Thursday, April 26, 2012

Lockheed CEO to Step Aside as Defense Squeeze Looms

Lockheed Martin Corp. said Thursday it is preparing for what it has warned would be a devastating impact on the industry from steep cuts in Pentagon spending under the so-called U.S. budget sequestration process.
The world's largest defense contractor by sales also warned that the outlook for temporary spending fixes remained uncertain, and is also contending with a strike by workers at its main fighter jet plant in Texas.
The multiple headwinds facing Lockheed were highlighted as Chief Executive Bob Stevens announced he would step down from the role next January, though planned to remain chairman for a further year.

Tuesday, April 24, 2012

Lockheed Martin strike could threaten F-35 program

Posted on April 24, 2012 at 8:01 AM
FORT WORTH — The future of American jet fighters is on the assembly line in Fort Worth.
The F-35 Joint Strike Fighter is designed to be the backbone of the Air Force, Navy and Marines for decades to come.
Delays and cost overruns have already put Lockheed Martin under the gun to deliver — and the workers who deliver the planes are on the picket line.
"We're prepared to stay one day longer than the company can stand," says Paul Black, president of Local 776 of the International Association of Machinists.
Thirty-six hundred machinists struck at midnight Sunday. They say they are frustrated over insurance changes.
"Higher deductibles. Higher out-of-pocket maximums," Black said.
The union is also angry with Lockheed's proposal to end pensions for new hires.
"The company is trying to split our membership by offering new hires a pension that's less than what we enjoy today," Black said.
Defense experts say the F-35 program is so big, with so many delays and cost overruns, that there's a lot more on the line than labor grievances.
"I think that's a real danger for the Joint Strike Fighter program at this time," said Todd Harrison, a defense analyst with the Center for Strategic and Budgetary Assessments in Washington. "Any slips can have tremendous ripple effects throughout the program, and end up causing much greater schedule delays."
Lockheed spokesman Joe Stout said white collar workers are keeping production going, but at a slower rate. He said F-35 testing is actually ahead of schedule for the year, and can tolerate some delays.
But defense analysts say a prolonged strike would give more ammunition to critics who want to scale back F-35 orders — something that could ultimately cost jobs.
Lockheed offered 3 percent raises for three years and a $3,000 signing bonus. But machinists say givebacks — especially for future workers — will keep them off the job and on the picket line.
There are no talks scheduled between the two sides.

Sunday, April 15, 2012

Dutch to buy fewer F-35 jets than planned - minister


AMSTERDAM | Sun Apr 15, 2012 2:20pm BST

(Reuters) - The Netherlands will buy fewer than the 85 Lockheed Martin Corp (LMT.N) F-35 Joint Strike Fighter jets it had planned to acquire because costs have risen and the country needs to replace fewer F-16 fighters, the Dutch defence minister said on Sunday.

The costs of developing and building the F-35, which will replace F-16 fighters, have been rising. Japan and a U.S. Air Force official have warned they may order fewer planes if costs go up further.

Asked on Dutch television programme Buitenhof if the Netherlands still planned to buy 85 F-35 planes despite higher costs, Dutch Defence Minister Hans Hillen said: "The next cabinet will decide. It will certainly be fewer."

The Netherlands had planned to buy a total of 85 F-35 planes over the period 2019 to 2027, the Dutch Defence Ministry said in a letter to parliament last year. The ministry has reserved 4.5 billion euros to replace the existing F-16 fighters.

Hillen declined to say how many F-35s the Netherlands would buy instead but said fewer F-16s needed to be replaced.

"When we signed up (for the F-35) we took the number of F-16s at the time as a basis. When I became minister we had around 90 F-16s. Now we have 68," Hillen said.

The Netherlands has not finally agreed to buy the F-35 planes but is participating in the development programme and has ordered two F-35 test planes, of which the first has been constructed.

A new Dutch cabinet, which will take office in 2015 unless the current government falls early, will make the final decision about replacing its fighters.

Lockheed is developing three variants of the new plane for the U.S. military and eight partner countries: Britain, Australia, Canada, Italy, Turkey, Denmark, Norway, and the Netherlands.

