C-130J deal nets $2.3bn offset package for Canada

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In return for the $1.4 billion acquisition of 17 C-130J airlifters by Ottawa, Canadian aerospace industry will reap $2.3 billion in offsets over the life of the contract, Lockheed Martin says.

A $1.5 billion package of "industrial regional benefits" already approved covers the next six years. This offset arrangement requires Lockheed to accept Canadian companies as suppliers of spare parts and services for the C-130Js, as well as for a variety of other aircraft programmes.

Cyclone Manufacturing, for example, will build detail parts and assemblies worth $22 million for the P-3 Orion maritime patrol aircraft, Lockheed says.

The agreements also cover several programmes that are not directly affiliated with the C-130J or even Lockheed.

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 © Lockheed Martin
Canadian firms will be flying the flag on the C-130J programme

A notable example is a $60 million deal signed with Northstar Aerospace. Under the new offset agreement, Northstar will produce gearboxes for C-130J engine supplier Rolls-Royce. But the deal also involves gearboxes for the Trent 1000 engine, which is designed to power the Boeing 787.

A subset of the offset package establishes five companies to provide in-service support in Canada to maintain the newly acquired C-130Js, the first of which made its debut flight on 3 March.

A $27 million deal retains Cascade Aerospace as the third-line maintenance provider for the Canadian fleet. Cascade won the deal after a competition, holding on to the same role it already performs for the Canadian military's older C-130s.

Lockheed also awarded IMP Aerospace a $16 million deal to provide warehousing services, while CAE will maintain simulators and training devices, Standard Aero will service the C-130J's R-R AE2100 engines and the HAAS Group will manage hazardous material services.

The offset package and in-service support deals have been awarded after aerospace industry officials in Canada protested over the lack of local participation in a series of high-profile military aircraft deals signed by Ottawa since 2007.

A similar deal to acquire four Boeing C-17s neglects to provide a major role for Canadian industry in the sustainment programme, with the strategic airlifters to be maintained at depots in the USA.

Separately, CAE has received a contract worth around C$250 million ($245 million) to provide and support a new aircrew training system linked to the Canadian forces' future fleet of 15 CH-47F Chinook transport helicopters. To be delivered by 2014, the equipment will share common databases with systems delivered in support of the C-130J, CAE says.