via Forbes.
Somehow we have allowed a Mega-Corporation that will probably lead to a defense monopoly to develop.
We once had laws that prohibited such things.
We.
Are.
Screwed.
Sidenote: SFO pointed out that these aren't profit figures being thrown out by Thompson. I say ok, but this is why I was so happy to see Robert Farley's article on the F-35. The other side of this coin isn't just what it means to the military capability of Western powers but also the economics behind this program. He either knows, or knows someone who can crunch the numbers and explain how a program that has so many subcontractors can be cost efficient/affordable and yet earns Lockheed Martin a strong buy by every stock picker on the planet. Something doesn't add up. And all this is before we start looking at the monopoly that is becoming Lockheed Martin.
It was during his tenure as COO that LockheedSomething evil is brewing when we are on the cusp of guaranteeing a company's survival for another 100 years, plus its shareholders an enormous return on little investment, all at tremendous cost to the governments of the Western World.
Martin won the competition to build the tri-service F-35 Joint Strike Fighter, by far the biggest weapon program in the world with hardware and service revenues likely to eventually exceed half a trillion dollars. The company also pushed deeper into federal IT markets as the build-out of military networks accelerated, began recovering space franchises lost to competitor Boeing, and
consolidated its leadership in naval electronics.
Somehow we have allowed a Mega-Corporation that will probably lead to a defense monopoly to develop.
We once had laws that prohibited such things.
We.
Are.
Screwed.
Sidenote: SFO pointed out that these aren't profit figures being thrown out by Thompson. I say ok, but this is why I was so happy to see Robert Farley's article on the F-35. The other side of this coin isn't just what it means to the military capability of Western powers but also the economics behind this program. He either knows, or knows someone who can crunch the numbers and explain how a program that has so many subcontractors can be cost efficient/affordable and yet earns Lockheed Martin a strong buy by every stock picker on the planet. Something doesn't add up. And all this is before we start looking at the monopoly that is becoming Lockheed Martin.
I'm pretty sure the laws are still there, most of which came out of the experience of the Great Depression. They are not enforced as they are anti-free market. One of the main ones in one form or another in most western democracies that is not enforced was enacted to counter the trend in market economies to produce singularly successful entities at the expense of the society at large. Principally it states that no 4 entities can control more than 40% of the market. I think you will be hard pressed to find any industries in the western world where this is true. All are too big to fail and exercise huge influence on the government machinery. Just like Standard Oil was broke up so should every one of the companies in every one of the industries where these conditions exist. Otherwise the taxpayer every few years is bailing out these companies as society can not afford their failure.
ReplyDeleteAs much as I hate lockmart, and agree with some of your points, even I have to point out that 500B in revenue is a very, very different thing than 500B in profits. The "book" profit is likely only a few percent of that, though I expect the "real" profit will be more.
ReplyDeleteRemember that in the Procurement process for the F-35, the USG only pays two people, LM and P&W. This is their "Revenue". However, they then have to pay much of that to all the subcontractors involved.
ReplyDeleteLM will earn some more Revenue in related maintenance contracts, but these are cont as consolidated as the procurement ones.
btw, missed you on Wot... I just got my Borsig :)
Some good news for anti-F-35 folks.
ReplyDeleteThe F-35 negociation reportedly is not going well in Korea, enough to the point that the DAPA is now going back to the drawing board and is trying to come up with a Plan C in case the F-35 negociation fails.
1. The tech transfer negociation with Lockheed isn't going well, especially now that the defense ministry decided on the C103(The twin EJ2x0 powered jet) as the bases of their negociation. Because of the impending fighter jet short fall, the KFX has become the "MUST DO" top priority for the defense ministry and this is causing a lot of friction with Lockheed and the US DoD.
2. The defense ministry negociators are trying to verify if they could in fact buy 40 F-35s for $7.3 billion approved budget(No increase is possible). If not, they will have to bail out of the F-35.
3. Because of a 2-year delay in the KFX program due to the F-X selection delay and a budget allowing only 40 F-35s(assuming they could actually get 40 for $7.3 billion), this opens a whopping 120+ fighter jet short fall by early 2020s and filling this short fall has become super critical. Vendors are expecting another F-X contest right after the current one, because the present security conditions in Northeast Asia doesn't allow a country to fall behind in arms race.
4. This anticipated 120+ unit shortfall is the reason the EADS and Boeing are still staying in the race, because the F-35 surely won't be a contender in this follow up contest because it will be a "let's buy lots of cheap jets" kind of contest. Boeing may try to sell the Silent Hornet in place of the Silent Eagle. Lockheed can only offer the F-16 or the F-50 in this contest.
5. EADS is preparing a Typhoon lease deal from the existing European Airforce inventory, in hopes that the Korean government would be more open to a Typhoon buy after having used some. Boeing can't match this lease deal, unfortunately.
So we stir a bunch of shit, find the civilian contractors legally liable then in the civil action sponsored by the congress and federal court the US government seizes propriety ownership of F-35 project and all its associated infrastructure.
ReplyDeleteAll of the F-35 projects R+D, infrastructure, and associated business expenses are consolidated into an isolated conglomerate subsidiary company that files Chapter 7 bankruptcy. Chapter 7 is denied and the the subsidiary goes out of business with no one for the collections agencies to complain to under media blackout. Perfect ROTFL. This keep the corporations as a whole from going out of business and allows them to continue doing R+D.
It'd be the cheapest on the market. We'd have to give away a few jets to compensate the allies financially in order to keep them happy and maintain a legal basis for sole ownership but in the big scheme of things it would be fantastic for the US government.
Pretty much every argument I've heard against the F-35 originates from 4 things:
A) People really want a twin engine sixth generation fighter that cost twice as much to produce. (we will need and get this at some point.)
B)People think it cost too much and doesn't justify the 6-8% of the defense budget its going to get.
C) People think it wont work because of bugs that haven't been worked out in the development.
(Anytime the aircraft industry does something actually original and not a warmed over version of something old this happens.)
D) People are fans of an opposing corporations projects that don't share a financial gain in the success of the project.