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FL: Lockheed's F-35 Contract to Bring Work to Orlando

6 Nov, 2018


Lockheed Martin (NYSE: LMT) finalized an $11.5 billion deal with the U.S. Department of Defense for the production and delivery of 141 F-35s, CEO Marillyn Hewson confirmed last week during a third-quarter earnings call. This represents the lowest price in the aircraft program’s history.

Most of the work will be done in Fort Worth, Texas, but some will take place in Bethesda, Md.-based Lockheed Martin’s other U.S. operations centers, including in Orlando. Many of the firm’s more than 9,000 local employees create various parts and training programs at the Lockheed Martin Missiles & Fire Control unit in southwest Orlando and its Rotary & Mission Systems division in east Orlando.

It’s also a big deal since the F-35 program accounts for $1.7 billion in total economic impact in Central Florida, and supports tens of thousands of local jobs.

Of course, Lockheed and the Pentagon tout the F-35 as more than a fighter jet — it’s the most advanced fighter aircraft ever built, featuring stealth technology, supersonic speed, powerful sensors, large weapons capacity and the ability to collect, analyze and share data.

But it also was the most expensive weapons program in Pentagon history, so costs always come under great scrutiny. The latest deal represents the most F-35s purchased by the government at one time, and Lockheed Martin and the defense department were able to negotiate lower production costs.

The unit price for the F-35A, the jet’s most common version, is $89.2 million per aircraft — down 5.4 percent from the $94.3 million price tag on the last batch, as reported by OBJ sister publication Washington Business Journal.

Unit costs for the F-35B and F-35C are $115.5 million (a 5.7 percent drop) and $107.7 million (an 11.1 percent reduction), respectively.

The F-35 also is Lockheed Martin’s signature high-tech aircraft, so the firm wants to push as many of the units as it can, which the lower price is expected to help accomplish, Hewson said during the earnings conference call.

“We’d like to see [the F-35] continue to sell all around the world. We’d like to see it go the way of the F-16, which, as you know, we’ve sold over 4,500 aircraft around the world. And today the F-35 program of record is around 3,200, so we hope to see it to continue to grow at that level.”

Earlier this year, the firm had forecast building 91 F-35s in 2018, but that number since has ballooned to 130. Because of that, F-35 production and maintenance activity may grow at a double-digit rate or more next year, Lockheed Martin Executive Vice President and CFO Bruce Tanner said during the earnings call.

Meanwhile, driving down costs while providing the best value is critical to the program’s success, U.S. Navy Vice Admiral Mathias Winter, the F-35 program executive officer, said in a prepared statement: “We are delivering on our commitment to get the best price for taxpayers and warfighters.”

5,300: No. of direct local jobs created by the program

15,000: No. of indirect jobs created by local suppliers through the F-35 program

5,600: Total F-35 mechanics trained by simulated maintainer program built in Orlando

620: Total pilots trained by the simulated F-35 pilot program built here

70: No. of F-35 local suppliers

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