is considering all options to continue increasing the production rate of the multinational , though officials are not yet to the point where they must draw on company funds to forward finance the manufacturing line.
“Anything and everything has been looked at,” says Lorraine Martin, executive vice president of the company’s F-35 program. “If [the production rate] doesn’t increase, that is going to be difficult. We have been flat for four years.”
Still, company officials expect to overtake their so-called fourth-generation competitors – including’s Super Hornet – in cost as early as 2019.
The company delivered 13 of the single-engine, stealthy fighters in 2011, 30 in 2012 and 36 in 2013. Early in the program’s development phase, company officials hoped to increase the production rate by at least 50% year over year to gain enough volume to reduce the per-unit price. These hopes have dissipated, though, in the face of a string of program shifts culminating in 2010 with a major restructuring that slowed production until development gets closer to completion in 2016.
Now, the Pentagon – by far the largest F-35 customer – is facing major budget cuts that could force the production rate to stay lower than planned for the fighter. The Air Force is looking at cutting as many as 24 aircraft over the next five years due to budget pressure, and the Navy is looking at far more drastic scenarios.
Though companies have in the past financed portions of production as they anticipate forthcoming contracts – Boeing did this repeatedly with theproduction facility in Long Beach, Calif. – there is “no need to do that right now” for the F-35, said Orlando Carvalho, executive vice president of Lockheed Martin Aeronautics.
Meanwhile, Lockheed Martin is “all in” on helping to reduce the aircraft’s per-unit price. CEOs from the top F-35 manufacturers have joined together in a council to tackle the problem; no specific initiatives have yet been identified by the council for cost reductions. But Martin says they are looking at options.
Martin says she expects the per-unit cost of the F-35A in 2019 – when full-rate production begins – to be $85 million in then-year dollars, or $75 million in current dollars. This includes an aircraft with the Pratt & Whitneyengine and all mission systems, she says.
Martin claims this pricing will be better than competitors at the time. Boeing said that in today’s money, an/F would cost $50 million. However, Boeing is facing a production rate reduction by as much as half from 48 annually.
The target cost for aircraft in low-rate initial production lot 7 is just less than $100 million based on the most recent contract agreement between Lockheed Martin and the Penatgon. An LRIP 8 deal is expected to be signed next spring, Martin says.