Jan. 1—The massive $740 billion defense spending bill vetoed by President Donald Trump last week —and now being used as a bargaining chip in negotiations over a COVID-19 relief plan— could prove a vital lifeline for East Hartford-based Pratt & Whitney after months of once-unthinkable losses.
As currently written, the National Defense Authorization Act, which sets the U.S. Defense Department's budget at the start of each fiscal year, would channel about $9.1 billion to the F-35 program, of which Pratt is an irreplaceable part. The company is the sole manufacturer of the combat jet's engine, a complex and closely-guarded power plant estimated to run between $13 million and $18 million per unit.
The fresh round of funding would allow the U.S. government to purchase 93 F-35s from lead contractor Lockheed Martin, 14 more than what the Pentagon had originally requested.
By comparison, the government paid for 60 F-35 fighters over the course of fiscal year 2020.
Such a significant boost in orders could provide a silver lining this year for Pratt and its parent company, Waltham, Massachusetts-based Raytheon Technologies Corp. Raytheon lost close to $4 billion during the second quarter of 2020 as a result of a more than 90% plunge in global air traffic volume. With passenger planes mothballed for months, commercial engine repair and maintenance orders dried up, cutting off what had been one of the conglomerate's most important revenue streams.
In response, Raytheon Technologies made plans to eliminate thousands of positions worldwide, and in October the firm began laying off salaried employees in Connecticut, most of whom were based at Pratt's central hub near downtown East Hartford. At the time, East Hartford Mayor Marcia Leclerc said a representative from Pratt told her that a total of 454 workers in Connecticut would lose their jobs.
Between its campus in East Hartford and a plant in Middletown, Pratt & Whitney has about 13,000 employees in the state.
Money for further testing
Aside from direct procurement, the latest iteration of the NDAA sets aside money to study why some F-35 test crews have experienced symptoms consistent with oxygen deprivation while piloting the jet.
The bill also formally expels Turkey from the F-35 buying consortium, under which allied nations take part in building components for the stealth jet and received priority on finished craft. The removal is widely seen as retaliation for Turkey's purchase and deployment of the Russian-made S-400 Triumf surface-to-air missile system.
Logistical bottlenecks, budget overruns, and unsatisfactory mission capability marks have delayed Lockheed's planned ramp up to "full production" on the F-35 project —estimated at around 160 fighters per year— since 2017, and Bloomberg reported Thursday that disruptions stemming from the COVID-19 pandemic will likely move that milestone even further into the future.
A spokeswoman for Ellen Lord, the Defense Department's acquisition and sustainment chief, told the news agency that federal approval of full-rate production is on "indefinite hold" because the virus outbreak hampered work on a critical combat testing facility, where the multi-role jet will have to prove its mettle against simulations of Chinese and Russian air defense systems. Defense officials have said they cannot sign off on a quickened production schedule before knowing the results of those tests.
The pandemic struck just as the Pentagon and Lockheed were preparing to declare victory in the years-long struggle to push the F-35 program across the finish line. By late 2019, the plane's per-unit price had fallen from over $90 million to around $77 million, and engineers were rolling out fixes to some of the aircraft's most glaring flaws, including severely deficient aircraft control software, helmets that tended to register frequent false alarms, and guns that couldn't fire accurately and cracked due to misaligned muzzles.
As recently as January, before COVID-19 had spread far beyond mainland China, a vice president at Lockheed told analysts and investors that the company was on track to produce 140 F-35s in 2020 and about 160 F-35s in 2021.
Legislators in the House and Senate passed versions of the NDAA in July and November, respectively, and sent a reconciled plan to the White House this month. Trump, who had openly contemplated vetoing the package over certain segments he objects to, made good on his threats last week.
In his tweets, the president has inexplicably slammed the bill as a concession to the Chinese Communist Party. He has also taken aim at provisions that would bar troop withdrawals from Afghanistan and Germany, maintain civil liability protections for technology companies, and strip the names of Confederate generals and politicians from military bases.
On Monday, Democrats and Republicans in the House joined forces to override Trump's veto 322 to 87. The Senate seems poised to do the same, though U.S. Sen. Bernie Sanders, I-Vt., has said he will attempt to filibuster an override vote until the chamber agrees to take up the issue of increased direct financial aid to most Americans.
Sanders is pressing Congress to boost the value of one-time stimulus checks from $600 to $2,000, a position opposed by the Senate's GOP leadership.
Zach cover all topics that fall under business. His coverage can include openings and closings of local businesses, trends in unemployment, details of developments from major companies and utilities, and investigating the impact of state politics and regulations on the private sector. For more updates about business in north-central Connecticut, follow Zach on Twitter: @ZachVasileJI.
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