Northrop Reveals $1.56 Billion Loss On B-21 ProductionSHARE

>The B-21 program will lose $1.56 billion combined on all bombers delivered during the first five annual lots of production, manufacturer Northrop Grumman said Jan. 25. Northrop reported the charge in an annual earnings release for 2023
How is this even possible?: https://aviationweek.com/defense-space/aircraft-propulsion/northrop-reveals-156-billion-loss-b-21-production

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  1. 1 month ago
    Anonymous

    RtX bros, we won. Made 12k usd yesterday

  2. 1 month ago
    Anonymous

    Just stay out of Taiwan and you needn't worry.

  3. 1 month ago
    Anonymous

    Because the initial batches are always expensive. Remember how much the f35 was starting out?

    • 1 month ago
      Anonymous

      That and they don't want to end up like the B-2 or F-22 with procurement cut to the bone. Sell the first batches at a loss with a price that is palletable to the pentagon bean counters then hope they go all in on a fleet wide replacement order.

      • 1 month ago
        Anonymous

        Ding ding ding

  4. 1 month ago
    Anonymous

    Grumman are dipshits just like Boeing who don't retain their workforce. They hire and fire like schizos and have to spend tons of time retraining people. That costs money, and incurs mistakes.

    • 1 month ago
      Anonymous

      These government contractors only do what they are paid for
      Not paid to retain? Then they won't

      That is a contract type. The first contract for B-21 development was cost-plus. This one is fixed fee. In reality they are barely different.
      Cost-plus contracts outside limited development are really really bad.
      That is when you get incompetent companies making ridiculously low bids to win the contract and then they "plus" the frick out of it and you still end up with a system with half the features that still doesn't work and costs 10X as much as it should.
      No production contract should ever be cost plus. If something changes then you renegotiate it but never just let them self inflate.

      What company is going to have fixed price contracts for unfinished designs, every single component supplied by some other contractor, and big question marks for key technologies

      The one thing is that the government should really just be running this shit themselves directly

      Why would you employ FULL TIME contractors that then learn their job from scratch ? You aren't saving money, you are paying a middle man just to manage it for you...

      • 1 month ago
        Anonymous

        >The one thing is that the government should really just be running this shit themselves directly
        That's communism you fricking commie lefti'st

  5. 1 month ago
    Anonymous

    I guarantee that a defense contractor is not losing money on the contract.

    • 1 month ago
      Anonymous

      Ah-fricking-ha....
      >However, the B-21 program, which will ultimately yield more than 100 bombers, has most of its production covered under a cost-plus contract, which means it will reimburse the company for the extra expenses it incurs due to inflation.
      So they have transitioned into a fixed cost contract from the previous cost-plus contract.
      What they are saying is while they set up the production line profits will not be maximized. This is all planned and they will not lose money over the life of the contract.
      It would never be in the billions no matter what. Their costs are for labor and hypothetical facilities fees.
      Never believe what some moronic reporter writes.

  6. 1 month ago
    Anonymous

    Non-paywalled articles

    https://breakingdefense.com/2024/01/northrop-grumman-logs-billion-dollar-charge-on-b-21-stealth-bomber/
    >Since bidding on B-21 in 2015, “we certainly have changed our view on bidding of contracts where we did not have a mature design at the point of bid and yet we committed to fixed-price options into the future,” Warden said. “And we have, to my knowledge, not done that again.”

    https://www.defenseone.com/threats/2024/01/northrop-eat-12b-b-21-program/393612/
    >The $1.17 billion charge ($1.56 billion pre-tax) on the five initial-production lots is “largely driven by a change in our assumptions regarding funding to mitigate the impact of macro-economic disruptions on the LRIP (low-rate initial production) phase of the program and higher projected manufacturing costs that reflect recent supplier negotiations and our experience in completing the first aircraft,” Warden said.
    >The overrun is due to growing costs with military construction, not with Northrop’s current execution of the engineering and manufacturing development, or EMD, phase of the program, Warden said.

    >“That's important because our design work in this phase is helping the Air Force to better estimate the cost of those later phases and due to a number of factors of learning, their cost estimates for the later phases have increased, and that's what's driving the Nunn McCurdy breach. As the Air Force has said, growth on the EMD would not have triggered the breach,” Warden said.

    • 1 month ago
      Anonymous

      >USAF deliberately works out the contract to be stable and fixed price so that they pay x amount and don't get fricked up if Northrup messes up the program
      >WHOOPS COVID-19
      >you now lose about a billion dollars
      It happens. There's a USAF/DOD official somewhere seeing this news and leaning back in their recliner with a cold drink.

      • 1 month ago
        Anonymous

        It does not work that way. They just make the contract for more money. It is a way to keep the contract from steamrolling unchecked but they always renegotiate fees.

      • 1 month ago
        Anonymous

        Lol no Northrop is going to get their money whether it's tacked onto most definitely not related contracts or the price of the next batch.
        -t. worked for a defense contractor and have seen how such scum operate firsthand
        Murder all MBAs Consultants administrators and other parasites in all industries ok bye

  7. 1 month ago
    Anonymous

    It's due to the nature of a fixed price contract. Northrop shifted the inflationary risk to themselves rather than the AF, which is a valid sales tactic. Obviously if Northrop signs a contract in 2020 and predict inflation of 5% and inflation ended up being 12%, all of Northrop's variable costs go up, while the price stays the same.

