F-35 costs coming down

As the Canadian government assesses alternatives to the Lockheed Martin F-35 for its next generation of fighters, mainly to address concerns about unit costs, Lockheed Martin announced it has managed to reduce the cost of an aircraft in combat configuration by 50 per cent, through supply chain and production line streamlining.
When I hear things like the F-35 cost is increasing, nothing could be further from the truth, said Steve O’Bryan, Lockheed Martin’s vice-president of F-35 program integration and business development, during a Feb. 8 teleconference.

He said the fifth stage of low-rate initial production (LRIP5) had yielded a unit cost 13 per cent below the $67 million, which was the official U.S. government estimate on orders placed in 2017 for aircraft to be delivered in 2020. The reduced cost worked out to just over $58 million, and includes the Pratt & Whitney F135 engine, as well as all the pods and sensors required for operations. Moreover, the LRIP5 price was some 50 per cent below LRIP1 aircraft.
Asked how that had been achieved, O’Bryan told Canadian Skies that Lockheed Martin and its suppliers had been really driving down the learning curve from lessons learned from legacy fighters such as the Grumman F-14 Tomcat, the McDonnell Douglas F-15 eagle, the F-18 and its own F-22 Raptor.
We more efficiently put the airplane together, we more efficiently put the supply chain together, and we drive down the price, he said. We’re going to continue to do that and continue to add volume. We’re able to absorb the overhead rates, if you will, and we’re able to amortize that overhead . . . over a larger quantity of airplanes.
O’Bryan said that production lines for most previous fighters had never been designed from the outset to handle the volumes envisaged for the F-35. With 187 aircraft delivered or on order, from a projected run of more than 3,100 by 2039, contracts have been signed with the three U.S. customers – Air Force, Navy and Marine Corps – and eight export customers. 
Israel and Japan are the latest Lockheed Martin customers to sign contracts. O’Bryan pointed out that for every F-35 they acquire, Canada will get a cash payment on each one, because of its status as an original partner in the Joint Strike Fighter program.
Asked how much those payments would amount to, Lockheed Martin told Canadian Skies in a subsequent email that it did not track the numbers, but they might eventually be available through Industry Canada. All transactions are government-to-government, wrote a company representative. The U.S. government will manage those transactions.
O’Bryan pointed out that approximately 170 Canadian suppliers are already benefitting from $450 million in F-35 work, including some with global product mandates in that their components and/or assemblies will be installed in every F-35 Lockheed Martin will build.

Agreeing that there are huge opportunities going forward for Canadian industry, Edward O’Donnell, Pratt & Whitney’s vice president, F135 and F119 business development, military engines, described the F135 engine as essentially an evolution of the F-119 in the F-22 Raptor. He said Pratt & Whitney has effectively transitioned into full production now that virtually all the engine testing has been done.
Pratt & Whitney had produced 48 engines in 2012 out of 87 to date, and O’Donnell expected that we will produce more F135 engines than all of our other military engines combined at Pratt & Whitney.
Like Lockheed Martin, the engine manufacturer exercised the supply chain to improve efficiency, having started about four years ago on what was described as an aggressive long cost initiative to reduce expenses. 
The result was much stronger and tighter relationships with the supply base. It meant that the F135 unit costs had been reduced by $1.5 million annually so far. All of that leads to us supporting what’s happening at Lockheed Martin, O’Donnell said.

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