For the second time in a week, President-elect Donald Trump sent the shares of a public company into an abrupt nosedive by singling out a specific government contract as wasteful and promising to revisit it once he takes office. The victim on Monday was Lockheed-Martin, the giant defense contractor responsible for the troubled F-35 Joint Strike Fighter program.
Beyond slamming the program for cost overruns, Trump also argued that there ought to be a “lifetime ban” that prevents government employees who negotiate defense contracts from later going to work for firms on the receiving end of those contracts.
Trump’s attack actually began on Sunday morning, in an interview with Fox News Sunday’s Chris Wallace. “You look at the F-35 program with the money, the hundreds of billions of dollars and it’s out of control,” he complained.
The incoming president amplified his criticism on Twitter Monday morning, writing, “The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.”
“We welcome the opportunity to address any questions the President-elect has about the program,” said Jeff Babione, Lockheed’s F-35 program manager, who was attending an event in Israel on Monday with U.S. Defense Secretary Ash Carter to mark the delivery of several of the fighters to the Israeli military. “We understand the importance of affordability and that’s what the F-35 has been about.”
Babione added, “Since the beginning, we have invested hundreds of millions of dollars to reduce the price of the airplane by about 70 percent since its original costing, and we project it to be about 85 million dollars in the 2019 or 2020 timeframe.”
Trump’s tweet was posted about an hour before the stock market opened Monday morning, and when the opening bell rang, Lockheed shares dropped and continued falling. By late morning, Lockheed shares were down about 4.5 percent, which represents a loss of billions of dollars in value to investors.
How lasting the damage will be is an open question. Shares of airplane manufacturer Boeing took a hit last week when Trump ripped the company for the expected price tag on two new models of Air Force One. However, less than a week later, Boeing shares on Monday were trading at a higher price than they had been before Trump’s criticisms.
In his conversation with Wallace on Sunday, Trump went further than simply criticizing the cost overruns on the F-35. He criticized the way defense contracts are negotiated and said that the government employees who do the negotiating shouldn’t be able to cash in by later jumping to a job in the private sector with the same contractor.
“The people who are making these deals for the government, they should never be allowed to go to work for these companies,” he said. “You know, they make a deal like that then...you see them working for these big companies that made the deal.”
He continued, “I don’t want the people who are making these horrible deals -- and they’re horrible deals with the cost overruns -- I don’t want them going to work for the companies...they should have a lifetime restriction.”