DEFENCE AND SECURITY: Lockheed Martin's Ottawa branch flies through F-35 controversy

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Company is valuable sector anchor, economic development official says

When Lockheed Martin is mentioned in Ottawa, it usually involves the ongoing political debate over the controversial F-35 Joint Strike Fighter program to provide new military aircraft for Canada and several other countries.

F-35s.

by Derek Abma

But when one steps off Parliament Hill - away from questions about competitive procurement processes and hidden costs - and heads to Kanata, Lockheed Martin's relationship with the nation's capital changes dramatically.

Maryland-headquartered Lockheed Martin Corp.'s Canadian division is based in Ottawa, which is home to about 150 of the global defence giant's 550 Canadian employees.

While the F-35 project is largely located in Texas, Lockheed Martin's Canadian division is focused mostly on technology. This ranges from control and radar systems for military operations, confidential databases, as well as integrating and teaching people how to use the sometimes complex technology with which the military works.

Tom Digan, president and general manager of Lockheed Martin Canada, doesn't rule out the possibility of his group providing some after-purchase support on F-35s if the Canadian purchase goes ahead, but says that's not where his attention is at the moment.

Currently, Lockheed Martin Canada's biggest project is the $1.2-billion overhaul of electronic systems used by 12 Royal Canadian Navy ships docked in Halifax. The contract was announced in 2008, and the work is likely to last until 2018. There are options for additional support work after that.

The national capital is an ideal spot for the Canadian division's headquarters, given this is where most of its government clients are located, says Mr. Digan.

He adds that Ottawa's deep pool of technology professionals also makes it a suitable home base.

"I have easy access to talent," Mr. Digan says. "I have no problem recruiting here."

Lockheed Martin Canada runs its human resources, finances and contract management from the nation's capital. As well, many of the firm's projects are managed from Ottawa, which also serves as the base for an assortment of manufacturing, IT and training functions.

The Canadian division of Lockheed Martin exists primarily to serve the Canadian market, with minimal exports coming from this unit.

"Almost all of what we do is for the Canadian customer," Mr. Digan says.

The company does not disclose financial information specific to any one location, but Mr. Digan describes the Canadian division as a "very small microcosm" of Lockheed Martin Corp., which saw US$46.5 billion in revenue last year.

Mr. Digan adds there is nothing in the recently announced federal government spending cuts that's cause for concern for Lockheed Martin's operations in Canada or Ottawa.

Invest Ottawa CEO Bruce Lazenby says it's valuable for the city's defence and security sector to have an "anchor" such as Lockheed Martin Canada. He adds it creates opportunities for the 400 or so local firms that exist in this sector, and also establishes credibility to outside investors.

"If there is a company in Germany thinking about establishing a presence in Canada, they look and say, ‘Oh wow; Ottawa has got Lockheed Martin and some of those other good brands. Those are the kinds of companies that hire the kinds of people that we want, so that must mean there's a good ecosystem there,'" Mr. Lazenby says.

Mr. Digan says Lockheed Martin has a bright future in Ottawa.

"I have an employee base in Ottawa that's very happy, motivated and does excellent work," he says. "I think we're cost-competitive and I think we're here for the long haul."

RECENT FINANCIALS

$46.5 billion: Net sales in 2011, up 1.81 per cent

82: Percentage of sales from U.S. government

$2.66 billion: Net earnings in 2011, down 7.75 per cent

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