Shortly after Russia’s unproved invasion of Ukraine in February, Lockheed Martin [LMT] realized it would need to ramp up its production of certain weapon systems the Defense Department was supplying to the Ukrainian military and made the decision to begin making the necessary investments on its own.
DoD transfers and spending on weapons for Ukraine such as the HIMARS multiple rocket launcher, Javelin anti-tank guided weapon system, Guided Multiple Launch Rocket System surface-to-surface missiles, and others present “upside opportunities” to Lockheed Martin’s expectations in 2024, James Taiclet, the company’s chairman, president and CEO, and Jay Malave, chief financial officer, said during its third quarter earnings call on Tuesday.
Six to seven months ago, Taiclet said he visited senior DoD officials and told them Lockheed Martin would begin “spending on capacity for a few of these systems.”
For example, Taiclet said, the company advanced $65 million to its suppliers to shorten manufacturing lead times for HIMARS even though it had no government contract to do so. These parts are already being manufactured, he said.
Taiclet also said that Lockheed Martin met with its suppliers to work toward increasing HIMARS production to 96 units per year.
In September, the Army awarded the Lockheed Martin and Raytheon Technologies [RTX] team that jointly manufactures Javelin $311 million to replenish missiles that have been sent to Ukraine and cover deliveries destined for Lithuania and Jordan.
Lockheed Martin has also upgraded its manufacturing facility in Camden, Ark., where a number of key systems are manufactured including HIMARS, Patriot Advanced Capbility-3 integrated air and missile defense, the Multiple Launch Rocket System and related munitions, Terminal High Altitude Area Defense system, and other key platforms. Lockheed Martin is cross-training its workforce in Camden to be able to work across product lines “so that when the ramp comes, we can pivot to it quicker,” Taiclet said.