The end of a fighter jet built for the Cold War and cancellation of a new fleet of presidential helicopters sparked concerns of job cuts at Lockheed Martin Corp. and its partners — but did not appear to shake Wall Street’s confidence in defense stocks.
Defense Secretary Robert Gates said Monday the Pentagon will end the F-22 fighter jet and White House helicopter programs run by Lockheed, but would increase production of the company’s Joint Strike Fighter.
Job and other budget figures released by Gates sought to assuage fears of deep cuts at the nation’s largest defense contractor and its suppliers, helping Lockheed shares to rise nearly 9 percent.
Gates recommended more than doubling the number of Joint Strike Fighters to 30 in the upcoming budget, which would increase funding to $11.2 billion from $6.8 billion.
According to the Pentagon, there already are 38,000 employees working on the next-generation stealth fighter jet, known as the F-35. That number is anticipated to jump to 82,000 in fiscal 2011.
Still, Bethesda, Md.-based Lockheed has said almost 95,000 jobs — mostly in California, Texas, Georgia and Connecticut — could be at risk if the Pentagon didn’t buy more F-22 jets.
Gates offered a very different employment picture, saying the number of direct jobs would fall to 13,000 in fiscal 2011 from 24,000 this year.
JSA Research Inc. analyst Paul Nisbet said the disparity of F-22 and Joint Strike Fighter job figures appeared to “surprise a few people” and was enough to offset Lockheed losing two major programs.
Military analysts widely expected the radar-evading supersonic F-22 jet — considered an outdated weapon system — would not go beyond the 187 already planned. The planes cost $140 million each.
Lockheed said it’s assessing the impact of Gates’ decision on several defense programs.
Most of the F-22′s are being built in Marietta, Ga. and Fort Worth, Texas. Boeing Co. manufactures the wings and other parts in Seattle. The engines are supplied by Pratt & Whitney, a United Technologies Corp. unit, in Middletown, Conn.
Georgia Republicans, Rep. Phil Gingrey and Sen. Johnny Isakson, said Gates’ decision put thousands of manufacturing jobs at risk. And Jeff Goen, president of the union representing Lockheed’s employees in metro Atlanta, said layoffs are inevitable unless Congress restores the fighter program.
“It’s going devastate many families here,” Goen said.
Goen didn’t know how many jobs might be lost, but said Lockheed has about 2,000 workers — out of 7,000 at its Georgia plant — assigned to the F-22. The union, the International Association of Machinists Local 709, represents about 1,200 employees working on the jet’s assembly.
Matthew Perra, a spokesman for Pratt & Whitney, said that without additional F-22 aircraft orders, the company will be forced to halt orders from suppliers within months.
Hartford, Conn.-based United Technologies last month announced plans to trim 11,600 jobs from its global work force. And the company’s CEO Louis Chenevert has said the diversified manufacturer may cut an additional 2,000 to 3,000 jobs in Connecticut if the Pentagon cancels production of the F-22.
Plans to buy a new fleet of White House helicopters also were among the programs terminated by Gates. With a price tag of $13 billion and a six-year delay, the helicopters were considered at risk to be cut in the 2010 budget.
Obama has said he would closely examine the program, noting that his current ride seemed “perfectly adequate.”
Gates said the Pentagon will look into other options in fiscal 2011 for a new program to replace the aging helicopter fleet.
Cost overruns and delays have plagued Lockheed’s program due partly to aggressive plans by the Bush administration to incorporate anti-missile defenses, communications equipment, hardened hulls and other advanced capabilities on the helicopters following the 9/11 terrorist attacks.
The Navy waited nearly a year before formally disclosing the information to lawmakers as it sought to find ways to keep the program within budget. Those efforts failed.
Shares of Lockheed Martin added $5.97, or 8.9 percent, to $73.28 Monday. Many other defense stocks also rose.