Lockheed Martin: willing to outsource F-35 production to Japan

Lockheed Martin is also confident it can complete operational tests by 2016 and meet delivery and technical requirements set by Japan's Ministry of Defense, said John Balderston, who heads Lockheed's F-35 campaign in Japan.

"We fully understand the importance of the Japanese defense industry as part of national security posture and we will work with Japanese industry to produce its next generation airplane," Balderston told Reuters in an interview in Tokyo.

"We are confident that we can fully meet the MOD's delivery and other requirements."

Japan has yet to decide how it will replace its current fleet of aging F-4 Phantom fighters, whose design dates back to the 1960s and which have become increasingly difficult to maintain. Mitsubishi Heavy Industries (7011.T) is also set to end production of its F-2 aircraft in 2011, raising concerns over the future of Japan's fighter-jet industry.

Along with the F-35, Boeing Co's (BA.N) F/A-18 Super Hornet and the Eurofighter Typhoon have been short-listed for the final fighter jet selection, which Japan aims to make this year.

Japan, which plans to order 40 to 50 new fighter jets, wants delivery by March 2017, according to local media reports. The country has come under pressure to make a selection as the decision has already been delayed by at least three years.

BALLOONING COSTS

The development of the stealth, supersonic F-35, due to replace various aircraft in the military fleets of both the United States and its partners, has been hampered by delays and ballooning costs.

The fighters is the Pentagon's costliest arms purchase, most recently projected to total more than $380 billion over the coming two decades. U.S. lawmakers last month urged the Pentagon to think of alternatives to the F-35 program if costs cannot be brought down.

Balderston said, however, that the company would resolve development issues and that new F-35 testing programs are ahead of schedule.

The F-35 is expected to account for more than 20 percent of Lockheed's global sales when it enters full production.

(Reporting by Mariko Katsumura; Editing by Nathan Layne and Joseph Radford)