JLTV: Arkansas Likely To Approve Bonds For Lockheed Factory

Not every vote on a Pentagon program is cast in Washington, DC. Today, the Arkansas state legislature convened in special session to decide on an $87 million bond issue to benefit aerospace giant Lockheed Martin. The “super project” at stake — to use the Arkansas statute’s term of art — is the expansion of Lockheed’s East Camden plant so it can build some 50,000 Joint Light Tactical Vehicles.

That’s assuming Lockheed wins the JLTV contract, of course: Rivals Oshkosh and AM General are still very much in the running, with a decision expected in July. In this race with two traditional truck-makers, high-tech Lockheed is the high-risk choice. Lockheed partner and veteran ground vehicle manufacturer BAE built the team’s JLTV prototypes in Sealy, Texas, but now Sealy’s shut down and the entire line removed to Camden, where it’s been upgraded and reassembled. Lockheed’s built missiles and munitions at Camden since 1981, but it only turned on the ground vehicle line last fall. Lockheed argues all this newness is to its advantage: It has the most cutting-edge technology and manufacturing processes to build an affordable vehicle with Humvee-level mobility and MRAP-level protection.

So what does the bond issue do for Lockheed? “It adds to our competitive posture, and it communicates the strength of our long-running partnership with the state of Arkansas,” Lockheed spokesman John Kent told me. “If LM wins the contract, we will use the funds to prepare the Camden facility for full-rate production, help build an automotive test track, install tooling and production equipment and implement training programs in cooperation with Southern Arkansas University Tech,” whose campus is actually co-located at the Camden site.

The company plans to invest $125 million in Camden if it wins JLTV. The $87 million bond issue would cover almost 70 percent of that, leaving only $38 million for Lockheed to finance out of pocket or at competitive lending rates.

For the state’s part, Arkansas Governor Asa Hutchinson cites estimates the expansion will directly create about 600 jobs, and another 600-plus indirectly. Consulting firm IHS estimated the net gain to the state at $16 million over 25 years, although the firm said that was a “conservative” figure.

The proposal’s odds in the state legislature look good. The harder problem is convincing the Pentagon to pick Lockheed. With each competitor’s ability to manufacture JLTV affordably a major factor in that decision, Lockheed’s hoping the decision in Arkansas will help sway the one in Washington.