The F-35 procurement: joint challenge – joint effort

Dr Harris,
Mr Svensgård,
Ladies and gentlemen,

last November, the Government announced its plans to buy the Lockheed Martin F-35 combat aircraft, as a replacement for our fleet of F-16s. This is an investment decision of formidable proportions. Indeed, it is destined to be Norway’s largest defence procurement ever. The Government has a considerable responsibility to taxpayers to show them that the choice of the F-35 was correct, from both the industrial standpoint and the operative one.

Three criteria were crucial when the Storting approved the Government’s proposed choice of fighter aircraft. The first and second were the F-35’s operational capabilities and its price.

The third criterion, obviously of major importance to me today, is the prospect of generating long-term strategic industrial partnership. As you all know, our purpose here today is to make progress on this important goal.

Dear friends,

forging industrial partnerships between Lockheed Martin and Norwegian industry is a challenging process, and we have a lot left to do in order to finalise the industrial participation plan. This conference has the potential to bring us closer to that objective, and I would like to thank Lockheed Martin for engaging with Norwegian industry in this highly constructive way.

The Norwegian Government is aiming for an industrial participation plan that not only makes promises, but that is concrete, realistic and rewarding in terms of generating contracts for Norwegian industry. We shall consider both the business opportunities offered by the F-35 programme itself, as well as what Lockheed Martin may offer in the margins of, or in addition to, this programme.

However, I would like to underline that the objectives and guidelines for industrial return from the F-35 programme, as set out in the Request for Binding Information, remain valid. This means that when we assess the programme’s industrial performance, we will focus first on the F-35 Industrial Participation Plan, then on the areas of national priority. These are Advanced Composite Structures, the Joint Strike Missile, APEX ammunition and systems for Product Lifecycle Support (PLCS). We will also welcome other defence and defence related high-tech opportunities. These should be in areas in which Norwegian industry has a competitive advantage, and where cooperation between Lockheed Martin and Norwegian companies may secure market access and access to technology.

Let me be clear: the Storting’s acceptance of the down-select of Lockheed Martin’s F-35 aircraft was premised on specific industrial conditions. The Storting and the Government share the objective of ensuring that the added value of industrial participation is equal to the total contract value of the combat aircraft. Further progress in the procurement process thus depends on an adequate plan for industry cooperation. These are the facts, and this is the basis for our continuing work on the industrial participation plan.

I would like to emphasise that Norwegian industry is gearing up to meet the challenge of competing on the basis of best value. This is not offset through the “back door”. I know that Norwegian industry is ready for mutually beneficial cooperation with Lockheed Martin and its sub-contractors – on the basis of being the best in terms of price and quality. Norwegian industry is at the cutting edge in several high-tech niche sectors, and is a strong contender for contracts awarded on a competitive basis.

A fine example in this respect is Kongsberg. Skilful, competitive, and boasting a strong professional environment, this company is one of Norway’s leading high-tech businesses. It is focusing strongly on low-weight and superior strength composite materials, not least for use in the new generation of fighter aircraft. 

Another good example is Natech, a technology-oriented manufacturing company. Despite employing less than 50 people, the company has already secured a contract linked to the F-35 programme. Defence procurements can indeed bear fruit even for small and medium-sized companies.

When we observe the capability of the Norwegian high-tech sector, it becomes evident that the Storting was realistic when it set high benchmarks for industrial cooperation with Lockheed Martin. It is also evident that it took into account the recent history of industrial development in Norway.   

It is noteworthy that the Norwegian defence industry in many respects owes its present position to large international procurements, such as the F-16 deal concluded in the 1970s. The expansion of this industry has in turn had wide-ranging, positive spill-over effects on non-military industries. Consequently, the defence industry is a vehicle for the development of the high-tech sector that will sustain Norway when the sun sets on the age of petroleum. 

