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Fri, Feb 23, 2001 - Page 3 News List

Lockheed Martin inaugurates new repair branch

DEFENSE With the air force turning its aircraft repair and maintenance over to private firms, the giant has come to Taiwan and inked a deal with seven local companies

By Brian Hsu  /  STAFF REPORTER

Lockheed Martin, the world's largest defense and aerospace systems manufacturer, yesterday inaugurated a new branch in Taiwan in hopes of grabbing a piece of the potentially lucrative military aircraft maintenance market.

The company is positioning itself to take advantage of potentially huge business opportunities which will come with the conversion of Taiwan's air force repair depots into government-owned company-operated (GOCO) facilities. The military will maintain ownership of the facilities while private companies will carry out the repair and maintenance work.

Strategic alliances

Lockheed Martin Aeronautics Service Taiwan (LMAST), the defense industry giant's new branch in Taiwan, has formed a strategic alliance with seven local companies to secure its place in the military aircraft repair and maintenance market.

The strategic alliance was formally inked yesterday as representatives from LMAST and the local companies signed an agreement at a ceremony held in Taipei.

The ceremony also marked the opening of LMAST.

"The primary objective of Lockheed Martin is to be a major player and contributor to the growth and development of Taiwan's aviation and defense services industry," said Daniel Patterson, president of Lockheed Martin aircraft and logistics centers, at the ceremony.

"The LMAST will provide assistance to Taiwan companies in developing overhaul and repair capabilities [so that] your air force's aircraft [can] reduce dependence on foreign suppliers," Patterson said.

"In partnership with Taiwan and international companies, we will assist the Ministry of National Defense in converting the ROC air force repair depots to GOCO facilities."

Taiwan is one of Lockheed Martin's most important customers, having a large fleet of Lockheed Martin military aircraft including F-16 A/B fighter jets and C-130 transport aircraft.

Lockheed Martin estimates that Taiwan's military maintenance market will have a value of US$500 million by 2005.

The introduction of repair and maintenance facilities from Lockheed Martin is part of the Taiwan government's plan to make the country become a regional maintenance center for both military and commercial aircraft.

It is estimated that the aircraft maintenance market in the Asia-Pacific region will reach US$800 million by 2005 and that with Lockheed Martin's assistance, the Taiwan industry could win business valued at US$600 million, according to information provided by Lockheed Martin.

Local industry concerns

Despite the bright prospects for the business, there are worries that the government-owned Aerospace Industry Development Corporation (AIDC), the developer of the IDF fighter plane, might not be able to survive against competition from the LMAST-dominated alliance in the military aircraft maintenance market.

The AIDC is not among the seven local companies which formed a strategic alliance with Lockheed Martin.

An official with AIDC, who declined to be identified, told the Taipei Times that the corporation is concerned about the potential impact the LMAST alliance will have on them.

"Lockheed Martin has to decide on whether they want to be a partner or compete with us. We are still engaged in talks with them on the matter. Whatever the results, our IDF maintenance market is not to be given away," the official said.

"According to Article 22 of National Defense Law, military aircraft maintenance can be done only by domestic com-panies. But we can not stop Lockheed Martin from setting foot in the market because F-16 maintenance is beyond our capabilities," he said.

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