An
F-35
undergoes
assembly
at
the
Lockheed
Martin
factory
in
Fort
Worth,
Texas.
(Lockheed
Martin
photo)
WASHINGTON
—
Months
after
defense
giant
Lockheed
Martin
took
the
extraordinary
step
of
suing
its
supplier
Howmet
Aerospace
over
a
dispute
concerning
the
supply
of
titanium
for
the
F-35,
the
two
parties
have
quietly
settled
the
case,
according
to
federal
court
records
reviewed
by
Breaking
Defense.
“While
we
cannot
discuss
the
settlement
details,
we
reached
an
agreement
to
ensure
the
continued
delivery
of
titanium
and
are
working
with
Howmet
and
our
subcontractors
to
maintain
the
F-35
production
schedule,”
Lockheed
told
Breaking
Defense
in
a
statement.
Howmet
declined
to
comment.
The
legal
row
provides
a
rare,
if
somewhat
limited,
look
inside
the
relationship between
a
mega
prime
contractor
like
Lockheed
and
one
of
its
key
suppliers.
Lockheed
claimed
in
the
lawsuit
that
Howmet
cut
off
the
supply
of
titanium
in
November
2023
after
the
aerospace
giant
refused
to
agree
to
higher
prices,
which
Howmet
said
accounted
for
inflation
and
constrained
global
supply.
Lockheed
sued
shortly
thereafter,
asking
a
federal
judge
to
force
Howmet
to
continue
supplying
titanium
at
previously
set
prices.
Howmet’s
“failure
to
abide
to
its
contractual
agreement
will
cause
unavoidable
and
substantial
delays
in
Lockheed
Martin’s
delivery
of
F-35
aircraft
to
the
United
States,
threatening
national
security
and
Lockheed
Martin’s
reputation
and
goodwill,”
Lockheed
said
in
court
documents.
The
issue
at
hand
stems
from
a
tightening
global
supply
of
titanium
in
the
wake
of
Russia’s
invasion
of
Ukraine,
which
has
caused
Western
aerospace
companies
to
seek
alternatives
to
Russia’s
VSMPO-Avisma—
the
world’s
single
largest
titanium
supplier,
which
has
25
percent
of
its
shares
held
by
state-owned
defense
conglomerate
Rostec.
The
US
government
and
European
Union
have
refrained
from
issuing
sanctions
on
VSMPO-Avisma,
and
some
major
aerospace
players
such
as
Airbus
and
Bombardier
continue
to
buy
Russian
titanium.
However,
other
US
aerospace
firms,
including
Boeing,
have
vowed
to
stop
buying
Russian
titanium
for
use
on
commercial
jetliners,
driving
up
the
price
for
titanium
from
other
sources.
According
to
Howmet’s
court
filings,
the
removal
of
Russian
titanium
“gave
Japanese
suppliers
a
dominant
position
in
the
market,”
who
subsequently
“informed
Howmet
that
they
would
no
longer
supply
titanium
sponge
at
previously
agreed
(and
fixed)
prices.”
In
other
words,
the
overall
shift
in
the
market
to
Japanese
suppliers
meant
Howmet
faced
much
greater
competition,
and
a
subsequent
price
increase,
for
the
material
it
needed.
Hitting
back
against
Lockheed,
Howmet
accused
the
plane
maker
of
“cavalier
invocation
of
‘national
security
interests’”
and
squeezing
Howmet
to
pad
its
bottom
line.
Additionally,
Howmet
claimed
that
Lockheed
refused
to
return
contractually
required
scrap
metal
that
Howmet
could
use
to
produce
more
titanium.
According
to
court
records,
Howmet
asserted
the
price
increase
it
was
requesting
from
Lockheed
would
amount
to
a
$17
million
difference
—
a
fraction
of
Lockheed’s
sales.
Howmet
said
it
was
on
track
to
absorb
roughly
$58
million
in
losses
on
titanium
sales
through
the
end
of
2024
due
to
rising
prices.
After
both
parties
presented
evidence,
the
judge
overseeing
the
case,
Reed
O’Connor,
suggested
that
Lockheed
had
demonstrated
its
argument
was
likely
to
win
the
day.
Still,
he
ruled
against
a
request
from
Lockheed
that
would’ve
compelled
Howmet
to
keep
up
the
titanium
supply
as
the
litigation
unfolded,
finding
the
larger
company
had
not
demonstrated
the
irreparable
harm
standard
necessary
to
justify
an
injunction.
“Nonetheless,
the
Court
recognizes
that
Lockheed
is
substantially
likely
to
succeed
on
the
merits
of
its
breach
of
contract
claim.
Based
on
the
evidence
before
the
Court,
it
appears
Howmet
is
intentionally
breaching
the
parties’
contract
—
just
as
their
Japanese
suppliers
did
to
them,”
O’Connor
wrote
in
late
December.
After
some
more
back-and-forth
wrangling,
the
two
parties
entered
into
mediation
in
March,
according
to
court
records.
On
March
15,
the
court
was
notified
the
companies
reached
a
settlement,
bringing
the
litigation
to
an
end.
The
settlement
terms
were
not
made
public,
and
the
case
was
formally
dismissed
on
April
2.
It’s
not
clear
to
what
extent
the
dispute
may
have
impacted
F-35
production,
which
is
continuing
despite
the
Pentagon’s
ongoing
freeze
of
deliveries.
In
denying
Lockheed’s
injunction
request,
O’Connor
suggested
there
was
not
“widespread
disruption”
in
the
F-35’s
supply
chain
due
to
the
titanium
issues.
Asked
what
impact
the
clash
had
on
the
program,
F-35
Joint
Program
Office
(JPO)
spokesman
Russ
Goemaere
told
Breaking
Defense
today
that
“[t]he
JPO
is
pleased
that
LM
and
Howmet
have
reached
an
agreement
to
their
dispute
and
will
work
with
LM
to
ensure
that
any
potential
impacts
are
mitigated
and
that
aircraft
production
stays
on
plan.”
The
settlement
appears
to
resolve
the
dispute
over
titanium
pricing
and
worries
of
hampered
production,
though
Lockheed
continues
to
struggle
with
supply
chain
issues
for
critical
parts
of
the
stealth
fighter.
Amid
hardware
shortages
and
continued
software
challenges
for
the
jet’s
Technology
Refresh
3
(TR-3)
upgrade,
the
Pentagon
has
postponed
planned
retrofits
for
older
F-35s
to
an
unspecified
date,
Breaking
Defense
previously
reported.
Lockheed
and
the
Pentagon
are
looking
to
end
the
delivery
impasse
for
fighters
equipped
with
TR-3
by
July
at
the
earliest,
program
head
Air
Force
Lt.
Gen.
Mike
Schmidt
told
lawmakers
during
an
April
hearing
on
Capitol
Hill.
Those
aircraft
would
be
delivered
with
an
interim
version
of
TR-3
that
would
limit
them
to
training,
according
to
Schmidt,
who
said
full
combat
capabilities
would
likely
not
be
available
for
another
year
at
least.
Valerie
Insinna
contributed
to
this
report.