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Trump puts pressure on Lockheed over cost of F-35

Donald Trump turned up the heat under Lockheed Martin about the cost of its F-35 fighter jet, tweeting on Thursday that he had asked rival defence contractor Boeing to price its F-18 Super Hornet as an alternative. 

“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!” Mr Trump tweeted on Thursday evening. It is the latest salvo in an ongoing war of words between the president-elect and US defence contractors, whom he has criticised for waste and excessive cost. 

The implicit threat to cancel Lockheed Martin’s F-35 contract and replace it with a cheaper contract with Boeing, came on the heels of a meeting on Wednesday between Mr Trump and chief executives of the two companies at his Florida resort. 

Dennis Muilenburg, the Boeing chief executive, emerged from that meeting with fulsome praise for Mr Trump, who had earlier set off a Twitter firestorm by criticising Boeing’s price for Air Force One as excessive. After the meeting, Mr Muilenburg promised the president-elect that he would build that plane for less than the $4bn price tag that Mr Trump has often ascribed to it — although no contract has yet been signed for the plane, which is still in the research and development phase, so no price has in fact yet been agreed. 

On Wednesday, Mr Muilenburg said he had had a “terrific conversation” with Mr Trump but it was not clear whether they had discussed substituting the F-18, an older generation fighter jet, for the F-35. Lockheed had no comment and Boeing said only: “We have committed to working with the president-elect and his administration to provide the best capability, deliverability and affordability across all Boeing products and services to meet our national security needs.” 

The latest missive from Mr Trump sent Boeing shares up 0.7 per cent in after-hours trading, while Lockheed Martin shares were down 2 per cent. 

You could get any Cold War plane cheaper than a cutting edge 21st century plane but you are not going to like the results when you go to war

“It sounds like Trump is really trying to put pressure on Lockheed Martin to cut costs. But most of the cost of the F-35 is beyond Lockheed Martin’s ability to affect because it relates to supplier costs and government regulation, and the second problem is that the F-35 was designed to be far more capable than that F-18 — and that does cost money,” said Loren Thompson, a defence industry analyst who consults for Lockheed and other contractors. “You could get any Cold War plane cheaper than a cutting edge 21st century plane, but you are not going to like the results when you go to war.” 

On Wednesday, the president-elect met chief executive Marillyn Hewson of Lockheed, after tweeting last week that “the F-35 program and cost is out of control”. 

Asked whether he had secured any concessions from Ms Hewson, Mr Trump told reporters: “We’re just beginning, it’s a dance . . . but we’re going to get the costs down and we’re going to get it done beautifully.” The latest tweet may be just part of that dance, defence analysts said.

Via FT