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Aerospace & Defense Industries

Australia's AUKUS submarine deal strikes blow to arms contractors

Small firms in scuttled contracts for French-made vessels face stormy future

SYDNEY -- Australia's cancellation of a 90 billion Australian dollars ($65.9 billion) submarine contract with France and shift to working with the U.S. and the U.K. to develop nuclear submarines has created problems for defense contractors abandoned by the move.

Lockheed Martin Australia, which was supposed to be in charge of the submarine's combat systems, is one that is being battered by Canberra's surprise move to scrap the 2016 contract with France's Naval Group for 12 diesel-powered submarines. Local companies could also be involved in the new program, but the outlook remains murky.

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