{"id":17713,"date":"2016-12-24T09:45:19","date_gmt":"2016-12-24T09:45:19","guid":{"rendered":"http:\/\/www.biphoo.com\/bipnews\/?p=17713"},"modified":"2016-12-24T09:45:19","modified_gmt":"2016-12-24T09:45:19","slug":"trump-push-cut-jet-costs-hits-nerve-demands-face-limitations","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/trump-push-cut-jet-costs-hits-nerve-demands-face-limitations.html","title":{"rendered":"Trump Push to Cut Jet Costs Hits a Nerve but His Demands Face Limitations"},"content":{"rendered":"
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Trump Push to Cut Jet Costs Hits a Nerve but His Demands Face Limitations<\/span><\/strong><\/h2>\n

Trump Push to Cut Jet Costs Hits a Nerve but His Demands Face Limitations:-<\/strong> After meeting with Lockheed Martin\u2019s chief executive on Wednesday about lowering the cost of its new F-35 fighter jet, President-elect Donald J. Trump expressed confidence that Pentagon officials standing with him were \u201cgood negotiators\u201d and could \u201cget it done beautifully.\u201d<\/span><\/p>\n

Then, on Thursday, he gave the talks another jolt, posting on Twitter that he had asked Lockheed\u2019s rival, Boeing, for a price quote on the most comparable version of its older F\/A-18 Super Hornet.<\/span><\/p>\n

And on Friday, Lockheed\u2019s chief, Marillyn Hewson, made clear she got the message.<\/span><\/p>\n

\u201cI had a very good conversation with President-elect Trump this afternoon and assured him that I\u2019ve heard his message loud and clear about reducing the cost of the F-35,\u201d she said. \u201cI gave him my personal commitment to drive the cost down aggressively.\u201d<\/span><\/p>\n

Besides the drama of his personal intervention, Mr. Trump had made it clear that he would like to squeeze Lockheed for a better deal and might try to shift some of the fighter business to Boeing if he does not get it. Rarely have presidents taken such negotiations into their own hands, and his post \u2014 along with an earlier one rapping Boeing over the cost of a new Air Force One \u2014 sent shock waves through the military industry, which is bracing for volatile dealings with Mr. Trump over projects to update nuclear weapons and build new bombers and missile submarines.<\/span><\/p>\n

So far, Lockheed Martin is the biggest target. It depends on the F-35 for nearly a quarter of its revenues, and Mr. Trump has not indicated whether he just wants a better price for each plane or might scale back the program. At an estimated $400 billion for 2,443 planes \u2014 being built in different versions for the Air Force, the Marines and the Navy \u2014 the high-tech fighter is by far the largest weapons project, and it is long overdue.<\/span><\/p>\n

\u201cAs in the business world, he\u2019s laying out this combative posture,\u201d said Gordon Adams, who oversaw military budgets in the Clinton White House. \u201cHe\u2019s doing it like a real estate deal. It\u2019s amazing.\u201d<\/span><\/p>\n

But while taxpayers want to see the government clamp down on arms costs, Mr. Adams added, \u201cthere is not an Option B\u201d with some of these programs, \u201conly an Option A, and you\u2019ve got to make it work.\u201d<\/span><\/p>\n

Others said that even if Mr. Trump persuaded Lockheed to lower its price a bit, he could end up ratifying a shift that had already been underway, with the Navy buying more of Boeing\u2019s Super Hornets along with the F-35s.<\/span><\/p>\n

\u201cHe\u2019s coming to it a little late in the game,\u201d said Richard L. Aboulafia, an aviation analyst at the Teal Group in Fairfax, Va. \u201cThe Navy has been buying the Super Hornet along with the F-35 for several years, and they will be taking even more Super Hornets, and he says something and makes it look like he is in charge.\u201d<\/span><\/p>\n

For the Navy, the planes complement each other but are not interchangeable, and it would be impossible for the Super Hornets to supplant more than a fraction of the F-35s that the Pentagon wants.<\/span><\/p>\n

Mr. Trump has not commented beyond his Twitter message, and his transition team did not respond on Friday to a request for comment on his plans for the F-35 program.<\/span><\/p>\n

