Lockheed to offer F-35 work to Japan firms to win bid

TOKYO Thu Oct 6, 2011 6:54am EDT

TOKYO (Reuters) - U.S. aerospace and defense contractor Lockheed Martin (LMT.N) said on Thursday it will offer final assembly of the F-35 fighter to Japanese firms in a bid for a defense contract from Tokyo.

Lockheed, seeking to bolster its chances of winning a bid to supply warplanes worth as much as $8 billion to Japan, said it will also offer manufacture of major components, maintenance work and engine assembly of the F-35 to Japanese firms.

The F-35 "has taken our industry and partners to a new level," John Balderston, the campaign director for Lockheed's bid, told reporters at a Tokyo hotel where the company was displaying a mockup of the plane.

"It will put Japanese aerospace into the lead," Balderston said, referring to what Lockheed says is its more advanced technology than rivals.

Lockheed's F-35 Joint Strike Fighter is competing for an order to replace aging F-4 Phantom fighters in Japan against Boeing's (BA.N) F/A 18 Super Hornet and the Typhoon, made by a consortium of European firms including EADS EAD.PA, Britain's BAE Systems (BAES.L) and Italy's Finmeccanica (SIFI.MI).

Japan rarely buys European equipment, preferring to arm its military with U.S. or Japan designed weapons, and the 40-plane order is expected to go to either Lockheed or Boeing.

While the newer design of Lockheed's F-35 has an edge in stealth technology, cost overruns and schedule slips have cast doubts over its prospects.

The Pentagon said on Wednesday it expects to finish a "should cost" estimate for the next batch of F-35s this month.

Officials estimate it will cost $382 billion to build 2,447 of the jets for the U.S. military, but Pentagon chief arms buyer Ashton Carter has pledged to push that down to a far lower "should cost" level.

American arms makers have typically farmed out much of the production to Japanese companies, including Mitsubishi Heavy Industries (7011.T), Kawasaki Heavy Industries (7012.T) and IHI (7013.T) as part of past agreements to supply equipment to Japan's army, navy and air force.

Boeing executive Phillip Mills told Reuters last month that local defense contractors could build three-quarters of the Super Hornet's components under license if Japan picked the aircraft.

(Reporting by Tim Kelly; Editing by Michael Watson)