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December 01, 2011

Lockheed: F-35 likely to take budget cut hits

F-35B at sea No. 2 10-03-11
Lockheed Martin officials conceded Thursday that looming large defense budget cuts will probably mean fewer new orders for the F-35 Joint Strike Fighter than they had hoped.

Speaking at an investment conference in New York, Lockheed CFO Bruce Tanner said it was unlikely the F-35 would be exempt from big cuts in defense spending that are almost certain to occur beginning in October when the federal government’s fiscal year 2013 budget takes effect.

Even steeper budget cuts are to take effect in January 2013 unless Congress acts to undo the automatic spending reductions, sequestration, mandated by the Budget Control Act passed last August.

“Under sequestration I have to believe F-35 would build at a lower rate,” Tanner said.

The Pentagon has already slowed F-35 production rates, both to pay for higher costs and to allow time for development and testing to catch up.

The Pentagon had initially planned to order 43 planes in 2012, with increases each year thereafter. But as a result of higher costs and development delays the planned order has been cut to 35 planes and more recently 30, with Lockheed and the Pentagon negotiating over how much the company should share in the risk of continued cost increases.

- Bob Cox

 

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Comments

Geoff Koh

As has been widely anticipated for several years now, FY14 will see the first substantial cut backs in orders.

FY14's budget year will serve as a partial indicator for the track the rest of Program will take.

While the JPO office and DoD have insisted that F-35's Full Rate Production schedule was affordable and sustainable, it has been clear to many outside the 'Program' circle that such expectations were simply not sustainable, nor realistic.

How any revised estimates will now affect near-term and longer-term Unit Cost figures is something Congress will probably need to take up, evaluate and better grasp heading into FY13 Defense Appropriations.

tom frisby

On a macro basis, one of the things that I think we have always missed when reducing NASA and DoD budgets is that when we do, we lose some of the great technology and engineering/scientific teams that has ever been assembled, teams which could help solve alternative energy, transportation, and other issues facing our country. We did the same at the end of the 70s at a time that these people could have made a huge impact on the future of America's industrial base. Most Americans fail to realize the complete impact of the innovations brought to use both the Space and the Defense programs. Let's not lose that capability

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