North Korea Missile, Nuke Tests May Help Lockheed Martin

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A week ago North Korea performed a test launch of three missiles into the Sea of Japan, just as the G20 meeting in Hangzhou was about to start. Early Friday morning the country conducted an underground nuclear test that officials say gives North Korea capability to produce “smaller, lighter, and diversified nuclear warheads of higher strike power,” according to a report from Bloomberg.

China reportedly opposed the latest test, but it has supported North Korean demands that South Korean refrain from deploying the Terminal High-Altitude Area Defense (THAAD) missile defense system built by Lockheed Martin Corp. (NYSE: LMT).

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 and may do the same in this case. However, 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.

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