Northrop Grumman has been pushed to the forefront! The cost of their B-21 stealth bomber project is skyrocketing like an unbridled horse, leaving people speechless and directly cutting the company's profit for the first quarter of 2025 by 49%, with a pre-market stock price drop of 10%. But this is not the worst part; last year, they admitted that the project had already lost nearly $1.2 billion, and now the total loss easily exceeds $2 billion! Trump's tariff war is another punch hitting the B-21 supply chain, and even Trump himself might scratch his head: will this bomber take off or will it blow a hole in Northrop Grumman's wallet first?

The B-21 plan is to produce 100 aircraft, and recently they have even called for 145. Unfortunately, the manufacturing cost is becoming a bottomless pit. Northrop Grumman CEO Kathy Warden had no choice but to lay bare the truth on the earnings call: "We changed the production process to speed up, but the material costs soared, and inflation and macroeconomic pressures added more chaos." In the first quarter, the B-21 project directly contributed a pretax loss of $477 million, dragging down the company's sales to $9.47 billion, far below analysts' expected $9.92 billion.

With Chengfei's sixth-generation fighter making its debut, who could have imagined that the B-21 cannot deter China, but instead bites Northrop Grumman's financial statements into shreds. Warden smiled bitterly: "We underestimated the amount and price of materials, and the economic environment is much worse than we anticipated." What makes it worse is that the low-rate initial production contract for the B-21 is a fixed-price "poison pill," and all cost overruns must be borne by Northrop Grumman itself, with each of the first five batches losing money.

While Northrop Grumman is struggling with the cost of the B-21, Trump's global tariff war has delivered a "knockout punch" to the supply chain. The B-21's manufacture relies heavily on high-tech materials such as special alloys, composite materials, and stealth coatings, many of which depend on international supply chains. For example, Canada is an important supplier of steel and aluminum to the U.S. aerospace industry, while Mexico provides some electronic components and assembly services. The 25% tariffs have directly increased the import costs of these critical materials. The "macroeconomic impact of material prices" mentioned by Warden undoubtedly has tariffs as a significant driver. CNBC reported that Trump's tariffs have inevitably led to rising raw material costs, especially significantly affecting industries with complex supply chains like aerospace. China's restrictions on heavy rare earths are likely to become a bottleneck for mass production.

Taking steel as an example, Canadian aviation-grade steel accounts for a large share of the U.S. market, and tariffs will increase the cost per ton by about 25%. The body and structural components of the B-21 heavily rely on these materials, and the cost increase is directly passed on to the production line. Although Northrop Grumman has not disclosed specific sources of materials, Warden admitted that they "underestimated the consumption and price of materials," and the叠加 effect of tariffs obviously made this problem worse.

Trump's tariff war forces companies to reassess their supply chain layouts. Components involve suppliers in multiple countries around the world, including precision sensors, radar systems, and engine parts from suppliers in Japan and Italy. Trump's high tariffs on Vietnam (46%) and Cambodia (49%) have completely disrupted the "China + 1" diversification strategy, making it extremely difficult for Northrop Grumman to find low-cost alternative suppliers.

A CNBC supply chain survey shows that 57% of companies believe cost is the biggest obstacle to repatriating supply chains to the U.S., and relocation costs may be more than twice the current costs. For Northrop Grumman, moving the B-21 supply chain from global to the U.S. not only requires building new factories and production lines but also faces the challenge of a shortage of skilled labor in the U.S. Not to mention that many key components of the B-21, such as semiconductors and rare earth materials, cannot be fully domesticated in the short term. Although Trump exempted tariffs on some key materials like semiconductors, this exemption is temporary, and tariffs may still be imposed in the future, increasing the uncertainty of the supply chain.

Trump's tariffs are expected to push up U.S. inflation rates. For the B-21 project, inflation not only increases material and labor costs but may also squeeze the Pentagon's budget. The estimated total cost of the B-21 project for fiscal year 2019 was $203 billion (for 100 aircraft), and if increased to 145 aircraft, the total cost may soar to nearly $300 billion.

Currently, six pre-production aircraft led by "Hellhound" are being intensively tested, and the other five are on the production line. The company predicts that once full-rate production begins, the B-21 will turn into a "money tree." However, this beautiful vision must first endure the current challenges.

Trump probably needs to personally grab a calculator to figure out whether this stealth bomber is worth the astronomical bill.

Original article: https://www.toutiao.com/article/7501627868221276687/

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