Trump, Boeing and Lockheed Martin CEOs meet to negotiate US contracts
Dennis Muilenburg, CEO of Boeing, and Marillyn Hewson, CEO of Lockheed Martin, arrived at President-elect Donald Trump's Mar-a-Lago resort to discuss government contracts following tweets Trump posted about the two major defense contractors.
On December 6, Trump tweeted that the cost of Boeing building the new Air Force One fleet was too expensive and that he was going to “cancel order!”
The multibillion-dollar contract with Boeing, which would facilitate the replacement of two 26-year-old 747 jumbo jets nearing the end of their 30-year lifespan, was approved by the undersecretary of defense in September 2015.
The design and development of the planes were originally set to cost $2.9 billion over the next five years, in addition to the $1 billion it would cost to build the actual planes.
At the time the contract was signed, Amy McCain, the Presidential Aircraft Recapitalization program manager, said, “[the Air Force is] focused on ensuring this program is affordable. This contract gets us started on determining how to modify a 747-8 to become the next Air Force One, and finding opportunities for cost reduction through detailed requirements choices, competition of subsystems, and in the sustainment of the aircraft after it has been fielded.”
After meeting with the president-elect, Boeing CEO Muilenburg told reporters, “we’re going to get it done for less than that, and we’re committed to working together to make sure that happens … we haven’t actually started the build of the airplane yet, but once we finalize the requirements and make sure that it’s affordable we’ll launch on building the aircraft. We’ve got a hot production line and we’re ready to go.”
“It's a dance, you know, it's a little bit of a dance,” Trump told reporters, adding that the CEOs were “good negotiators.”
There is no word on how much cheaper the new contract is going to be for the government, but, at this time, Boeing has only received $170 million of the contract in order to design the new planes.
Trump also plans to meet with Marillyn Hewson, the CEO of Lockheed Martin, a company that has the contract for the F-35 fighter jet program, which Trump also wants to cut.
The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.
— Donald J. Trump (@realDonaldTrump) December 12, 2016
The F-35s, which are used by both the Marine Corps and the Air Force are currently costing the government an estimated $379 billion and ultimately is set to cost around $1.5 trillion, making it the most expensive weapons system in US history.
Lockheed Martin has publicly stated that it welcomes “the opportunity to address any questions the president-elect has about the program.”
However, Lt. General Chris Bogdan, who runs the F-35 program for the Pentagon, said, “I don't think the program cost wise is out of control nor do I think that it's out of control schedule wise."
After Trump tweeted about both companies, Boeing stock fell 0.72 percent and General Dynamics (Lockheed Martin) stock fell 2.87 percent. However, both stocks rose by the end of the day, with Boeing stock ending the day at 0.43 percent higher than it started. And, even after it took a slight dip in the market, Lockheed Martin's stock has gained more than 16 percent over the course of the year.
