Lockheed Martin speeds up European defense tie-up talks amid EU push to buy local

“We are trying to establish more production and more supply chains in Europe," Raymond Piselli, Lockheed’s vice president for international business, said in an interview. “That establishes us more as part of the European aerospace and defense ecosystem."

Lockheed’s efforts to deepen its roots in the continent come after the European Commission proposed setting up a new loan mechanism to help EU countries ramp up weapons production, with rules that effectively exclude U.S. manufacturers in most cases. As a result, analysts warned Lockheed, RTX and Northrop Grumman’s orders from the EU could dwindle in the years to come.

While France has long led the charge to reduce reliance on U.S. contractors, Portugal has more recently raised doubts about the convenience of buying Lockheed’s F-35 jets, and other capitals have more discreetly expressed concerns.

The calls to “Buy European" have emboldened Lockheed’s European rivals such as Dassault Aviation, Saab and the Eurofighter consortium made up of BAE Systems, Airbus and Leonardo, which hope to increase sales of their own fighter jets-the Rafale, the Gripen and the Typhoon.

Piselli said the EU’s efforts to build its own defense industry aren’t harming Lockheed’s business. Accelerating the company’s partnerships in Europe will help the continent’s defense reindustrialization while benefiting Lockheed’s U.S. business, hindered by local supply-chain bottlenecks, he said.

Last month, Lockheed and German defense group Rheinmetall said they would set up a missile and rocket manufacturing center in Germany, with the aim of helping European governments get access to missiles–including highly-advanced ATACMS, GMLRS and Hellfires–much quicker, with some potentially being exported to the U.S.

Lockheed will also hire more workers at its Polskie Zaklady Lotnicze Mielec subsidiary in Poland, the group’s largest production facility outside the U.S. and Poland’s largest defense exporter, Piselli said. PZL Mielec employs around 1,700 people and makes the Black Hawk multi-role helicopter, as well as components for other platforms. The number of new jobs hasn’t been decided yet, he added.

“I think we are doing all the right things and at this point it’s more about just having more of a focus and doing it a little bit quicker than what we were doing in the past," Piselli said.

Lockheed has struck deals to sell its cutting-edge F-35 fighter jet to 13 European countries–10 of which are EU members–including Germany, the U.K. and Switzerland. Poland, which signed a $4.6 billion contract in 2020 to acquire 32 F-35A jets, could order a second squadron, Piselli said.

But talks with Portugal, Spain and Canada have been marred by government concerns over cost, economic returns and relying on U.S. defense contractors at a time of trade tensions with Washington.

Canadian officials are reviewing how the F-35 program could be adjusted to boost production in the country, Canadian Prime Minister Mark Carney said in late March.

Piselli said most governments are still prioritizing the F-35’s capabilities over politics and reindustrialization when deciding whether to buy, and that Lockheed doesn’t want to just put work in a country because it is trying to close a deal.

“What we’re trying to do is put work in a country where it’s value added to our supply chain, value added to our platforms and what we want to build, in the United States and in Europe," he said.

Write to Cristina Gallardo at cristina.gallardo@wsj.com