Pratt & Whitney and other military contractors should have a successful 2017, despite shadows thrown by President-elect Donald Trump.
Trump, in tweets, has disparaged the Pentagon’s F-35 Joint Strike Fighter program as overpriced. It is unclear whether Trump’s criticism might lead to an effort to curtail the multibillion-dollar program once he’s commander in chief.
Trump also described Boeing’s new Air Force One aircraft as too expensive at $4 billion, and Boeing’s CEO vowed it would cost less than that. His criticism left a question mark over Sikorsky Aircraft’s program to build a $1 billion-plus presidential helicopter, called Marine One when the president is on board.
Ray Jaworowski, senior aerospace analyst with Newtown’s Forecast International, says he doesn’t think that either Pratt or Sikorsky needs to be overly concerned at this point.
Trump’s tweets, Jaworowski says, should be put in perspective. “Throughout the campaign, Donald Trump consistently called for increased defense spending in order to rebuild the U.S. military,” Jaworowski said in a recent analysis.
Trump hasn’t provided details on his plans for military spending, he acknowledged.
But Jaworowski said it is widely expected that the new administration will propose increases in defense spending “significantly greater” than under the Obama administration and will also work to remove the budgetary caps on defense spending in place since 2013.
Jaworowski said both the F-35, for which East Hartford-based Pratt is the exclusive engine maker, and the Sikorsky presidential helicopter program should have “little trouble” getting through Congress, given that Republicans control both houses.
But he adds that it’s equally reasonable to expect that the new administration will not issue blank checks to the aerospace-defense industry.
Military programs will still have to compete for funding with the administration’s other budgetary priorities — such as infrastructure spending, Jaworowski said.
Trump’s recent comments on the new Air Force One aircraft, as well as the F-35, signal that “cost containment will be an emphasis, even with military programs,” he said.
“There is even some nervousness within the industry that the new president may use” social media to pressure contractors into making price concessions on troubled or high-priced projects, Jaworowski said.
Still, he said, the F-35 program “is too far along, and too central to U.S. and allied procurement plans, to be in any serious danger of termination.” It’s possible, however, that the planned F-35 production surge could be slowed, Jaworowski said. Such a move, he said, “ironically would only keep per-unit costs high” by delaying the cost savings that a higher production rate could bring.
As for the presidential helicopter, Jaworowski said, so far there is no sign that it would be in trouble from the new administration.
Still, Sikorsky and corporate parent Lockheed Martin would do well to be careful to keep the program “on track and costs under control,” he said, or it “could become a focus for criticism,” particularly in light of Trump’s recent Air Force One criticism.
