had a very good conversation with President-elect Trump this afternoon," Hewson stated in the statement on Friday. "I gave him my personal commitment to drive the cost [of the F-35 jet] down aggressively."

    Hewson pointed out that she understands the importance of Trump's approach to deliver exceptional capability for the US military at the lowest cost for American taxpayers.

    "We [Lockheed Martin] are ready to deliver," Hewson noted.

    The estimated cost of the F-35 over its life exceeds $1.4 trillion.

    Related:

    After Meeting Trump, Boeing CEO Vows to Build New Air Force One for Under $4Bln
    Trump Pledges to Work With Boeing to Cut Costs of Air Force One
    Tags:
    cost-cutting, F-35, Lockheed Martin, Donald Trump, United States
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    • avatar
      jas
      "We [Lockheed Martin] are ready to deliver," Hewson noted.
      --
      Nobody should have to beg her to be honest. She just admitted to intentionally overcharging. Excessively expensive and still malfunctioning junk.
    • avatar
      nonyank
      Interesting how a man who has not even been confirmed as president, pays NO taxes and has let the TAXPAYERS bail him out of his finsncial Boondoggles and Con schemes 6 yes 6 times....he is interesting in saving taxpayers money....BULLSHI-!
    • support
      Lockheed and other defense contractors have been paying more than the going commercial rate for the cost of money to the non-military private sector during this Administration; part of the bank "bail-out" deal which in effect nationalized US banks was to allow the bankrupt banks first dibs at the juicy Federal jobs. . Probably banking expenses including interest charges added somewhere in the neighborhood of double the cost owing to accounting requirements and other regulatory issues on the part of the banks involved.

      finance should be run as in WW II: open P.O.'s that can only be financed by factors charging a fixed fee at simple interest rates, not banks, and then only when the government itself did not see fit to "tote the note."

      I have a box of Krispy Kremes as betting collateral that says the cost of the F-35 is times three its actual cost of production owing to the present cost of money to Lockheed.
    • avatar
      peaceactivist2
      Yes, Mom promises her whining boy to stop and she will bring him candies. This may work well in politics as well. Will wait and see
    • avatar
      goldcamshaft
      After months or years of exposure in the media now the contractor of the F35 assures the us that the cost will be reduced, which means that the cost is controllable. Why was it not controlled before during the Obama administration? Has the profit margin changed or did the "super-profits", (for use of a milder word, milder than the one I have in mind), dwindle at the moment when the company stands to lose the contract?
      It seems to me that cost was controllable all the time, but lack of good purchasing management on this project is linked to the present government. and that controllability, co-incidentally, is evident at time the old administration is going out. Is there a correlation between the amount of unlimited profits made by a given contractor and the government in power? Buddy, Buddy system, perhaps?
      The american public has to ask questions. Something stinks here!
      Papa is coming home. The sink, garbage area, toilets and soiled bed sheets have to be cleaned.
    • avatar
      michael
      this ought to be good to watch. :)
    • avatar
      nonyank
      Any time you work for the US government they constantly change the rules and rrequirements and specs which are respinsible for the out of control costs.
    • support
      For those of a scholarly bent, here is a technical paper on the reforms to defense acquisition introduced just prior to and during the startup of the Obama Administration courtesy of the US Army's Military History Institute. To cut to the chase start on page 185 then work back.

      www.bridgewaterenergy.net/DefenseAcquisitionUSA1960throughObamaReforms2009.pdf

      IMO the Packard Commission deserves much of the blame but that work was what we call a "good college try."

      The lesson to be learned is that in a world where disruptive innovation is viewed as the optimum solution to everything, it is absurd to expect to not always be off-balance and confused by even your own decision-making processes, especially when the whole point of managing costs comes down to achieving stability and predictability.
    • support
      I looked up my favourite Russian firm, Severstal, on the Net (if you recall, that firm bought the run-down and obsolete Ford River Rouge steel complex in Detroit and transformed it into the profit-making, modern facility it remains to be today then selling it off at a profit to an Ohio steelmaker).

      reports.severstal.com/eng/business_review/chief_executive_review/index.phtml

      President Trump needs his own personal Alexey Mordashov to re-schedule and re-source all the funding for Federal manufacturing operations to include designating who does the moneylending to US defense contractors.

      If you will note from the attached, in 2010 Chief Executive Officer Mordashov turned Severstal around from a 961 million US dollar loss-maker into a firm showing but a 91 million dollar loss yet at the same time generatng a free cash flow of 751 million dollars.

      All of this was done through re-sourcing operating capital providers.

      After a few calls, the actual cost of money for the F-35 project is four times what Lockheed would be spending if they used a factor at simple interest on a one time finance fee basis.

      Not only that, this is the situation across the US defense industry finance landscape except for small contractors. The lesson to be learned is that in a near-zero rate of inflation economy, the cost of money is higher in aboslute terms than during high inflation. This is because zero inflation means zero inflation-related reductions over time in the absolute cost of money.

      If President Trump wanted to REALLY do it right through reducing Federal debts, the US government should also participate in this factoring process directly with the proceeds committed to reducing the US National Debt.
    • support
      Based on my review of several other management documents which relate to the conduct of those overseeing this job, DCAA and DCMA, and who are the government representatives on the F-35 contract, I am compelled to hold Lockheed wholly blameless in this affair. They have met with unrelenting opposition and have been forced to maneuver through mirror-filled funhouses of the Obama Administration's creation which maze of deliberately insoluble obstacles were tailor-made to force Lockheed into default so as to facilitate a windfall award to a more amenable suitor for this aircraft's development, a suitor more willing to kowtow to the Obama Administration's political agendum for the post-Obama world.

      This view becomes more clear when one realizes that with the bank bailouts, all those banks bailed out had to accept a permanent Federal representative onto each of their boards as directors and decision-makers.

      Therefore Lockheed had no choice as to which bank or financial institution "floated their notes" for bridge financing on the associated P.O.'s.
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