Lockheed Is Making Steady Progress In Its International Business Expansion

by Trefis Team
Lockheed Martin
Rate   |   votes   |   Share

Lockheed Martin (NYSE:LMT) has been under pressure from the declining defense budgets of the U.S. government as over 80% of the company’s sales come from the government, including around 60% from the Department of Defense (DoD). The passage of the Budget Control Act of 2011 first reduced the government’s defense spending by around $500 billion over 2011-2021, and then sequestrations – which took effect from March earlier this year – reduced the government’s defense spending over the next decade by another $500 billion approximately. Even though Lockheed is a prime contractor in many major government defense projects like F-35 Joint Strike Fighter (JSF) that are viewed in line with defense priorities, the lower overall defense budget has weighed on the company’s top line in the recent quarters.

A key counter measure adopted by Lockheed to offset the impact from lower U.S. defense spending is expansion of its international business. Accordingly, in July the company launched a new organization – Lockheed Martin International – headquartered in London and Washington, with corporate and regional offices in capitals of major defense spending countries which include Canada, Saudi Arabia, UAE, Singapore, Australia, Israel, India, Japan and South Korea. Lockheed made this move in order to engage directly and spend more time listening to the needs of these major international defense spenders. This closer engagement with the defense establishments of these countries will help Lockheed forge stronger relationships and maintain and grow its international defense business.

Here we take a quick look at some of the major international orders received by Lockheed Martin and the deliveries it made in recent months. We currently have a stock price estimate of $101 for Lockheed, around 15% below its current market price.

See our complete analysis of Lockheed Martin here

Lockheed’s Recent International Orders And Deliveries

In May, Lockheed received an order for 18 F-16 fighter jets worth $830 million from Iraq. [1] This order ensured that the company will be able to extend its F-16 production line to 2017, and thus avoid some layoffs out of the many it has been forced to make in recent months due to the government’s defense spending cuts. The company’s Mission Systems And Training segment received a modernization contract for its Aegis weapons system from Japan. Lockheed also received a $90 million contract from Saudi Arabia for fire control radars for attack helicopters. [2] The company also received a $34 million contract from Finland for integration of Joint-Air-to-Surface Standoff Missile (JASSM) onto the Finnish Air Force’s F-18 fighter jets. [3]

On the international shipments side, Lockheed delivered the first C-130J military transport aircraft to both Israel and Tunisia in the previous quarter. The delivery to Tunisia marks the entry of Lockheed’s C-130J Super Hercules to Africa, and thus opens up potentially another set of customers for the company. As evident from this brief summary of recent orders and deliveries, Lockheed has a very wide international customer base purchasing a variety of defense systems and equipment. Looking ahead, we believe that in addition to these programs the company’s agreements with 10 countries to supply around 600 F-35 JSFs will provide a crucial push to its international defense sales. Lockheed says that it is focused on raising the percentage of international defense sales from 17% of its total sales last year to at least 20% of its total sales over the next few years. [4] We believe the establishment of a dedicated organization – Lockheed Martin International – focused at developing the company’s international business and contribution from some major international defense partner programs like F-35 JSF will help the company achieve its target.

Understand How a Company’s Products Impact its Stock Price at Trefis

  1. Iraq to buy 18 more F-16 fighters, May 2 2013, www.stripes.com []
  2. LONGBOW LLC Receives $90 Million Contract for Saudi Arabia Apache Radar Systems, June 13 2013, www.lockheedmartin.com []
  3. Lockheed Martin Receives $34 Million JASSM® Contract for Additional Integration onto Finnish Air Force F-18, June 10 2013, www.lockheedmartin.com []
  4. Lockheed’s second quarter 2013 podcast, August 22 2013, www.lockheedmartin.com []
Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Lockheed Martin Logo
  • commented 4 years ago
  • tags: LMT GE BA
  • The F-35 will be inadequate to deal with the anti-access & area denial high threat environment which has shown that the aircraft has a lot of limitations and it cannot do a lot of things as expected to show and promise that is a true fifth generation fighter, because it'll never meet all the requirements of partner nations.

