Lockheed Works Toward 4th-Gen Prices for F-35

The 100th F-35 joint strike fighter rolls off the assembly line at Fort Worth, Texas, last week. (Alexander H. Groves/Courtesy of Lockheed Martin)

Dec. 18, 2013 - By AARON MEHTA – Defense News

FORT WORTH, TEXAS — The cost of a fully equipped F-35A joint strike fighter will drop to $85 million by 2019, according to a top Lockheed official, as long as the program continues to increase quantities.

That figure, calculated at $75 million in 2013 dollars, includes engines and all weapon systems for the conventional-takeoff-and-landing fifth-generation fighter, said Lorraine Martin, the head of Lockheed’s F-35 program, during a Dec. 13 press briefing.

The briefing was held at Lockheed’s F-35 production facilities in Fort Worth, Texas, as part of a ceremony celebrating the rollout of the 100th joint strike fighter. Travel and accommodations were paid for by the company.

In the most recently negotiated batch of aircraft, low-rate initial production lot 7 (LRIP-7), an engine-less F-35A came in around $98 million. If Lockheed can meet this cost goal, it would make the fifth-generation fighter competitively priced with fourth-generation aircraft such as the F-16 and F/A-18, a major boost for a program that has been criticized for being cost-prohibitive.

Costs for the jump-jet F-35B and aircraft carrier F-35C variants are less clear, due in part to the small number produced so far. The F-35A is by far the most popular model and has higher quantities, giving company officials a clearer sense of per-unit costs.

Achieving those cost reductions will require an increase in quantities, and while Martin expects orders to increase, she emphasized that quantity is quickly becoming the key price driver for the program.

“Quantity matters. Quantity absolutely matters right now on this program,” Martin said. “The [production] learning curve is still important, and it’s still enabling us to get work content off the line that’s not as efficient as it could be, but you start to learn that stuff. The silly stuff you learn fast and, as you go forward, you start to really refine how you produce the aircraft. Then the big driver to bring cost out is quantity.

“We’re at the point where we need both of them, and soon, quantity will be the biggest driver for us,” Martin continued. “If you buy more, they will be cheaper. There just is no doubt.

“We have been flat for four years, around 30 [to] 36 aircraft. If it doesn’t increase, it will dampen out our ability to get costs out.”

Whether there is an increase in the number of planes ordered for LRIP-8 will depend on the US budget situation. That lot is being negotiated with the Pentagon, and Martin said her company submitted pricing options for “variable quantities” of planes to give the Defense Department flexibility based on the budget situation.

Rising quantities and lowering costs don’t just benefit DoD and its partner nations. As Lockheed gets costs under control, Martin said the company hopes profit margins will increase.

“You would expect, for any aircraft program, you know how to do it better [as time goes on] and you’re hoping you’re able to do that in a predictable way, both for the government and for your own profit margins,” Martin said. “The program at the beginning was very challenged, so our margins have not been what you would want them to be going forward.

“My job is to ensure I know what it costs to build the aircraft, that what it costs to build an aircraft is reasonable and attractive to our customers, and that I can get a reasonable profit on top of that. And as I get that equation put together, I think the margins will come up.”

Looking forward to 2014, Martin expects to see increased international orders for the plane, including the rollout of the first F-35 from Italy’s final assembly and check-out (FACO) facility toward the end of 2014.

There are no plans to open FACOs outside of the two planned locations in Italy and Japan, according to Martin, who added that the Japanese FACO should be completed on schedule. She confirmed that a FACO component is not part of the F-35 deal being negotiated between the US and South Korea.