Lockheed Martin broke ground Tuesday on a new research-and-development facility in Orlando, Florida, where the Bethesda, Maryland-based defense giant plans to hire 1,800 people to work on new weapons systems for the Pentagon.
Engineers at the facility will work to develop new weapons systems including the Long Range Stand-off Missile (LRSO), a plane-launched nuclear cruise missile. The company is in fierce competition with rivals like Boeing, Raytheon and Northrop Grumman to capture new defense spending as the Trump administration looks to update the U.S. nuclear arsenal.
The expansion comes on the heels of a strong year for Lockheed. The company logged 2017 sales of $51 billion, up from $47.2 billion a year earlier, further solidifying its place as the world’s largest defense contractor by a wide margin. That growth was driven by accelerated production of the F-35 Joint Strike Fighter, which is finally ramping up sales following years of delays and cost overruns.
Profits were also helped along by new spending on missile defense, for systems such as the Terminal High Altitude Air Defense (THAAD), a network of truck-based missile launchers designed to shoot down nuclear missiles before they reach their target.
"We just need more space to handle all the growth we’re experiencing," said Frank St. John, executive vice president in the company’s Missiles and Fire Control business segment.
To keep its place at the top, the firm needs to stave off new competition from rivals Northrop Grumman, Boeing, General Dynamics and Raytheon, which are all competing for portions of the U.S. nuclear arsenal.
All five companies are hoping to benefit from a nuclear recapitalization plan that was conceived in the Obama administration and expanded somewhat under President Donald Trump. The United States has reduced its stock of nuclear warheads under the terms of non-proliferation treaties, but that hasn’t stopped the Pentagon from pouring new funding into updating its ability to deliver those warheads should the need arise.
The plan calls for new nuclear submarines to replace the aging Virginia-class models, new intercontinental ballistic missiles to replace the aging Minuteman III, new plane-launched cruise missiles, and updated command and control systems that better incorporate advancements in computing. Trump’s nuclear posture review also called for new, smaller nuclear missiles that can be launched from submarines.
Pentagon is embarking on high-stakes competitions for the air- and ground-based missiles legs of the nuclear triad, which includes the capability to launch from air, land and sea. It has chosen winners through a so-called "down-select" process, in which multiple winners are awarded large research and development contracts to develop competing models.
Whichever company wins the next down-select round on each program could benefit from billions of dollars in defense spending for decades to come, effectively locking out rivals.
Lockheed is smarting from a major loss on the ground-based leg of the nuclear triad, when the Air Force awarded $349.2 million and $328.6 million contracts respectively to develop the Ground-based Strategic Deterrent, a ballistic missile that is to replace the Minuteman III missile.
That loss raised the stakes for Lockheed to win the Long-range Standoff Missile, a nuclear-capable cruise missile meant to be launched from a B-52 or B-2 bomber. In late August, Lockheed and Raytheon were awarded separate $900 million contracts to develop the cruise missile over the next four to five years.
That means the next few years of research-and-development work could be critical to Lockheed.
"We need to perform really well on the programs we just captured in order to validate our customers’ selection of us for these programs," St. John said.
At the new Orlando facility, a 255,000-square-foot facility with six floors, teams of Lockheed Martin engineers plan to develop that missile alongside other development projects, including a new threat simulator and a large classified weapons system that company officials declined to detail. The 1,800 planned hires for the facility build on about 2,400 new hires for the company in 2017.