    The F-35 was defined during the mid-1990s to have "affordable" aerodynamic performance, stealth performance, sensor capabilities and weapons loads to be "affordably" effective against the most common threat systems of that era past – legacy Soviet Cold War era weapons, not for the 21st Century emerging anti-access & area denial high threats. The F-35 is designed primarily to support ground forces on the battlefield with some self defence capabilities and is not suitable for the developing regional environment and, not suitable for close air support missions. The aircraft is unsuited for air superiority, bomber and cruise missile defence due to limited range/endurance/agility, limited weapons load and limited supersonic speed. As its limitations are inherent to the design, they cannot be altered by incremental upgrades. The F-35 will be ineffective against the current generation of extremely powerful advanced Russian and Chinese systems, as detailed above; In any combat engagements between the F-35 and such threat systems, most or all F-35 aircraft will be rapidly lost to enemy fire.

    If you have the F-35s that just aren't capable of dealing with the anti access & area denial threat zones, it just doesn't do you any good of going ahead with the failed program and sink the money. Because the F-35 will be increasingly expensive aircraft that will fail the air defence program.

    "Why will the F-35 fail the requirement? It has the ability to penetrate heavily defended airspace and hold targets of interest at risk any time you want to. That's what the F-35 can do because it's stealthy".

    Well unfortunately there's absolutely no point of selecting the F-35 because some hostile nations could well be purchasing the Nebo M Mobile "Counter Stealth" Radar, advanced S-400 and S-500 SAM systems which will make the F-35 obsolete.

    If anyone wants to find out more about this counter stealth radar, here's a description if you're interested.

    Development initiated late 1990s leveraging experience in Nebo SVU VHF-Band AESA radar;

    2012-2013 IOC intended;

    Designed from the outset to detect stealth fighters and provide early warning and track data to missile batteries and fighters;

    The VHF component will provide a significant detection and tracking capability against fighter and UCAV sized stealth targets;

    High off-road capability permits placement well away from built up areas, enabling concealment;

    Rapid deploy and stow times permit evasion of air attacks by frequent movement, defeats cruise missiles like JASSM;

    Initial Nebo M builds for Russian Air Defence Forces, but expected like other "counter-stealth" radars to be marketed for global export to arbitrary clientele.

    The VHF band element in that radar will detect the F-35 at a distance of tens of miles. That is without a doubt. What that means is that the aircraft is going to be in great difficulty if it tries to deal with what I call a modern or contemporary threat. The same is also true when you deal with these newer stealth fighters, because they are designed to compete with the F-22. They fly higher; they are faster and more agile—much, much more agile. They have more powerful radars and much, much better antenna packages for other sensors. The F-35 is not meeting its specifications and its specifications are inadequate to deal with the changed environment.

    If the F-35 was to be able to meet its specifications, the aircraft will have the ability of going up against a 1980s Soviet air defence system of the type that we saw destroyed very effectively in Libya last year, the F-35 would be reasonably be effective in that environment, because these older Soviet radars would not see it.
    But if you are putting F-35 up against the newer generation of much, much more powerful Russian radars and some of the newer Chinese radars, the aircraft is quite detectable, especially from behind, the upper side and from the lower sides as well.

    Also F-35 will also be detected by the L-Band AESA. It is used for targetting which they'll be able to track LO/VLO stealth planes such as the F-35 especially from behind, the upper side and from the lower sides as well. Unfortunately the exhaust nozzle of the F-35 will be extremely hot. The back end of the F-35 in full afterburner is something like 1600 degrees (Fahrenheit). In terms of temperature, aluminum combusts at 1100. You are talking about something really, really hot. If you have got a dirty big sensor on the front of your Su-35S or your PAK-FA or whatever, it lights up like Christmas lights and there is nothing you can do about it. And the plume, because of the symmetric exhaust, is all over the place. It is not shielded, it is not ducted in any useful way. The Sukhois will be able to seek and destroy the F-35 when using the heat seeking BVR AA-12 (R-77) Adder AAMs.

    The APG-81 AESA radar. The nose geometry of the F-35 limits the aperture of the radar. This makes the F-35 dependent on supporting AEW&C aircraft which are themselves vulnerable to long range anti-radiation missiles and jamming. Opposing Sukhoi aircraft have a massive radar aperture enabling them to detect and attack at an JSF long before the JSF can detect the Sukhoi. It has Medium Power Aperture (0) (Detection range around 140 – 150 nm at BVR)

    Compared to which other aircraft's radar?

    The N011 Irbis-E (Snow Leopard) for the Su-35S Super Flanker-E

    NIIP claims a detection range for a closing 32.3 square feet (3 square metre) coaltitude target of 190 – 250 NMI (350-400 km), and the ability to detect a stealthy aircraft while closing 0.11 square feet (0.01 square metre) target at ~50 NMI (90 km). In Track While Scan (TWS) mode the radar can handle 30 targets simultaneously, and provide guidance for two simultaneous shots using a semi-active missile like the R-27 series, or eight simultaneous shots using an active missile like the RVV-AE/R-77 or ramjet RVV-AE-PD/R-77M.

