, Defense News5:03 p.m. EDT June 15, 2016
VICTORIA, British Columbia - As Canada considers a purchase of Super Hornet fighter jets from Boeing, Lockheed Martin is threatening to cut Canadian companies out of work on the F-35.
But defense analysts and industry sources say such punitive measures could take years to follow through with and might ultimately backfire against the U.S. defense giant.
Lockheed Martin went on a public-relations push last week and on the weekend, telling Canadian media outlets a decision not to buy the F-35 would put in jeopardy hundreds of millions of dollars of contracts that could be awarded to Canadian firms for work on the aircraft.
The ruling Liberal Party government is looking at the acquisition of 20 to 30 Super Hornets as an interim measure to deal with what it says is a gap in Canada’s fighter aircraft capability. Canada currently operates the F-18 but those aircraft are aging.
Liberal Prime Minister Justin Trudeau came to power last fall, pledging not to purchase the F-35, an aircraft he says is unnecessary for Canada’s needs, and too expensive. As debate continued in Parliament about the potential Super Hornet purchase, Trudeau claimed June 7 the F-35 “does not work and is far from working.”
Lockheed Martin has responded with the warning about the consequences of Canada not buying the F-35.
"I don't want it perceived as a threat, but we will have no choice: If Canada walks away from F-35, expect to relocate work in Canada to other purchasing nations,” Steve Over, the company’s director of F-35 international business, told the Canadian Broadcasting Corporation.
Similar statements were made by Lockheed officials to Reuters news service and the Globe and Mail newspaper.
Jordan Owens, a spokeswoman for Defence Minister Harjit Sajjan, said Canada would make its decision on a fighter jet based on its security needs. “Despite Lockheed's eagerness to send a spokesperson from Texas to Ottawa in order to game out hypothetical scenarios in the media, Canada remains a member of the Joint Strike Fighter program,” said Owens.
Canadian participation as a partner in the Joint Strike Fighter program has allowed around 110 domestic firms to secure (CAN) $825 million (US $610 million) in contracts over the years. Lockheed says if Canada doesn’t buy the F-35, the company will honor existing contracts but once those run out, the work would be shifted to other firms in nations still involved in the program.
Lockheed, however, could face significant difficulties following through with that plan, say industry officials and analysts.
“According to the agreement, as long as Canada remains a JSF partner it is fully entitled to have its industry bid and get contracts,” said Alan Williams, the former assistant deputy minister for materiel at Canada’s Department of National Defence, who oversaw Canada’s involvement in the F-35 program. “There is no stipulation that Canada has to purchase the F-35.”
Any attempt to cut Canadian firms out of work while the country is still a partner and contributing its payments to the program could spark legal action, he noted.
Defense analyst Martin Shadwick, along with industry sources, said Lockheed Martin has to tread carefully if it wants future work in Canada. “They could wind up doing themselves some real harm not only on the F-35 file but on anything else they are trying to sell in the Canadian market,” Shadwick said. “Governments have long memories on these types of things and they would not be enamoured of a corporation who took a scorched-earth approach.”
He noted, for instance, that Lockheed Martin hopes to win business on the Canadian government’s upcoming (CAN) $26 billion ($20 billion) frigate replacement program.
In addition, Lockheed might have problems finding foreign firms -- in the short term, at least -- to produce systems for the F-35 at the same quality and price that Canadian companies provide, added Shadwick.
Lockheed Martin spokeswoman Cindy Tessier said it is the firm’s position that Canada’s involvement in the F-35 program is “based upon Canada’s stated commitment to the procurement of 65 jets.”
The previous Conservative government had committed to purchasing 65 F-35s but put that on hold because of increasing costs and technical issues with the aircraft.
