Will Lockheed Martin Win This "Nuclear" War?

You've come a long way, baby. This is what U.S. Air Force bombers used to look like. Source: Wikimedia Commons.

The U.S. Air Force faces a $350 million decision. Its outcome could affect the fate of the world ... and of Lockheed Martin (NYSE: LMT  ) , too.

Discussing defense acquisitions strategy last week at the Stimson Center, a D.C.-based think tank, former U.S. Air Force Chief of Staff Norton Schwartz laid out the dilemma. Right now, the U.S. has a strong force of aircraft capable of carrying nuclear bombs -- 76 B-52s bombers, 61 B-1s, and 20 B-2 "Bat Wing" stealth bombers. The bulk of these planes, though, the B-52s, are starting to show their age, which is why the Air Force wants to develop and field a new Long Range Stealth Bomber, to be dubbed the "B-3," by 2020.

... and this is what they could look like tomorrow: the planned Next Generation Bomber. Source: Boeing.

Supplementing this force are "nuclear capable" tactical fighter jets like the F-15E and F-16, both of which the Air Force intends to gradually phase out in favor of Lockheed's new F-35 Joint Strike Fighter.

Problem is, in its present form, the F-35 is not designed to carry the Air Force's arsenal of B61 tactical nuclear bombs. Modifying the F-35's design, and modifying the B61 to fit it, is a project that will take years to accomplish, and cost upwards of $350 million to implement. According to General Schwartz, though, these funds would be better spent developing the next generation of strategic bombers -- the B-3s.

And this, in a nutshell, is the crux of the debate. Given a limited and shrinking defense budget, should the U.S. Air Force allocate precious defense dollars to upgrading the F-35 so that it can duplicate a job that the F-15s and F-16s can do (for now)? Or should it take the $350 million that this upgrade would cost, and invest it into accelerating development of a B-3 Long Range Stealth Bomber, whose own job can currently be performed by the nation's fleet of B-52s, B-1s, and B-2s?

A bird in the hand
I've got an opinion on this debate, and it runs something like this: The Pentagon has a history of starting new weapons projects, sinking billions of dollars into them, and then cancelling them with nothing to show for the effort (see Helicopter, Comanche; see also Stealth bomber, Avenger). Given this track record, I'm not 100% convinced the B-3 will actually get built. The high cost of the program -- $55 billion for 100 planes -- combined with the Pentagon's penchant for incurring cost overruns, could doom the program.

Meanwhile, love it or hate it, Lockheed Martin's F-35 is here today, and most military experts agree that the F-35 will still be flying 60 years from now, which is more than we may be able to say for the Air Force's B-52s, B-1s, and B-2s. My hunch is that the $350 million is better spent getting one plane capable of supporting the third (airborne) leg of America's nuclear triad now. We can worry about topping off the $55 billion B-3 budget if it seems likely that that plane will, in fact, get built.

What it means to you
That said, what matters more to investors is what all of this means to their investments. Fortunately, this angle to the story is pretty easy to read. Right now, there are three companies vying to build the Air Force's B-3 bomber -- Lockheed Martin and Boeing (NYSE: BA  ) have teamed up on one side of the contest. Northrop Grumman (NYSE: NOC  ) , builder of the B-2, opposes them. Depending on who wins the B-3 contract, any of these three companies could benefit if the Air Force shifts $350 million in spending away from the F-35, and spends it on developing the B-3 instead.

In contrast, only one of these three defense contractors -- Lockheed Martin -- benefits from investing $350 million in upgrading the F-35 today. If the Pentagon then goes on to add a further $350 million in spending to move the B-3 along at a later date, Lockheed Martin benefits twice.

In short, in this battle over funding for the Air Force's "nuclear" options, it's heads, Lockheed Martin wins, and tails, it probably still doesn't lose.

Lockheed Martin's F-35s: In line, and ready for a nuclear option. Source: Lockheed Martin.

Oh, and one more thing
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Read/Post Comments (16) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 20, 2014, at 6:15 PM, djbartell wrote:

    If past history is any clue to the future the B52 will still be flying!

  • Report this Comment On January 21, 2014, at 12:34 PM, kthor wrote:

    china has developed a supersonic engine to carry nuke payloads ...b52 would stand no chance against that ....what obama should do is grow a ball or two and do a first strike now!

  • Report this Comment On January 21, 2014, at 4:04 PM, imperator357 wrote: guess just starting up production to build more B-2s (existing stealth nuclear capable bombers) is just to far a stretch of the imagination for the geniuses in Washington to figure out.

  • Report this Comment On January 21, 2014, at 4:15 PM, smp4433 wrote:

    The U.S. Air Force faces a $350 million decision. ...are u sleeping or's minimum 350 Billion and may be a Trillion dollar decision based on whom you talk to at Lockheed..

  • Report this Comment On January 21, 2014, at 4:32 PM, wbaglivio wrote:

    Just bolt the nukes onto drones. Why not, it isn't any more ridiculous then the premise of the F35 anyway.

  • Report this Comment On January 21, 2014, at 7:40 PM, Expert01565 wrote:

    @Kthor, Darpa has been testing Mach 20 which is 3 times faster than the actually China HyperJet,, Look it up before you make yourself look dumb...Its easy google, DARPA Supersonic Mach 20!!! 13,000mph

  • Report this Comment On January 21, 2014, at 9:15 PM, jkhsdjfhkdsfl wrote:

    well two satellites fitted with a superconductive magnetic imploder could turn anything with a atom in it into a nuclear weapon via magnetic fusion,

    so when the satellites go down, watch out!