The Air Force and the Marines have no interest in buying Super Hornets, and most experts say that the Navy still needs to buy F-35s for its most sensitive missions. The F-35s are designed with radar-evading stealth protection, and the Super Hornets, which were designed in the 1990s, have only limited stealth attributes.<\/span><\/p>\n

So while the Super Hornets have been busy conducting bombing runs against the Islamic State in Iraq and Syria, the F-35 would be the Navy\u2019s best choice for trying to sneak into China early in a larger war to knock out antiaircraft installations. Asked if he would rather fly an F-35 than a Super Hornet on that type of mission, Mr. Aboulafia said, \u201cOh, God, yes.\u201d<\/span><\/p>\n

The F-35 was conceived as the Pentagon\u2019s silver bullet in the sky \u2014 a state-of-the art aircraft that could be adapted to the three branches of the military, with advances that would easily overcome the defenses of most foes. The radar-evading jets would not only dodge sophisticated antiaircraft missiles, but they would also give pilots a better picture of enemy threats while enabling 11 allied countries, which also want the planes, to fight more closely with American forces.<\/span><\/p>\n

But the ambitious aircraft instead illustrates how the Pentagon can let huge and complex programs veer out of control and then struggle to rein them in. The program nearly doubled in cost from 2001 to 2010 as Lockheed and the military\u2019s own bureaucracy failed to deliver on the most basic promise of a three-in-one jet that would save taxpayers money and be produced speedily.<\/span><\/p>\n

The Pentagon temporarily slowed purchases of the jets several years ago to stabilize the program, and Lockheed has now built 204 of them. Pentagon officials said recently that the program would need an extra $500 million but that it remained roughly on a revised schedule.<\/span><\/p>\n

In November, the Pentagon imposed a price cut on the latest batch of the planes after Lockheed refused to agree to terms. The various versions of the F-35 range in cost from about $102 million to $132 million apiece, and Lockheed thinks it can lower that to $80 million to $85 million by 2019. The Super Hornets typically sell for $60 million to $70 million.<\/span><\/p>\n

The Marines said their version of the F-35, which flies like a jet but can take off and land almost vertically like a helicopter, was ready for initial operations last year, and the Air Force began limited operations with its version in August. The Navy plans to wait until 2018, when the full war-fighting software is ready, to put planes into service.<\/span><\/p>\n

Some Pentagon officials remain skeptical that the millions of lines of software code can be completed on time, and outside analysts say that the purchases could eventually be trimmed to 1,200 to 1,500 planes. Right now, the Air Force plans to buy 1,763 of the planes and the Marines and the Navy 680.<\/span><\/p>\n

Still, most analysts say it would be hard to stop the program now. The Pentagon has already spent $100 billion on it, and there would be diplomatic fallout with other countries that have invested in the program. Cuts could also encounter resistance in Congress because Lockheed has spread subcontractors \u2014 and jobs \u2014 through nearly every state.<\/span><\/p>\n

Boeing is in a much better position in dealing with Mr. Trump\u2019s demands to cut costs on the Air Force One project, analysts said. That program is in an early phase, and Boeing has received only $170 million in study contracts.<\/span><\/p>\n

Mr. Trump has claimed that it would cost $4 billion to buy two 747-8\u2019s and develop antimissile and other sophisticated communications and defensive gear, but the Pentagon\u2019s own estimate is about $3 billion.<\/span><\/p>\n

Boeing\u2019s chief executive, Dennis A. Muilenburg, also met with Mr. Trump on Wednesday and said afterward that he had given Mr. Trump \u201cmy personal commitment\u201d to hold costs down.<\/span><\/p>\n

Boeing has said it did not expect to earn much on the planes. It also would like to win Mr. Trump\u2019s support for a plan to sell $16.6 billion in commercial aircraft to Iran and other measures to help its export sales.<\/span><\/p>\n

Source:-\u00a0http:\/\/www.nytimes.com\/2016\/12\/23\/business\/trump-lockheed-boeing-jet-costs.html?_r=0<\/span><\/div>\n

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