Lockheed, Northrop Face Big Cuts-Document

Reuters ^ | 01-03-2005 | Jim Wolf

[Drago]

WASHINGTON (Reuters) - Lockheed Martin Corp. (LMT.N: Quote, Profile, Research) and Northrop Grumman Corp. (NOC.N: Quote, Profile, Research) would bear the brunt of proposed cuts in U.S. weapons purchases totaling $30 billion over the next six years, according to the summary from a Pentagon budget document made available to Reuters Monday.

Nearly $18 billion would be slashed from programs run by Bethesda, Maryland-based Lockheed Martin, the Pentagon's biggest supplier, according to a trade publication, InsideDefense.com, the first to report details of the plan.

The cuts were spelled out in a so-called Program Budget Decision signed by Deputy Defense Secretary Paul Wolfowitz and dated Dec. 23. It would reduce previously budgeted purchases by $6 billion in fiscal 2006, which begins Oct. 1, and nearly $30 billion through 2011...

[Drago]

Looks like we are down to 180 F-22's...

[Southack]

"Looks like we are down to 180 F-22's..."

That's still a few too many, but a little overkill of the High part of the High-Low concept is OK in my book. Not much is going to be able to touch even 80 F-22's for a long, long time, after all...

[hchutch]

The F-22 is good, but it can't be in two places at once.

Quantity matters, too.

[Southack]

180 will be plenty enough F-22's to implement High-Low.

[kidd]

This is in contrast to the article here (from 12/16/04):
Lockheed Martin to add 500 jobs
http://www.freerepublic.com/focus/f-news/1302884/posts

[sevry]

Quantity matters, too.

How many Soviet fighters, and/or how many SAMs, would it take to disable or destroy an F-22? How many Chinese? How many fighter-jets do the Soviets and Chinese possess? How many missiles? Would 100 F-22s be pivotal without complete control of the air? or irrelevant?

[Ohioan]

Let me make full disclosure. I have a substantial position in Lockheed Martin. Three of my sons have Lockheed Martin stock, also.

That said, I find the dimensions of these cuts extremely disturbing--not because it may cost me a lot of money--but because it appears that the Administration, having gotten through the election as the Party that would beef up defense, may now be abandoning that position.

Make no mistake, the budget has to be reined in. But an Administration that can send Fifteen Billion to Africa to fight AIDS, and project hundreds of billions to pay people's pharmaceutical bills, has plenty of room to cut expenses, without risking America's essential domination of the air. This may be sending a very mistaken message to China, North Korea and others with far greater capacity to wage war than the Iraqis, with whom we seem far too preoccupied.

Hopefully, Congress will see fit to restore some of these cuts.

William Flax

[CasearianDaoist]

What is going on here? They did not touch the f35.

[CasearianDaoist]

What is going on here? They did not touch the f35.

[snopercod]

So far, you seem to be the only other one besides me on this forum who sees the connection between these military budget cuts and this administration spending like a drunken sailor on touchy-feely international meals-on-wheels programs.

Some UN hack calls us stingy, and America commits suicide trying to prove him wrong. Had clinton done even half of this, FR would be ablaze with outrage.

[Ohioan]

So far, you seem to be the only other one besides me on this forum who sees the connection between these military budget cuts and this administration spending like a drunken sailor on touchy-feely international meals-on-wheels programs.

This Administration suffers from a form of tunnel vision, which is extremely dangerous. More and more, they seem unable to assess their apparent priorities in terms of the dynamic interaction of factors. With China racing to catch up with us within 20 years, we need to send a clear message that while we seek peace, we intend to remain heavily armed. If these about to be cancelled planes were seen as necessary a year ago, the only thing which has changed, so far as I can see, is that the Administration has made one outrageous spending commitment, after another, and is beginning to panic in the face of a collapsing dollar.

If we simply got back to Constitutional premises; which would mean no foreign aid but that which is clearly in our interest; no federal role in civilian health or education; and putting our interests first, in general; the deficit would be eliminated, without cutting defense procurement. Why, just to introduce another factor, do we not require the Iraqi's to finance their own rebuilding, by pledging oil futures to a banking consortium? Is that too Capitalistic for this "conservative" Administration?

William Flax Return Of The Gods Web Site

[womcg]

I don't have any financial interests in either company, however I agree with your arguments. I sometimes get the feeling that this administration goes for short term "warm fuzzies", without looking at longterm threats. The PRC is our sworn enemy, as is N. Korea. We are hated by most of the Islamic world. Democracy has not overwhelmed the former USSR. Our true allies are few. Seems like bad timing. Not as bad, nor as treasonous as Clinton, but shortsighted, nonetheless.

[Ohioan]

I assure you that I only mentioned my financial stake in Lockheed, so as not to be attacked for non-disclosure.

About a decade ago, I attended the Annual Meeting in Chicago, and spoke out on some issue before the meeting. I wouldn't want someone to feel they were exposing something, if someone there, then, is a poster here now. (Of course, one would presume that most of the other shareholders would not be happy about this news, either.)

But all of that said, my motive here is concern for the continuity of the United States; the same theme that you will find in many of my posts on a very wide variety of issues, where I have no conceivable conflict of interest.

William Flax

[azcap]

These cuts (and the bigger ones the President and others at the Pentagon wanted) are all about bang-for-the-buck. The last 3 years of warfare have shown us that multi-billion dollar weapons systems are only part of the answer. Since each one eats such a large chunk of the military budget the value of these systems has to be reconsidered. The crusader artillery system was awesome but at 11 Billion dollars we had to pass. Ask the ground commanders in Iraq if they need a Crusader system. Nice - yes, but they'd probably rather you spent just half that price ($6.5B) and fielded two more full combat divisions with supporting troops.

    Projects like the DDX next generation destroyer and the F22 face the problem that naval and air systems tend to cost radically more than their current and near future use. Our current enemiesdon't field navies and air forces.  For that reason you see projects like the DDX trying to bolt on a few more cruise missiles and sell itself as a "Land Attack Platform" instead of air defense and anti-submarine. Billion dollar nuclear attack submarines are being converted to special forces shuttle vans.  

    This budget thinking comes from looking at our current and probable conflicts. Trying to create a new coldwar sized force to fight a conventional war with China is another and budgetarily hopeless thought.  

[snopercod]

I guess I've become cynical about the possibility of ever getting back to a constitutional form of governmenmt at this point. But that's another story...

I used to work for Lockheed, too, and am stuck with a bunch of their stock in my 401(k). What did it lose in the last two weeks, 30% or so? Sheesh...