  • Report this Comment On January 22, 2014, at 2:06 AM, FactChecker2 wrote:

    F-35s can not do a long range nuclear mission (1,200 nmi range versus 6,000 for the B-2). Any strategic use of them would require refueling with tankers or positioning strategic nuclear weapons in foreign countries with the F-35s.

  • Report this Comment On January 22, 2014, at 2:33 AM, bleeixo wrote:

    F35 with tactical nuclear is limited to the nearest land base or the carrier force or the air refuel.

    Long range bomber is expensive, slow, to be efficient, it has to carry many bombs. How long it will be able to survive over hostile teritory without fighter support?

    What do we do in preparing the defense against threat to our home land or to our exposed projected force?

    The real issue is that we may develope scarry weapon but we may not want to use them. We can not say the same about the other side.

    What is the likely hood that we will elect to be the first one who press the button or we only press the button only after the other side did?

  • Report this Comment On January 22, 2014, at 4:22 AM, NavBomb wrote:

    For those of us that have flown nucs, and thought about their use, it must be stated:Nuclear weapons are immoral. The very idea one striking a target anywhere on this earth today and not murder millions of innocent people, is insane.

    I hear the dudes who have never had to "think" about the reality of this express, "bomb 'em."

    That idea may make you feel good, but it is pitifully inadequate and immoral (for those with religious value systems).

    The F-35 has tiny weapons bays. The B-61 although compact would require a weapons type sling ejection system:heavy and NOT stealthy and bulky as nuc's require a weapons' rack that has the control code(s) element in it. They just do not hang there like an iron bomb.

    Best of all for the US Security would be for the USA to get real and demand that all nations right now work to go to ZERO nuclear warheads. Side Note: There are many different type of nuclear warheads.

    That being said: Then take the Moral High Ground. THERE REALLY IS SECURITY IN THIS, in that then you gain far more allies, than enemies and these allies do aid in maintaining one's national security (Like Russia tried to do about the Boston Bomber, Germany did on the Berlin Biestro attack, etc).

    ON POINT: America would be far safer leading the world to a "ZERO NUCLEAR WEAPONS" position than spending billion in the furthering of the use of nuclear weapons based on an outdated Cold War philosophy. Cold War is over!

    DO I think we have the national leadership to go NON-nuclear. NO.

    We as a nation are based on warmongering. Warmongering is what America is about. Look at the past 50 years. WOW what a mess we have made and gone broke doing it.

    Being broke may be the real winner here, as it may put a stop to a lot of this weapons nonsense.

  • Report this Comment On January 22, 2014, at 7:22 AM, ilsm50 wrote:

    B-3 versus F-35, Boeing/Northrop vs Lockheed.

    Cut the inflated costs enriching Boeing, Lockheed's PACs and the pentagon might become useful.

    Are there no atomic cannon left?

    Tactical nukes; Dr Strangelove thinking.

    The only use of a tac nuke that fits the 'common defense' is one that would blow an 'enemy' aircraft carrier out of the water as it approaches San Francisco Bay.

    For that there are cruise missiles.

    Smith is deluded, declining defense budget is a myth the pentagon is merely growing a bit more slowly than projected US GDP.

    However, Smith is along with the rest of the pentagon snake oil salesmen the pentagon trough must be filled faster than the peace economy!

    While all the money going through the pentagon is clipped for a huge amount of fraud and inflated costs.

    US could have both but there is no military need is the prime consideration is welfare work for Lockheed.

  • Report this Comment On January 22, 2014, at 1:11 PM, daverhall wrote:

    I would hope that the B3 program is put on hold for some time and that these options be added to the present aircraft we have that are good for some years to come. We need more jobs in the US now for our families.

  • Report this Comment On January 22, 2014, at 2:35 PM, bmmohio wrote:

    I don't see any of them getting funded. Most Air Force bases are in Republican districts(Not intended to be political but rather the imbalance with the Navy taking over all bases in Pacific and increase wages for civilians while the funds coming from the Air Force). Would rather see money be pushed into 60 ton caring unmanned blimp. Has more capabilities to be use for caring equipment (Air Force, Army, NASA), mail(USPS), air fueling, helicopter landing pad, mobile launching system, humanitarian assistance that can land right after a typhoon or hurricane. Pretty much 95% of what a carrier can do on water and land.

  • Report this Comment On January 22, 2014, at 4:57 PM, BoneDriver wrote:

    Rich Smith, you should probably do your homework. B-1s are not nuke capable.

  • Report this Comment On January 22, 2014, at 8:09 PM, salller wrote:

    If your not talking about drone stealth bombers your talking obsoletism.

  • Report this Comment On January 23, 2014, at 7:16 AM, savage393 wrote:

    Who in this technological world today thinks any aircraft can get close enough to any target protected by modern anti aircraft defense systems to actually deliver a non guided non powered nuclear weapon? The entire concept is ludicrous. If and when there is a nuclear exchange between nations of this world, it will come from space, with the delivery system being a ground or submarine launched (ICBM) missile. Why the Air Force holds on to this idea that they could actually deliver a weapon on anything but a third world country, is just a matter of trying to keep their hand out for funding of ideas that went out in the 80's. By the time an aircraft could be sent around the world for an attack, the war would be over, and NO ONE would be the winner.

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Rich Smith

As a defense writer for The Motley Fool, I focus on defense and aerospace stocks. My job? Every day of the week, I'm monitoring the news, figuring out the winners and losers, and tracking down the promising companies for you to invest in. Follow me on Twitter or Facebook for the most important developments in defense & aerospace, and other great stories.

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