Friday, June 10, 2016

Shakedown



Nice place ya got here. Shame if anything happened to it.

Translate that into Lockheed-lingo and it comes out like this - you buy any other airplane and we'll pull $825-million in contract work, Canada.

A bit of background. Lockheed has implemented a marketing strategy for the overdue, overpriced and underperforming F-35 supposedly stealthy light bomber that would make Erwin Rommel swoon.

To make the F-35 Congress-proof, Lockheed spread development and construction contracts across all but a few States. If the programme dies, there go all those jobs, jobs, jobs - enough to give any Congressman second thoughts. The company was shrewd enough to save plenty of gravy for its foreign developer partners - the UK, Canada, etc.

For a while the company said those contracts would continue even if Canada didn't ink a firm deal for the F-35, i.e. so long as the option was open. Now it's playing hardball.

If Canada goes ahead and buys something else, such as the Boeing Super Hornet, Lockheed will pull those $825 million in contracts.

"It's not really a threat," [Steve Over, Lockheed director of international sales] said in an interview with CBC News. "I don't want it perceived as a threat, but we will have no choice, if Canada walks away from F-35, except to relocate work in Canada to other purchasing nations."​

By the end of the year, Over said he expects the value of Canadian parts and sustainment contracts to reach $1 billion, with an anticipated lifetime value of $10 billion or more.

This puts the prime minister in an awkward spot. He hasn't shown a lot of spine in rough water. Presumably Lockheed was watching closely as he buckled on the Saudi Death Wagon deal. Will Slick dare risk incurring Lockheed's wrath and the fury of Canada's corporate sector or will he run true to course and just fold?

Lockheed can pretend it's not a threat but it damn well is. Are we going to do as we're told - one more time?


12 comments:

Anonymous said...

Call LockMart's bluff. Order a fly-off and say Canada will buy whatever plane best meets our needs and provides the maximum economic benefits. That approach proved a winner for his dad, and in fact, it's how defence procurement is supposed to work.

Cap

Toby said...

Is Lockheed actually performing any contract work in Canada as we speak or is this projected for some time in the future?

Anonymous said...

Q: Are you threatening me?
A: No, no, no, no. What ever made you think that?

https://www.youtube.com/watch?v=pm5mtpPtW1Q

Troy Thomas said...

The response should be easy. Canada's the buyer. There's no obligation to buy anything from Lockheed.
Capitulating to the threat should be the hard choice.
But we'll see, won't we, what this Liberal government does.

There should always be opportunity in these sorts of power plays. If Lockheed's threatening to pull manufacturing out of Canada, then Canada should be working the phones with Lockheed's competitors, reminding them that, hey, we're suddenly awash in empty factories and warehouses with trained workers just itching for something to do.

And even if Lockheed's competitors should decide to play solidarity, then well, there's a glut of Canadian trained workers who are free to pursue work in other industries such as automotive, computer technology, solar.

The versatility of the Canadian worker should give this Canadian government confidence in calling this threat. Canada doesn't need Lockheed so much as Lockheed think it does.

rumleyfips said...

Troy: Funny you should mention auto and computer in the same breath. GM plans to hire 1000 engineers in Oshawa for it self driving cars.

Owen Gray said...

The Military-Industrial Complex is alive and well.

Boris said...

Well, we don't pay ransoms to terrorists, why should we pay one to Lockmart?

Besides, it's incredibly impolite and very stupid to threaten one's potential customers. You don't get invited to fly-offs that way.

Hugh said...

GDP must grow, every year. Or else. That's priority #1.

Toby said...

Lockheed Martin does our census. See the article at Excited Delirium.

http://www.exciteddelirium.ca/2016/06/11/lockheed-martin-a-bad-business-partner/

We really should stop that.

The Mound of Sound said...


Of course it's a threat. If it hadn't been Lockheed would have conveyed their information privately. LM went public to bring heat on the government.

I wonder if Lockheed wants to bring the errant customer into line "pour encourager les autres." Perhaps it sees more defections in the works.

At this point I would like to see a competitive fly-off. Call it for next summer in Cold Lake. Put them all through their paces in a gruelling test of performance and readiness. Have them deliver their proposals - cost, support, industrial offsets, etc. Let's invite the neighbours - Britain, France, Sweden to boot.

Anonymous said...

Better yet, call it for next February in Cold Lake. Let's see how many of them are ready under real Canadian conditions.

Kim said...

Excellent suggestions here.