The question is what was the quid-pro-quo in this instance?
Following this tweet from Trump…
Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!
— Donald J. Trump (@realDonaldTrump) December 22, 2016
CNBC reports that:
Lockheed Martin CEO Marillyn Hewson speaks with Trump, says she “gave him my personal commitment” to drive down F-35 program cost “aggressively”
As yet again Trump appears to have won. It is perhaps no wonder though given that 78% of Lockheed’s net sales were from the US Government… As LMT’s Annual report shows:
The F-35 program is our largest program, generating 20% of our total consolidated net sales, as well as 59% of Aeronautics’ net sales in 2015.
In 2015, 78% of our $46.1 billion in net sales were from the U.S. Government, either as a prime contractor or as a subcontractor (including 58% from the Department of Defense (DoD)), 21% were from international customers (including foreign military sales (FMS) contracted through the U.S. Government) and 1% were from U.S. commercial and other customers.
So your biggest customer – by a country mile – is putting pressure on you to cut costs or he will cease his purchases of your biggest revenue producer to your biggest competitor… what would you do?
Maybe having a “dealmaker” in The White House won’t be so bad after all?
The Lockheed Martin Corporation (NYSE:LMT) closed at $249.59 -3.34 (-1.32%). Year-to-date, LMT has gained 14.94%, versus a 10.71% rise in the benchmark S&P 500 index during the same period.
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