Dear friends, 

due to the technology intensity involved, high-tech defence procurements have a multiplier effect. Each kroner Norwegian industry receives in research and development funding generates up to five kroner of value. For Norway, procuring the F-35 is thus much more than a purchase of the world’s most advanced combat aircraft. It is a nationwide endeavour. The outcome will have repercussions for our security, for our military capabilities, and for our industrial development for many years to come.

I have every hope that the Lockheed Martin Business Opportunity Days will be a constructive step towards mutually beneficial industrial partnerships, and thus towards the conclusion of the procurement process.

To achieve our final target, however, we have challenges to overcome. Our key task is to make real business deals materialise. This is a job that calls for joint efforts by Lockheed Martin, the industry, and the Norwegian Government. 

Lockheed Martin has already taken some constructive steps towards signing contracts with Norwegian companies. A recent, positive development is the expansion of the activities included in the industry plans, which now also encompass products and services not directly related to the production of the fighter aircraft.

While many Norwegian companies are capable of contributing essential inputs to the F-35, directing attention onto new sectors helps to expand the potential for Norwegian participation. The maritime technologies developed by Umoe Mandal, Hatteland Display and Vestdavit, the space industry technologies of Norspace and Jotne, and the advanced rocket motors of Nammo, are only a few examples of the potential that exists for successful cooperation outside the immediate context of the F-35. Broadening the scope of industrial cooperation in this way is a significant move, and very much welcomed.  

Dear friends,

if this cooperation is to live up to our high expectations, Norwegian industry must meet Lockheed Martin’s demanding requirements. The F-35 procurement is a complex process, and participation depends upon the investment of sufficient effort and resources. Cooperation with Lockheed Martin demands no small measure of technological competence, managerial skills and industrial infrastructure.  

Lockheed Martin’s industrial participation plan means that Norwegian industry is shortlisted for, and in a good position to win, contracts worth billions. Nevertheless, much work is left to do before contracts can be signed. It is of vital importance that Norwegian industry invests sufficiently in this process, and that investors may be sure that they are not throwing their money away. 

We, the Norwegian Government, have a job to do. We have been, and remain, engaged in close talks with Lockheed Martin, as well as with the US authorities. Maintaining momentum in these talks is not Lockheed Martin’s challenge and responsibility alone.

The Norwegian authorities and Norwegian industry must bear their share of the burden. Lockheed Martin Days in Oslo represent just the first milestone in our dialogue.

Norway’s public agencies are well-equipped to assist in the realisation of our joint objectives. In particular, Innovation Norway administers a host of support mechanisms for Norway’s high-tech industries. Moreover, the Ministry of Defence and the Ministry of Trade and Industry jointly manage a network of industrial agencies and financial facilities. While those under the supervision of the Ministry of Defence tend to be of a specific, targeted nature, those for which the Ministry of Trade and Industry is responsible are more general. Together, they comprise a comprehensive support network for Norwegian companies engaged in competing for contracts; in this case contracts with Lockheed Martin. 

Although we have the right instruments in place, and these are both tried and tested, there is always room for improvement. We therefore invite both Lockheed Martin and Norwegian industry to help us make the most out of the support framework, and to work with us to prepare an industrial participation plan that is both comprehensive and realistic.

Dear friends, dear representatives of Lockheed Martin,

to reiterate: we are here today to take a step closer to a comprehensive industrial participation plan. The preparation of such a plan is an objective we all share, inasmuch as the procurement is dependent upon the existence of a sufficient number of industry contracts. Such contracts will also ensure mutually beneficial cooperation between Norwegian and American high-tech industries. In short, the procurement of the F-35 has the potential to become a driver of the bilateral relations between our countries for many years to come.   

We have a shared interest in working closely together. Procuring fighter aircraft is a demanding task, and hard work lies ahead. However, I am confident that, if all parties do their share, we will manage to achieve an outcome that is beneficial to all. 

I would like to thank the industry representatives for attending today, and wish to thank the organisers for arranging this timely event. 

Finally, I would like to express my particular gratitude to Lockheed Martin for engaging in what will surely amount to a fruitful and long-lasting cooperation with Norwegian industry.

Thank you.