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New Report Questions F-35 Job Creation Claims

Jan. 22, 2014 - 11:06AM   |  
By AARON MEHTA   |   Comments
Teams at the Lockheed Martin facility in Fort Worth, Texas, work on an F-35 joint strike fighter. A Center for International Policy report concludes that Lockheed has inflated job creation figures to maintain support for the program.
Teams at the Lockheed Martin facility in Fort Worth, Texas, work on an F-35 joint strike fighter. A Center for International Policy report concludes that Lockheed has inflated job creation figures to maintain support for the program. (Lockheed Martin)
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WASHINGTON — The F-35 Joint Strike Fighter program has been hailed as a job creator of the highest order, a program that has a home in almost every state. But a new report claims that the job creation aspect of the fifth-generation fighter has been greatly exaggerated.

Promising the Sky: Pork Barrel Politics and the F-35 Combat Aircraft” argues that Lockheed Martin, the prime contractor on the F-35, has purposefully inflated job creation figures to maintain support for the most expensive weapon system in history.

“What I found, which wasn’t too surprising, is that Lockheed Martin is exaggerating the number of jobs involved in the F-35 program,” said William Hartung, director of the Common Defense Campaign at the Center for International Policy and the author of the report. “What was more interesting was that the jobs were so concentrated.

“A lot of people assume these big procurement projects have work done everywhere and therefore it could never be cut back, because too many members of Congress have an interest in them,” he continued. “But the F-35 is not as widely distributed as claimed, and therefore I don’t believe it is as invulnerable in the Congress as the Pentagon and the company would like us to believe.”

Lockheed’s claims of job creation in 46 states has also been a key component in rallying support for the fighter. Using Lockheed’s own job numbers from the F35.com website, Hartung points out that the 71 percent of the jobs created under Lockheed’s own figures will go to just five states — Texas (32.54 percent), California (18.75 percent), Florida (7.66 percent), Connecticut (6.78 percent) and New Hampshire (4.67 percent). In total, 31 of the 46 states will receive less than 1 percent of the jobs created; 15 of those would receive less than one-tenth of a percent.

That Texas would receive the majority of jobs is not surprising, as Lockheed’s Fort Worth facility is where the F-35 is assembled. But Hartung argues in the report that to say the F-35 will have true economic impact on a state such as Nebraska, estimated to receive .003 percent of jobs created, is “misleading.”

Lockheed claims on its F35.com website that “according to standard industry accepted economic forecasting, the multirole 5th generation stealth fighter is responsible for more than 125,000 direct and indirect jobs.” Of those 125,000 jobs, 32,500 would be “direct” jobs, such as workers who assemble the planes, while another 92,500 would be “indirect jobs” created at companies that help supply the larger companies with material or services.

Indirect jobs are a tricky thing to estimate, given the nebulous nature of measuring jobs created to help sustain and support another new job. Hartung looked at a pair of previous studies on defense industry job creation to compare whether Lockheed’s assumptions matched up.

Those two studies found a “multiplier effect” — the number of indirect jobs created per direct job — of less than two should be used when prognosticating job creation. As a result, Hartung believes the number of indirect jobs is more likely in the range of 50,000 to 60,000 — still a large number, but almost half of what Lockheed has claimed.

“Somehow they’ve managed to boost that number in ways that were way out of line with other studies in the field,” Hartung said. “Nobody else has argued you can get that much additional activity out of the number of direct jobs.”

In a company statement, Lockheed said it used a multiplier of 2.86 to calculate the job figures, a number that is in line with the average multiplier identified by management and consulting firm Deloitte in a 2012 look at the aerospace and defense industry.

“We calculate the jobs impact for our programs using methods accepted by industry and leading economists,” the company said in the statement. “The F-35 program has a very large positive economic impact in the US producing high-technology jobs in small and large communities across the country. We expect the positive US economic impact to continue to grow as F-35 production volume increases.”

The report also collected the number of “major” F-35 contractors, defined as companies developing specific components for the F-35 as opposed to the makers of widgets used in a variety of programs. Of the 138 major F-35 contractors, 88, or roughly 63 percent, were foreign corporations doing work outside of the US. While the UK is the largest production partner, its work is occurring in fewer sites than countries such as Italy (36 locations) and Australia (30 locations).

While having production work done abroad has been a key part of the F-35’s partner-nation program, Hartung argues the level of outsourcing has been higher than publicly disclosed by Lockheed, which could again lower the job estimates in the US.

“The same job can’t be in two places at once,” he said.

Whether the program ends up creating the number of jobs promised, it is highly unlikely the Pentagon would consider cancellation. Despite a well-documented history of cost overruns and delays, Pentagon officials believe the program is back on track and still view the F-35 as the backbone for American air superiority over the next several decades. ■

Email: amehta@defensenews.com.

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