North Korea Missile Launch May Help Lockheed Martin

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In keeping with past practice, North Korea on Monday launched three test missiles into the Sea of Japan just as the G20 meeting in Hangzhou, China, had gotten started. South Korean President Park Geun-hye “pleaded” with Chinese President Xi Jinping to drop his opposition to her plan to install a missile defense system built by Lockheed Martin Corp. (NYSE: LMT).

Lockheed’s Terminal High-Altitude Area Defense (THAAD) is a mobile defense system comprising a powerful radar to detect incoming threats along with fire control and communications systems and a truck-mounted missile launcher. The Chinese object particularly to THAAD’s radar that would be positioned to scan a portion of Chinese territory as well as all of North Korea.

China had joined the United States, South Korea and other nations in condemning North Korea following nuclear tests conducted by the country earlier this year. The disagreement over the installation of the missile defense program, which is scheduled to be completed by the end of 2017, may erode China’s commitment to containing North Korea’s missile program, instead giving China a reason once again to embrace North Korea.

North Korean missile launches earlier this year from a submarine and a mobile launcher presented new threats to South Korea because these weapons are more difficult to locate and destroy before missiles are launched.

According to The Wall Street Journal, 74% of South Koreans supported the installation of the THAAD missile shield, but there is opposition primarily focused on strained relations with China, the South’s largest economic partner.

Other opposition is coming from areas where the THAAD system will be deployed and environmentalists concerned about health hazards and other environmental impacts.

Lockheed, however, may eventually benefit from North Korea’s latest launches if the South increases the size of its order or even if it can parlay China’s fears about the system into a selling point to other customers.