Lockheed has a bad week; Japan considers its fighter jet options
It has been a month of mixed results for Lockheed Martin, maker of the F-35.
Last week, it announced that it remains eight per cent ahead of its plan in year-to-date test flights for the fighter jet. The company said in a news release that it remains “on or ahead of plan for 2011” on flight tests, even with a 15-day fleet stand-down in late summer, and various testing interruptions caused by adverse weather in the Southern U.S.
But this week, Lockheed issued some bad news: It’s laying off 540 employees in plane-making operations in three states. The cost-cutting is a response to the U.S. government’s decision to cut around $300 billion from its defence budget during the next decade.
Although the company has been touting its flight-test record, there is bad news from Down Under. Thanks to repeated delays in the Joint Strike Fighter program, Australian supplier Production Parts will be shutting down.
From the Canberra Times:
Sources close to Production Parts, a respected Melbourne Airport West business that employed 85 people, said the firm had spent up big on equipment needed to fill JSF contracts worth more than $40 million.
[...]
It had invested $6.25 million between 2008 and 2010, including $1.4 million on a German-made milling machine, and was contracted to make up to 12 different parts for the jet.
Workers manufactured the first of what was expected to be 1,500 high-compressor cases for the JSF’s Pratt and Whitney 135 engine late last year. Production Parts also held contracts for work on the second-string engine, the F136 being developed by Rolls Royce and General Electric.
Company managing director Peter Nicholls said the cancellation of that engine was a major factor when the firm went into voluntary administration last month. The strength of the Australian dollar and the slow-down in defence spending also contributed.
And, according to the Times, Lockheed Martin “stopped short” of guaranteeing work that would have been completed by Production Parts would be reallocated to other Australian firms.
Meanwhile, Lockheed is facing another challenge in the same hemisphere.
According to an article in the Financial Times, Japan is looking to purchase around 42 new fighters, and is considering a full competition between the F-35, the Boeing F/A-18 Super Hornet, and the Eurofighter Typhoon. The deal could be worth $6 billion, and would normally be destined for a U.S. supplier, but — as the FT points out — since the U.S. denied Japan the opportunity to buy its F-22 Raptor, it seems Japan is now rethinking its approach.
How about some speculation? Here’s DoD Buzz:
Here’s a scenario for you: Lockheed is still assembling the very last F-22s at its plant in Marietta, Ga.; it has said the no-kidding final fighter would roll off the line in November. If Congress acted quickly to lift the ban on foreign military sales of the Raptor, then Lockheed rushed over to Tokyo with a bid, it might check a lot of boxes: A Foreign Military Sales windfall for the U.S. and Lockheed; a newly strengthened security relationship with Japan; and a potential strategic game-changer in the Western Pacific, where China’s J-20 would not be the only fifth-generation game in town.
Japan will likely take China’s new J-20 into account when it makes its purchase, and that might give the F-35 somewhat of an advantage in the competition. However, Boeing has offered that Japanese contractors could build F/A-18 Super Hornets under licence if that ends up being the fighter of choice.
From Fox Business:
Phillip Mills, director of Boeing’s Japan FX Capture Team, said Japanese makers could supply about three quarters of Super Hornet components if Japan opted for the fighter jet.
There has been great interest in how much of next-generation fighter jet-related jobs will be outsourced to the Japanese industry, which has been battered by gradual but consistent shrinkage of the defence budget.
“If you came to the Boeing production line, everything you saw Boeing doing in St Louis would be available or is available for Japan industry to do,” Mills told Reuters in an interview.
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