At the end of January, President Trump claimed that he had encouraged the major $728 million price drop in the recent purchase of 90 F-35 Joint Strike Fighters, known as Lot 10, by the Department of Defense. At the time, many of the president’s critics were quick to oppose his statement, saying the price had been expected to fall months before his negotiations with the defense giant. Lockheed Martin’s CEO Marillyn Hewson, however, disagrees.
In a on Tuesday, Hewson said that the president’s negotiations helped the deal tremendously and that he was justified in taking credit for his actions.
“We were in discussions … and he helped accelerate that along, and I think he put a sharper focus on price and how we would drive the price down,” Hewson told reporters at a Lockheed media event in Arlington, Va. “So he absolutely did contribute to us getting to closure on that.”
Many opposed Trump’s actions by saying he had crossed the line by being part of a deal that was started before Obama left office. Hewson and her team see it differently, though. “If you think about his focus and his long-term trend of increasing more spending in national security and on defense spending, the F-35 is the largest program that the Department of Defense has in its budget,” Hewson said. “So for him to focus on the F-35 and to focus on how he can get the best price for the taxpayer going forward, I think, was perfectly appropriate.”
Finding the deal to be way too expensive, and seeing an opportunity to cut any cost possible, Trump urged Lockheed Martin to review an option to replace the costly F-35 jet with a modified F/A-18 aircraft that had been used previously and cost much less.
Around the same time, Defense Secretary James Mattis . Navy Captain Jeff Davis said in regards to the effort, “This is a prudent step to incorporate additional information into the budget preparation process and to inform the secretary’s recommendations to the president regarding critical military capabilities. This action is also consistent with the president’s guidance to provide the strongest and most efficient military possible for our nation’s defense, and it aligns with the secretary’s priority to increase military readiness while gaining full value from every taxpayer dollar spent on defense.”
Hewson gave then-President-elect Trump her “personal commitment” to cut the cost of the stealthy F-35 fighter jet.
Lot 10 was an $8.5 billion purchase that includes 90 aircraft – 55 for U.S. military forces, and 35 for international partners. The batch of F-35s is made up of three different versions. The Air Force’s ‘A’ version cost $94.6 million, the ‘B’ version flown by the Marines cost $122.8 million, and the Navy’s ‘C’ version cost $121.8 million. These totals reflect the $7 million saved per aircraft.
“The agreement represents $728 million in savings and a nearly 8 percent reduction in price over our last contract for the air vehicle delivered by Lockheed Martin and our industry partners,” Lockheed Martin said in a statement shortly after the final deal was announced. “This is a good deal for the American taxpayer, our country, our company and our suppliers.”
F-35 program executive officer Lt. Gen. Chris Bogdan also commended the deal as fair “for the taxpayers, the US government, allies, and industry.”
The defense giant seems to be working to cut even more costs in the future as well. “We are substantially bringing the cost of each aircraft down and at the same time the F-35 program will continue to add thousands of additional jobs to the US economy as we increase production year over year,” said Jeff Babione, Lockheed Martin F-35 vice president and general manager, in a statement.
Hewson added, “I will admit that as we are wrapping up the program we will continue to see cost reductions just through volume.” She noted the program has a goal of reaching a price tag of $85 million or lower by 2019 for the F-35A — the least expensive and most common variant of the Joint Strike Fighter.
According to both Hewson and Babione, Lockheed Martin has more than one reason to be pleased about Trump’s interests in the defense program since he took office. Hewson says foreign nations are now showing more interest than ever before in boosting their own defenses, to which she credits “the Trump effect.”
“NATO members are considering the shifts of U.S. priorities, and many see a great need to shoulder more of their own defense burdens,” she said. “This is significant. In fact, if NATO members fulfill their own stated pledges to spend 2 percent of their GDP on defense, it could result in a $100 billion increase in spending across the alliance.”
Trump has often stressed his desire to see U.S. allies take on more responsibility in paying for their own defense systems. When he addressed Congress earlier this month, the president took credit for the recent rise in NATO defense spending, claiming “money was pouring in” as a result of his comments. NATO officials responded by saying the commitment by allies to increase their spending has been in the works for years. Even if their plan has been ongoing for so long, there’s no denying that President Trump’s words carry a lot of weight around the world and bring important issues, in this case defense spending, to light.
In 2016, more than 40 percent of Lockheed Martin’s entire business, about $12.7 billion, came from international partners. With Hewson joining the ‘Trump Train’, along with other business executives, maybe we will see more savings and more deals being made between American companies and our allies around the world. It’s all part of the “Make America Great Again” agenda Trump has been pushing since day one.