Lockheed Martin [LMT] revealed May 19 that it is slowing production of the F-35 Joint Strike Fighter in a move that could impact up to 25 aircraft, as a “proactive” measure to mitigate the effects of supplier delays during the COVID-19 pandemic.
Defense News first reported Tuesday that the company’s plans to reduce its production rate could mean it misses its 2020 delivery goal by 18 to 24 aircraft. Lockheed Martin confirmed the update in a Tuesday evening statement to Defense Daily.
“In conjunction with the F-35 Joint Program Office, the corporation is tapering its production rate over a three-month period, temporarily adjusting the work schedules for the F-35 production workforce, and continuing to accelerate payments to small and vulnerable suppliers,” Lockheed Martin said.
The 2020 delivery target is 141 aircraft, the company confirmed. Delivery schedules are being adjusted with the new production schedule and hopes are that Lockheed Martin can return to “pre-COVID-19 production levels” by this fall. “We will accelerate production when we return to pre-COVID-19 conditions and could see this number decrease,” the statement said.
In a release distributed later Tuesday evening, Lockheed shared that the company and the International Association of Machinists and Aerospace Workers (IAM) agreed to a temporary alternate work schedule for F-35 production line employees in Fort Worth, Texas.
The new schedule, which will begin May 23, divides each shift into three groups, per the release. On a rotation, each group will work for two weeks and then will have a week off. During the adjusted three-week work schedule, employees who work 96 hours or more will be compensated an additional 24 hours for their off week while receiving full pay and benefits. The new schedule will be reevaluated after the initial three-week period.
“These are challenging times, but managing tough challenges is when the F-35 program performs at its best. The alternate work schedule maintains the specialized skillset of the employees and provides opportunities to for us to adjust our workflow to account for supplier delays due to COVID-19,” said Aeronautics Executive Vice President Michele Evans. “Our F-35 workforce is the best in the world at what they do, and we will continue to deliver on our customer’s mission.”
The F-35 program had already experienced negative impacts from the global coronavirus pandemic. In March just as the virus was beginning to spread around the world, final assembly factories in Japan and Italy were temporarily shut down as part of their nation’s respective responses to the pandemic (Defense Daily, March 4).
Lockheed Martin executives first hinted that F-35 deliveries could be negatively impacted by the COVID-19 global pandemic in an April 21 call with investors. Ken Possenriede, the company’s chief financial officer, said then that some F-35 suppliers would be “delinquent” that month due to timing reasons, which will be worked out, and that other domestic and international suppliers will fail to hit milestones mainly due to COVID-19 related issues (Defense Daily, April 21).
Lockheed Martin Chairman, President and CEO Marillyn Hewson said during the call that the company is accelerating over $150 million in payments to small and medium-size companies, and has directed $50 million of a planned $450 million in accelerated Defense Department progress payments to its suppliers. Hewson will step down as leader of Lockheed Martin June 15, with current American Tower Chairman and CEO James Taiclet announced as her successor.
Last week, President Donald Trump commented on the precariousness of the F-35’s global supply chain in an interview with Fox Business Network (Defense Daily, May 14).