Lockheed Martin won a three-year extension on an agreement to service Canadian Navy frigates, even as U.S. defense contractors brace for fallout from President Trump’s trade dispute with the country and U.S. allies that have been lucrative customers.
Under the agreement, Bethesda, Md.-based Lockheed’s Canadian subsidiary will provide support for combat management systems for 12 Halifax-class ships. The backbone of the Canadian Navy, Halifax frigates were originally designed for surface and anti-submarine warfare on the open sea, but have adapted to handle attacks from smaller, easier-to-maneuver ships closer to shore, according to the government.
The deal, continuing a contract that began with the vessel’s modernization project in November 2008, comes just days after the Trump administration abruptly backed out of a communique from the Group of 7 summit hosted by Canada and stridently criticized Prime Minister Justin Trudeau’s opposition of U.S. tariffs.
The rhetoric was only the latest salvo in trade conflicts that Trump initiated with Canada, Mexico, and Europe, leading to the decision last month to impose tariffs of 25 percent on steel from the nations and 10 percent on aluminum. The duties spurred prompt retaliation, and Roman Schweizer, an analyst with Cowen Washington Research Group, cautioned that they may force the countries to spurn U.S. defense manufacturers.
“We’re concerned about the impact that these specific tariffs might have and we’re more concerned about what retaliation might mean for the industry,” said Eric Fanning, head of the Aerospace Industries Association, which represents companies with a payroll of 2.4 million high earners. “We have communicated those concerns to the White House. I think we can find ways to focus on fair trade and free trade – I don’t think it has to be an either/or.”
Lockheed, which has supported the Halifax frigates for 25 years, was pleased by the “vote of confidence” from its customer, Gary Fudge, vice president and general manager of Lockheed Martin Canada Rotary Mission Systems, said in a statement. Lockheed, which has a global staff of 100,000, employs about 1,000 at Canadian sites including Ottawa, Montreal, Halifax, Calgary, and Victoria.
The company’s shares fell 1.4 percent to $314.75 in New York trading on Tuesday, paring their gain over the past year to 14 percent.