    • 1 month ago
      Anonymous

      Making less than maximum potential future profit is not actually a loss though.

      • 1 month ago
        Anonymous

        To these people it kinda is. If you're dealing with decade long procurement contracts and you expect you're going to lose x amount compared to the amount you expected going into the contract (that you promised to all your shareholders btw), you have lost money.
        In reality yes it's all just imaginary money but we're dealing with hardcore American capitalists.

        • 1 month ago
          Anonymous

          As long as you are hitting the milestones and things are going smoothly then everyone is happy.
          The only people in the defense industry public corporations who actually benefit from massive profits have a title that says CXO or something like that. Otherwise you maybe get a slightly larger or smaller bonus check.
          When you do government work you are on a just get by basis no matter what.

        • 1 month ago
          Anonymous

          So all chink and turdie posters can come up with nowadays is "rook you are making ress money the west has faren", quite sad.

      • 1 month ago
        Anonymous

        Shareholders care about any deviation from expectations because the value of any asset, even a company like Northrop Grumman, is equal to the expected cash it's going to produce during its existence. That's why companies decline in value even when they make less profit than expected or reduce projections, or, conversely, why a company that has never made a dime can be valued in the billions. The market-capitalization reflects the expectation of the market of how much money the company is going to make until the end of time.

        • 1 month ago
          Anonymous

          Investors, yes, but not the government, taxpayers or in general the workers (unless your stock options came at the peak and not the dip.)

          • 1 month ago
            Anonymous

            That's not necessarily true. Companies that aren't making an expected rate of return may not get the same access to capital in the future or struggle to repay debt. This is especially true when you consider the B-21 for example is not the only thing Northrop is making. It may need more fat on this project to make up for expenses elsewhere. I highly doubt that's the case here, but in general, making less than you expected is generally not a good thing, especially if making that money factored in to long term planning.

    • 1 month ago
      Anonymous

      DoD contracts have 'cost-plus' protection, which exists to solely protect the contractors from inflation. Northrop will be reimbursed for production costs adjusted to inflation. This stuff happens all the time.

      • 1 month ago
        Anonymous

        That is a contract type. The first contract for B-21 development was cost-plus. This one is fixed fee. In reality they are barely different.
        Cost-plus contracts outside limited development are really really bad.
        That is when you get incompetent companies making ridiculously low bids to win the contract and then they "plus" the frick out of it and you still end up with a system with half the features that still doesn't work and costs 10X as much as it should.
        No production contract should ever be cost plus. If something changes then you renegotiate it but never just let them self inflate.

        • 1 month ago
          Anonymous

          Protip just frick up every contract and whine until you get one cost plus contract then bill all your cocaine to that and now magically the rest of your programs are within budget
          -t. defense pro

        • 1 month ago
          Anonymous

          how much is a prime contractor even doing?
          can't they just subcontract everything and thus move the risk onto the subcontractors?

      • 1 month ago
        Anonymous

        Official inflation is far, far lower than actual inflation.

        • 1 month ago
          Anonymous

          Are you talking about that shadowstats nonsense that just adds a flat 2%~ to every official report and pretends that's the reality?

  8. 1 month ago
    Anonymous

    Boeing says it lost over $6 billion on the KC-46 contract too. I'm not sure if they've decided to copy Hollywood accounting or if defence contractors are just really bad at their jobs

    • 1 month ago
      Anonymous

      >or
      AND

  9. 1 month ago
    Anonymous

    Anyong got any idea what this is? Saw it in a video they put on twitter last week.

    • 1 month ago
      Anonymous

      Looking at the display screens and wheels on the nearby cart for scale, that has to be a drone. There are so damned many now I have no random guess as to which.

      • 1 month ago
        Anonymous

        Only thing that comes to mind would be the RQ-180 but that's supposed to look a lot like the B-2/21 which doesn't really match up with an engine placement like that

        • 1 month ago
          Anonymous

          oh wait.... the rear isn't nearly finished huh, there's a second part that connects to that so..... maybe?

    • 1 month ago
      Anonymous

      That's the central fuselage for an F-35A.

  10. 1 month ago
    Anonymous

    Its gonna be either a tax writeoff or theyll be compensated in subsequent contracts

  11. 1 month ago
    Anonymous

    DIS IS THE BRIZE OF FREEDOM :DDDD

    • 1 month ago
      Anonymous

      >The price of freedom is a roughly a 300mil hit to yearly financial reports for each of the next 5 years.
      Ehhh the B-21 already hitting LRIP (which i've got to wonder if the NG financial report takes that into consideration?) has me mollified long term as far as what i invest in goes.

  12. 1 month ago
    Anonymous

    >Americans are getting the most advanced flying war machine in history for cheaper than expected

    This is the own from the Global South /misc/estinians ITT?

    • 1 month ago
      Anonymous

      >Most advanced flying war machine in history
      Lets not be crazy here the B-21 is making use of tech that's likely a decade old and came into its own in the F-35 program. B-21 is probably closer to Gen 5.5 than Gen 6 imo (combo of gen 5+ stealth + gen 5 Command and control abilities to guide bombs)

  13. 1 month ago
    Anonymous

    That's... actually reasonable. It's the "loss leader" strategy that's employed in the entertainment industry to spread the cost of development over the intended lifetime of a product. You incur a higher risk of losing money big time if the gamble fails, but the gamble rarely does when you're an established brand, and you get good will out of it for free.

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