Pratt & Whitney, a unit of United Technologies Corp (UTX.N), is building the F-35's engine.

(Reporting by Gilbert Kreijger; Editing by Helen Massy-Beresford)

Tuesday, April 3, 2012


Crash or burn? The Conservatives’ F-35 dilemma

Special to Globe and Mail Update

In the wake of Tuesday’s expected report by the Auditor-General, the

On one level, the government’s new-found caution is not surprising. The aircraft’s budget woes are well documented and much is being made of recent revelations of below-advertised performance. Despite the hype, however, revelations that the aircraft will be seriously over budget and may not yet meet all of the minimum requirements are not, in themselves, particularly newsworthy. Few defence procurements come in on-budget or meet all requirements out of the box. This is not news, although the government’s refusal to acknowledge these realities until forced to do so is troubling.

No, the real story is that the highly unusual (to put it kindly) F-35 selection process has threatened to put the Royal Canadian Air Force in a bind. By side-stepping a mandated competition between different aircraft types two years ago, and announcing that the F-35 was the only acceptable plane, the government implied that anything short of a fifth-generation fighter is unsatisfactory.

Simply put, the Conservatives oversold the benefits and the necessity of the F-35 and never allowed a proper assessment of the alternatives. We were told that it was the only aircraft capable of meeting the RCAF’s requirements, that no other plane was even worth considering in a proper competition.

The Defence Department now faces a daunting task. The F-35 procurement is heading toward a possibly fatal combination of relentlessly rising per-unit costs (how many aircraft will we actually be able to afford?), questions about whether other countries in the F-35 consortium will go ahead, and doubts about the plane’s actual performance. Yet, the government has been adamant that this is the only fighter for Canada. Making the case for any other aircraft to replace the CF-18 will be difficult.

Indeed, therein lies the government’s challenge. If the F-35 purchase does not go ahead now, how does the Defence Department justify spending billions on another aircraft – all of which were, until recently, deemed unacceptable? If a fourth-generation aircraft was incapable of meeting Canada’s defence needs before, why should one be now? Simply saying that the budget situation has changed and that we are now going to buy a cheaper plane may make sense in economic terms, but it flies in the face of years of Conservative declarations that Canada will be left woefully unprepared to protect its sovereignty and fight alongside allies overseas.

Make no mistake, there are some fine alternative aircraft out there. The F-18E/F Super Hornet is widely touted as the leading contender. Neither it, nor any of the other potential aircraft matches the performance we are promised the F-35 will ultimately achieve. The purchase of any of them could, over time, leave Canada less able to take part in international missions alongside allied fifth-generation fighters, although all of them are more than capable of fulfilling the sovereignty protection mission at home. Moreover, none of these alternatives are cheap, although they would likely cost less than the F-35. But, to date, both Conservative ministers and the RCAF have assured Canadians that none of these aircraft is adequate – hence the decision to cast aside established procurement procedures in favour of a sole-source acquisition.

By doing away with a competitive process, the Conservatives set up the RCAF for a dangerous and utterly avoidable shortfall. At this point, it appears that either the CF-18s will need to be kept in service until additional money is found for the F-35, even as public services are being cut in an age of austerity, or the Conservatives will admit that the RCAF can make do with a fourth-generation fighter after all.

Canada’s aerospace industry has also been put in a potentially awkward position. Significant resources were committed to support Canadian industrial participation in the development and production of the F-35. This alone may be the strongest case for Canada’s eventual purchase of the F-35, no matter what it ends up costing. If another fighter is bought, Canada will be in the unusual position of having a military that flies one aircraft, while its aerospace industry is participating in the development and production of another. Moreover, if Canada abandons the F-35, other countries may be encouraged to follow suit, leaving Canada’s aerospace industry with fewer contracts and many lost opportunities. As with certain past procurements, industrial and regional policies could ultimately prove more important than defence requirements in deciding what equipment is bought for the military.

Two years ago, the Defence Department and the armed forces helped the government circumvent standard procurement procedures to acquire the F-35 quickly and with minimal fuss. The RCAF may come to regret this decision.

Peter Jones is an associate professor in the Graduate School of Public and International Affairs at the University of Ottawa. Philippe Lagassé is an assistant professor there.