Lockheed slated to miss F-35 delivery target in 2020 as supply chain struggles to keep up

By: Valerie Insinna   20 hours ago

WASHINGTON — Lockheed Martin will throttle back the pace of F-35 production on May 23, leaving it anywhere from 18 to 24 jets short of the 141 scheduled for delivery this year.

The COVID-19 pandemic has made it more difficult for Lockheed's supply chain to make components on time, and as a result the company is moving to an adjusted work schedule where production will slow over the next three months, said Greg Ulmer, Lockheed's vice president for the F-35 program.

Ultimately, Lockheed aims to accelerate production as soon as possible and hopes to decrease the number of aircraft that will delivered late. However, Ulmer said there are too many variables to say precisely how long buyers will be left waiting for their F-35s.

“If I have the ability to speed up or recover sooner, then I will do so,” Ulmer said. “If there are other unknown COVID-19 impacts that I don't know about that come on the horizon — I don't know that either. ... As we go forward, probably late summer or early fall, we'll have a pretty good sense of where we're going to be.”

Beginning on May 23, Lockheed will divide the approximately 2,500 employees who staff the F-35 production line in Fort Worth, Texas, into three groups, moving them to new schedule where each group works for two weeks and then has a week off. After one three-week rotation, the company will determine whether the system is successful and can either alter the schedule or continue until Sept. 4, it said in a statement.

Rotating smaller groups of employees on the line allows Lockheed to move to a slower pace of operations while at the same time ensuring that workers retain their expertise and don't need to be retrained when the production rate returns to normal, Ulmer said. “It really maximizes our ability to recover production on the backside and retain our workforce with no loss of learning.”

Lockheed Martin executives first disclosed that F-35 deliveries could be delayed during an April 21 earnings call with investors.

“There are local distancing requirements that are being more stringently applied across the globe. There is workforce disruption,” Kenneth Possenriede, the company's chief financial officer, said at the time. “We've actually had some issues with shipping constraints.”

Most of the supply chain pressure on the program stems from constraints on low-tier suppliers that produce components that feed into larger portions of the F-35. While the production line tries to do as much work on each section as possible, workers are having to slow down and wait for missing parts to arrive, Ulmer said.

Lockheed has also had challenges getting connectors for the jet on time — another problem that makes it difficult for the company to merge F-35 sub-assemblies into a finished aircraft, Ulmer said.

Once aircraft are completed and go through acceptance testing, the sequence of deliveries will remain the same, he said.

The slowdown of the F-35's production rate comes days after President Donald Trump voiced support for moving more of the jet's production to the United States. Currently, international partners who helped fund development of the F-35 can compete for work on the jet, reducing the cost of the aircraft and giving foreign buyers an industrial incentive to support the program.

“The problem is if we have a problem with a country, you can't make the jet. We get parts from all over the place. It's so crazy. We should make everything in the United States,” Trump said on Thursday.

However, the industrial challenges currently faced by Lockheed do not appear to be caused by the international supply base. Ulmer said European suppliers, who were hardest hit before the United States, are now rebounding from the pandemic.

“I really see Europe kind of [on the] leading edge of the recovery side of this,” he said.

In particular, northern Italy struggled with high numbers of confirmed COVID-19 cases, leading Italian defense firm Leonardo, which runs an F-35 final assembly and check out plant in Cameri, to shut down operations over a two day period in March to clean the facility. With the number of new cases receding, Italy began reopening nonessential businesses this month.

“Leonardo today is north of 90 percent manned, fully operating. They're pretty much back to normal operations,” Ulmer said.

The ongoing expulsion of Turkish suppliers from the F-35 program is also unlikely to be affected by the production slowdown at Fort Worth, as Lockheed has already identified companies to take over that work, he said. “With the vast majority of those, that alternate sourcing has been accomplished. I really don't see this as an impact to that."

Ramping production back up

Unless COVID-19 cases spike in the coming months, Lockheed believes it will be able to return workers to a normal production schedule in the late summer or early fall.

What will vary is timing for when suppliers can return to their usual production rates, and whether those suppliers have the capacity to expedite the manufacturing of key parts, Ulmer said. Once the supply chain has fully recovered, it will take the Fort Wort line two to three months to resume full rate production.

“There are 1,900 suppliers across the program” in the United States, Ulmer said. “So we take all that information in, we determine what rate they can deliver to, we determine if they have any kind of constraints we can help them deal with, and then we have to balance that into the production system to dial in the production rate we can execute.”

“I am optimistic that the majority of industry is on the backside. I'm reluctant to say that because there could be a rebound,” Ulmer said, “but we're at the very back end of the impact.”

https://www.defensenews.com/breaking-news/2020/05/19/lockheed-to-slow-f-35-production-as-supply-chain-struggles-to-keep-up