Lockheed Martin's Norway Problem

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During the Middle Ages, Viking warriors shook Europe to its foundations as they marauded throughout the continent. Centuries later, Norway, the now-placid modern-day homeland of these fearsome folk, may be poised to stir up trouble again. But this time it's defense giant Lockheed Martin (NYSE: LMT) that is in the path of the potential maelstrom.

Norway is one of eight allied countries that have agreed to participate in the massive $244 billion Joint Strike Fighter (JSF) program, which is led by Lockheed Martin and includes Northrop Grumman (NYSE: NOC) and BAE Systems as contractors. According to a recent Washington Post article, Norway is unhappy that its local companies are having trouble securing subcontracts to work on the next-generation warplane. A top parliamentary official has gone so far as to say that Norway could pull out of the project if Lockheed won't help the country's firms secure work on the plane.

The loss of Norway alone would hardly be a devastating blow. After all, the tiny country has agreed to contribute just $125 million to the JSF project. The danger, however, is that the departure of Norway, which has been a staunch U.S. ally and contributed support in the war in Iraq, could trigger further defections. Other European partners, including the U.K., reportedly share Norway's concerns and have been grumbling. Since the JSF program's low-cost model is partially predicated on the participation of European allies, losing more than a few could prompt the Pentagon to rethink the program's scope.

At the moment, Lockheed is working to placate Norway and other countries. If it can't, it's possible Europe could abandon the JSF project, especially considering Europeans' inclination to defy Washington and go their own way.

Last year, a European consortium began deployment of the Typhoon, a new fighter. If Lockheed Martin isn't careful, the Typhoon and other European-produced fighters could displace the JSF as the future of Europe's air defense.

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Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.