SEATTLE (REUTERS) - Mr Donald Trump on Monday (Dec 12) widened his attack on defence contractors, slamming Lockheed Martin Corp's F-35 fighter jet programme as too expensive as aides to the President-elect said he intends to keep pushing to cut the costs of military hardware.
Mr Trump's latest Twitter broadside sent defence shares tumbling and fanned concerns that the incoming administration will reduce defence contractors' profit margins and cut broader federal spending, threatening US factory jobs even as Mr Trump promises to boost manufacturing employment.
"The F-35 program and cost is out of control," he said on Twitter, echoing campaign promises to cut waste in federal spending. "Billions of dollars can and will be saved on military (and other) purchases after January 20th."
Last week, Mr Trump targeted Boeing Co with tweets for "out of control" costs on new Air Force One planes, urging the federal government to "Cancel order!"
The new administration's focus is likely to be "wide-reaching and impact all of government as we look to come up with better deals", Trump transition spokesman Jason Miller said. "We're going to look for opportunities to go back through and make sure that we're not getting taken advantage of."
Mr Trump's F-35 tweet drew support from US Senate Armed Services Committee chairman John McCain, who has voiced support for the fighter jet in the past. While a president cannot cancel a programme after funds have been allocated, it can purchase less.
"He can reduce the buy over time, next year, as we look at it again," Mr McCain told Reuters.
But Mr Trump's off-the-cuff remarks bristled others in Congress. Senator Richard Blumenthal, a Democrat from Connecticut, home to F-35 engine maker Pratt & Whitney, said the programme supports 2,000 Pratt jobs and thousands more at suppliers.
"The suggestion that costs are out of control is just plain wrong," he said. Mr Trump should "learn more about the facts" before discussing "arbitrary cuts in the programme", he added. "He's the President-elect. What he says matters."
Lockheed shares fell 2.5 per cent after being down 5.4 per cent earlier. Shares of General Dynamics, Northrop Grumman, BAE and Raytheon also fell, while United Technologies and Boeing shares were slightly higher.
The F-35 has been dogged by problems, with the Pentagon's chief arms buyer once describing as "acquisition malpractice" the decision to produce jets before completing development.
That led to retrofits and helped escalate costs to an estimated US$400 billion (S$569.5 billion), prompting the F-35 to be described as the most expensive weapon system in history.
The Pentagon's chief weapons tester has continued to criticise it, but the jets are now in use by the US Marine Corps and Air Force, and by six countries: Australia, Britain, Norway, Italy, the Netherlands and Israel. Japan took delivery of its first jet last week, according to a programme spokesman.
Lockheed's F-35 programme leader, Mr Jeff Babione, said on Monday the company had invested millions to reduce the jet's price by 60 per cent from original estimates.
"We project it to be about US$85 million in the 2019 or 2020 timeframe," he told reporters in Israel.
The Pentagon is now paying about US$102 million each for the conventional take-off A-model, according to sources familiar with the programme. The savings reflect larger quantities and the ironing out of technical issues.
As a practical matter, it was unlikely the US would unwind such a large programme involving contractors in nearly every US state and eight partner nations, Baird Equity Research analyst Peter Arment wrote in a note on Monday.
"But what is likely... is the message to the industry of potentially more risk-sharing on costs," he said. "This is potentially a new paradigm for the industry."