    The PAK-FA will feature the N050 BRLS IRBIS AFAR/AESA?, similar to the Su-35S N011.
    * Frequency: X-Band (8 – 12 GHz)
    * Diameter: 2 ft 4 in (0.7 m)
    * Targets: 32 tracked, 8 engaged
    * Range: 250 nmi (400 km)
    EPR: 32.3 ft; (3 m): 86.3 nmi (160 km) and 0.11 sq.ft (0.01 sq.m) target at ~50 nmi (90 km)
    Azimuth: +/-70°, +90/-50°
    * Power: 4,000 W
    * Weight: 143 to 176 lb (65 to 80 kg)

    Again, the F-35 will be detectable from behind the fuselage, the upper side and from the lower sides as well, except for the front area, a conservative estimate for the frontal RCS of the F-35 would be 0.0015 square metre which is only stealthy in the front, this is what I call "Partial Stealth" which the F-35 does have. Because if the situation arises, the Sukhoi family of fighters, upcoming J-20 or J-60 can out-run, out-climb and out-manoeuvre, and be able to track the F-35 using L-band AESA, IRST sensor (from the upper and lower sides and aft fuselage) and launch their AAMs from any altitude at speed etc.

    The bad news is, with the changed environment the F-35 will be obsolete when the aircraft arrives in 2018 or later, the US as well the allies are armed with this aircraft will make their air power totally ineffective in the next 30 to 40 years. I'm complaining about Lockheed Martin lying and misleading to the military and the public what they state their facts what the F-35 can do etc. And I don't see any contradiction with the way I've promoted these new Russian/Chinese radars etc.

    The F-35 is a boondoggle, nothing but a turkey of the program.

    Stay well away from Lockheed's inferior, overpriced and unproven products like the failed F-35 programme. They don't deserve to support and give business from allied nations. It is just another spin from Lockheed. The price tag of the F-35 will keep continuing to increase to more than $396 billion, it will never be reduced, despite the Pentagon and Lockheed Martin have agreed on the terms of a deal for the Defence Department to buy two lots of F-35s for $7 billion.

    Only a mindless idiot would sign up to buy the turkey which is a massively overpriced jet with full of junk that flies like an elephant.

    If I were the defence minister for my country (Australia) doing the defence acquisitions, if Lockheed makes me or wants me to participate the lemon F-35 programme for the RAAF's fighter/strike force. You know what I'm going to do with it, I shove the aircraft in their Lockheed's backsides and I will burn the F-35 paperwork.
    Lockheed Martin Logo
  • commented 4 years ago
  • tags: LMT GE BA
  • The article should instead be "Lockheed Is Failing In Its International Business Expansion".


    My colleagues and myself (from the defence industry) have made very clear that the service will do all it can to scrap the failed F-35 for a pretty compelling reason:

    The F-35 JSF (Joke Still Flying) aircraft designs will not meet specification nor the operational requirements laid down in the JSF JORD (Joint Operational Requirements Document) by significant degrees, noting that these operational requirements and resulting specifications, themselves, were predicated on the capabilities of reference threats from an era past and subsequently subjected to the illogical and deeply flawed process known as CAIV (Cost As and Independent Variable).

    The designs of all three JSF variants are presenting with critical single points of failure while even the most basic elements of aircraft design (e.g. weight, volume, aerodynamics, structures, thermal management, electrical power, etc.) will almost certainly end up in what Engineers call "Coffin Corner".

    In essence, the unethical Thana Marketing strategy is using to sell the JSF, along with the acquisition malpractice of concurrency in not only development, the production and testing but the actual designs of the JSF variants, themselves, have resulted in the JSF marketeers writing cheques that the aircraft designs and JSF Program cannot honour.

    "We must be able to project power in contested environments (A2/AD) and the Joint Strike Fighter is that machine." Is a full of baloney by drinking too much Kool-Aid.

    We have rolled up our sleeves and found our way to get rid of this lemon for good. But all the comments from the critics have made it very clear that will be a good idea in the estimation of the Air Force.

    The more you trying to protect the F-35 and speeding the process of the failed programme the worse off the United States and the allies are by eroding the air power which will make the western nations totally ineffective in the next 30 to 40 years.