Australian firms that have signed up to supply parts for the trillion-dollar Joint Strike Fighter program would already be feeling the pinch from deferred orders and US government budget cuts, the next head of Lockheed Martin has said.
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Christopher Kubasik, currently the multi-national defence contractor's president and chief operating officer, was in Canberra for the opening of Centennial House, Lockheed Martin's new Australian headquarters.
He steps up to chief executive officer next January 1 and will have the final responsibility for delivering the JSF, the most expensive defence contract in history.
Mr Kubasik said that increased commercial pressure on small to medium enterprises that have signed to supply components for the fifth generation fighter was emerging as an ''unintended consequence'' of recent United States and Australian decisions to delay orders and would be made even worse if sequestration cut a further 10 per cent out of the US Defence budget.
One Australian JSF components supplier, Melbourne's Production Parts, has already gone under for a range of reasons, not all of which can be linked to the slowdown in stealth fighter orders.
Quickstep Holdings, an Australian composite materials pioneer with JSF contracts expected to generate work worth $700 million over the next 20 years, opened a new plant at Bankstown Airport last week.
Lockheed Martin signed a contract with Quickstep for composite wing flaps for the company's C-130J Hercules in March worth between $75 million and $100 million over the next five years.
A spokesman said this had been done in a bid to ''balance some of these [JSF] issues with orders from other elements of the portfolio''.
Mr Kubasik said Lockheed Martin was not in a position to provide direct financial support to suppliers who lost out because they were getting less work than anticipated. The company had already invested $1 billion of its own money in capital and research over the last decade and was sharing the pain.
It made sense, where possible, to allocate work from other contracts to the SMEs to help them through.
''That makes better business sense because we get a product,'' he said. ''I don't think we as a corporation will be in a position - and nor would our board of directors allow us - to carry or fund suppliers. I just don't think that is good business practice.''
Asked if Lockheed Martin was more inclined to provide alternative work to contractors rather than something akin to a social security program he said that was the case. ''Right, that's a good way to put it - but that was your quote, not mine.''
Lockheed Martin is celebrating its centenary, hence the name of the new Canberra headquarters, which will eventually house 200 workers.
It was established in 1912 when Glenn Martin was encouraged to assemble an innovative bi-plane by Orville Wright. His company later merged with Allan and Malcolm Lockheed's firm.