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F-35 industry partners invest in cost saving plan

Three F-35 industry partners will invest $170 million over the next three years to lower the price of the $131 million fighter, the US Department of Defense announced today.

The investment by Lockheed Martin, Northrop Grumman and BAE Systems –making the forward fuselage and wings, centre fuselage and aft fuselage, respectively, of the F-35 – comes as the programme seeks to attract a new influx of orders by the original development partners over the next five years.

If the cost reductions yield savings, the contractors will be allowed to recoup the cost of the investment plus earn a profit fee from the accrued savings, the DOD says.

Lt. Gen. Chris Bogdan, F-35 programme executive officer, called the plan a “significant change” in the business model for the nearly 13-year-old development effort.

Bogdan has been driving the programme to lower unit costs on the F-35 to $85 million by Fiscal 2019, assuming orders from international partners and US services rise to a total of nearly 200 aircraft in a single year from around 35 now. In 2008, programme officials had hoped to reach annual production of 200 F-35s by this year, but a series of delays and budget cutbacks prolonged reaching the goal for at least five more years.

“Our industry team knows what is at stake given the current budgetary and global security demands to reach these cost milestones,” says Lorraine Martin, executive vice-president and general manager of the F-35 programme.

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