The week ahead: Oct 12–Oct 23

Lockheed Martin and Avio announced a strategic cooperation agreement for solid rocket motor (SRM) production on Tuesday, Oct. 13. It gives Lockheed access to a share of Avio's merchant supply capacity for the Extended Range GMLRS (ER GMLRS) and the Precision Strike Missile (PrSM). After qualification, initial work will focus on motors for those two programs, to be made at Avio USA's new plant in Hurt, Va.¹

Last November the two companies signed a non-binding term sheet under which Lockheed would have preferred access to a portion of the plant's capacity for "both tactical and strategic size SRMs." They said then that they intended to negotiate a Strategic Cooperation Agreement.⁴ The agreement now announced names two programs for that initial work. Neither company's release gives the agreement's value, motor quantities, delivery schedule or whether its terms are binding.¹

Lockheed is not the plant's only prospective customer. Avio USA, the U.S. subsidiary of Rome-based Avio S.p.A., broke ground in Hurt on Sept. 29.³ Avio CEO Giulio Ranzo said the group has launched an investment of more than $500 million in new U.S. SRM capacity "with a view to become a merchant supplier to the various defense customers."¹ Avio USA is developing the plant for Raytheon programs as well as Lockheed's.³ Under a memorandum of understanding signed the same day as Lockheed's term sheet, Raytheon will have preferred access to a share of the plant's production capacity.^4–5 That partnership builds on a July 2024 contract for preliminary engineering work on the Mk104 rocket motor.⁵

Lockheed Martin is considering new industry partners to build PAC-3 Patriot interceptors in Europe, which could also help supply Ukraine, Defense News reported Tuesday. In Germany, the company is weighing Diehl Defence, Jason Reynolds, general manager of Lockheed's integrated air and missile defense division, told the outlet at the Association of the U.S. Army convention. "If we were to go forward with exploring any kind of production in Germany, we would likely do that with a company like Diehl," he said. A Diehl spokesperson confirmed consultations are ongoing, according to Defense News.¹

The pairing has a paper trail. Reynolds signed a memorandum of understanding with Diehl at the same convention a year earlier to explore expanding the PAC-3 Missile Segment Enhancement (MSE) supply chain.² German leaders have offered to host PAC-3 production, and Raytheon and MBDA already make the PAC-2 line there, Defense News reported.¹

Reynolds said Lockheed is "absolutely willing to talk to Ukraine," adding that "it might be something like an ACE, as opposed to an MSE, that we would start with." Lockheed announced development of the ACE over the summer, billing it as a cheaper option against relatively simple threats at half the cost of an MSE, Defense News reported. Because a plant inside Ukraine risks Russian attack, the company is considering production in nearby safe countries, the outlet reported.¹