Lockheed Martin Banks on Internal Investments to Reduce F-35 Cost

By Valerie Insinna

Lockheed Martin unveiled new details on manufacturing investments aimed at bringing the F-35 joint strike fighter price down to about $80 million a copy by 2019.

The efforts are a part of the company’s Blueprint for Affordability initiative and would save the government $1.8 billion by 2019, said Lorraine Martin, Lockheed’s vice president and general manager of the F-35 program, during a Sept. 16 briefing to reporters. 

The latest figures in 2013 had the F-35's per unit cost ranging from $98 million to $116 million depending on the model.

Lockheed is making changes to joint strike fighter manufacturing techniques and the components themselves, she said. 

“As we change anything on the aircraft, whether it’s a method or an actual component, we need to make sure that the lifecycle costs are also taken into consideration,” as well as any effects to sustainability or weight, she said. “There are things we can do to drive cost out of the aircraft, that actually also make it easier to maintain.” 

Under the plan, Lockheed Martin and its partners BAE Systems and Northrop Grumman will invest $170 million in cost reduction efforts over the next two years, she said. The government has the option from 2016 to 2018 to invest money if initial projects are successful.

The joint program office will reimburse the companies that sum only if they are successful in slashing the aircraft’s cost, Martin said. “If we never show those returns, we never get it back.” 

The companies have 66 projects approved by the F-35 joint program office, with about 600 more in the pipeline waiting to be sanctioned by Lockheed Martin or the JPO.

One project involves taking the canopy bow frame component made of titanium, and using 3D printing instead of forging to create the attachment fittings. 

“This not only reduced the material costs because we’re not throwing as much away creating these attachment fittings, but it also results in less lead time to actually create the part,” which saves money, Martin said. 

Lockheed invested $342,000 to do stress analysis testing, implement the techniques and qualify the finished component, but it will save $31.5 million over the lifecycle of the program, she said. 

Lockheed Martin subcontractor Kongsberg is changing the way it manufactures the jet’s rudder component. Currently it whittles down a plate of material to create the part. The company discovered it would waste less material by using a variety of techniques such as forging and machining. The $360.2 investment should net $204 million in savings over the program’s life.

Other projects replace titanium with lighter, less expensive aluminum parts or required an investment in new equipment. Martin stressed that even as components are changed, their structural integrity will not be compromised. 

Lockheed Martin and the government are nearing the end of negotiations for the eighth batch of low rate initial production aircraft “in the next weeks or couple days.”

“We’re looking at everything we can do to get the cost of the actual aircraft down,” she said. By LRIP 9 and 10 in 2015 and 2016, the company expects F-35 production to ramp up.

Air Force Lt. Gen. Chris Bogdan, F-35 program executive officer, emphasized the importance of increasing the aircraft’s production rate in his Sept. 16 speech.

“For every dollar that you save on the F-35 … 80 cents on the dollar comes directly from the ramp rate and economies of scale,” he said. “The 20 percent that remains comes from how efficient you can build the airplane.” 

"In the next three years, we're going to double production, and I think in the next five years, we triple production. So there is a significant ramp coming to us,” he added. But “any time a partner or a service moves an airplane to the right ... it effects everybody."

Such movement last year resulted in a 1 to 2 percent price increase, or about $2 million more for an F-35A model, he said.

The military needs F-35 costs to go down year after year so that the services, international partners, and foreign military customers can reliably predict prices, he said. “We have, since about LRIP 5 been tracking down that price curve very, very nicely.” 

With greater predictability, the JPO hopes it can get more international customers to commit to purchases, especially block buys, he said. 

“We have partners out there that have already gone through the grueling process of asking their governments for permission to buy airplanes, and they’ve gotten that approval … for large numbers of F-35s,” he said. Customers with such approvals can be put on a long-term contract, which would help both the United States and other participating countries save money.

Throughout his speech, Bogdan differentiated between the old F-35 program plagued by cost overruns and delays and the new, more stable version.

“It's a complicated, messy, ugly program sometimes,” he said. “We're going to have problems, and we're going to solve those problems. But not quite the same level as it used to be."

The Marine Corps’ July 2015 initial operating capability is “fundamentally on track,” but building the mission data file may extend past that date, he said. “I feel pretty good about that.” The Air Force IOC in August 2016 is low risk, he said. The joint program office is already preparing for the Navy to begin fielding jets in 2018.

Should sequestration be reinstated in 2016, Bogdan expects that it would not affect the program. “The department senior leadership has told me the same thing that they told me two years ago: This program needs to continue on,” he said.

Topics: Aviation, Joint Strike Fighter

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