thedrifter
12-03-07, 08:45 AM
Posted on Mon, Dec. 03, 2007
Taxpayers may pay big F-35 costs
By BOB COX
Star-Telegram Staff Writer
Foreign nations are in no rush to place orders for Lockheed Martin F-35 Lightning II fighter jets, and that threatens to push the planes' rising cost even higher and shrink future orders.
The result is that one way or another U.S. taxpayers will likely shoulder most of the cost of getting the F-35 into production, with the bulk of foreign orders not coming until years from now, when jet prices will have dropped dramatically.
Lockheed and the Pentagon have been talking with representatives of the eight nations that have contributed $4 billion-plus to the Lightning II program about placing early orders for production in 2011-13, but the high price is a deterrent.
"Nobody is interested in getting their airplanes earlier unless we can help them mitigate the fact the earlier airplanes cost more," Tom Burbage, Lockheed executive vice president and F-35 program general manager, said in a recent interview.
Another U.S. ally, Israel, may be in a position to help out. Israeli defense officials have reportedly decided that they want to buy F-35s soon and are talking with the Pentagon and State Department.
Price might not be as big a concern for Israel because it would most likely pay for F-35s using its annual U.S. military-aid package. The Bush administration has already proposed boosting arms financing for Israel from $2.4 billion in 2008 to $3.1 billion in 2011-18.
The Lightning II was conceived a decade ago as a low-cost, multirole jet that would replace numerous older models for U.S. and foreign military services. Its versions -- conventional takeoff, short takeoff and carrier-based -- and low price were intended to attract foreign sales.
The Pentagon and Lockheed would like to land some early foreign F-35 orders. As the F-35's total development cost has increased from $30 billion in 2002 to an estimated $40 billion, the Pentagon has paid the bill in part by delaying some planned U.S. military orders.
That has in turn driven up the cost of producing the earliest aircraft when production rates are already low.
The problem is simple economics.
As production begins, each of the relatively few airplanes built is enormously expensive. Prices fall as more planes are made.
The Pentagon's 2008 budget contains about $2.8 billion for the Air Force and Marines to buy six F-35s each. That's about $233 million a plane, compared with $50 million for a modern F-16.
Costs come down as production rates go up, but Air Force budget documents indicate that even in 2013, each F-35 it buys will still cost about $100 million -- in 2006 dollars, not taking inflation into account.
Plans now call for production to begin on lots of 16 planes in 2009, 32 in 2010 and 47 in 2011, with all but a handful of planes, at most, for the Air Force and Marines. A surge in orders that would boost production to 118 planes is expected in 2012.
Lockheed and the Pentagon would dearly love to land some foreign orders for 2011 so a production increase could be ramped up more gradually and help bring down costs sooner.
If costs grow further, as they seem to inevitably do, even the U.S. armed forces could be tempted to delay purchases further, creating a chain reaction.
Ray Jaworoski, aerospace analyst for Forecast International, says the countries that have partnered with the U.S. on developing the F-35 need to begin replacing their aging fighter fleets in the next few years.
"The big question is, is that near-term potential going to translate into near-term orders?" said Jaworoski, adding that U.S. allies' political leaders may not be likely to expand defense spending enough to buy more expensive F-35s early.
"It seems likely that the [F-35 production] ramp-up is not going to be as steep" as Lockheed and the Pentagon would like, Jaworoski said.
Britain and the Netherlands will each buy a couple of planes early for testing and training, but at this point, few other early orders are likely.
Israel's desire to buy F-35s comes with its own complications. Israel, according to published reports, wants to get planes sooner than the U.S. wants to let them out of the country. Pentagon officials don't want F-35s leaving the U.S. until all planned testing has been completed.
Israel also wants to be able to outfit the planes with its own weapons and other systems, posing more political and technical issues that governments will have to work out.
"We're not planning on their jets right now," Burbage said. "But if they choose to buy, we could get a few of their jets into production" for delivery in 2013.
Other nonpartner nations, notably South Korea and Japan, are seen as potential F-35 buyers. Japan would like to buy Lockheed's F-22 fighters, but the U.S. has so far indicated that it is unwilling to sell that highly sophisticated jet to other nations.
"If they're barred from buying the F-22, the question is, where do they go?" Jaworoski said.
But even if the Japanese military bought F-35s, Jaworoski said, it may not do so soon enough to help boost near-term production rates.
F-35 LIGHTNING II
2008 defense spending
Procurement: 12 planes, $2.65 billion
Research and development: $3.5 billion
Planned production
Lot 1, 2006-09: two planes
Lot 2, 2007-10: 12 planes
Lot 3, 2008-11: 16 planes
Lot 4, 2009-12: 32 planes
Lot 5, 2010-13: 47 planes
Lot 6, 2011-14: 118 planes
Planned U.S. purchases
Air Force: 1,763
Navy and Marines: 680
Other countries' planned purchases
Great Britain: 138
Italy: 131
Australia: 100
Turkey: 100
Netherlands: 85
Canada: 60
Denmark: 48
Norway: 48
Total: 710
Source: Star-Telegram research
Ellie
Taxpayers may pay big F-35 costs
By BOB COX
Star-Telegram Staff Writer
Foreign nations are in no rush to place orders for Lockheed Martin F-35 Lightning II fighter jets, and that threatens to push the planes' rising cost even higher and shrink future orders.
The result is that one way or another U.S. taxpayers will likely shoulder most of the cost of getting the F-35 into production, with the bulk of foreign orders not coming until years from now, when jet prices will have dropped dramatically.
Lockheed and the Pentagon have been talking with representatives of the eight nations that have contributed $4 billion-plus to the Lightning II program about placing early orders for production in 2011-13, but the high price is a deterrent.
"Nobody is interested in getting their airplanes earlier unless we can help them mitigate the fact the earlier airplanes cost more," Tom Burbage, Lockheed executive vice president and F-35 program general manager, said in a recent interview.
Another U.S. ally, Israel, may be in a position to help out. Israeli defense officials have reportedly decided that they want to buy F-35s soon and are talking with the Pentagon and State Department.
Price might not be as big a concern for Israel because it would most likely pay for F-35s using its annual U.S. military-aid package. The Bush administration has already proposed boosting arms financing for Israel from $2.4 billion in 2008 to $3.1 billion in 2011-18.
The Lightning II was conceived a decade ago as a low-cost, multirole jet that would replace numerous older models for U.S. and foreign military services. Its versions -- conventional takeoff, short takeoff and carrier-based -- and low price were intended to attract foreign sales.
The Pentagon and Lockheed would like to land some early foreign F-35 orders. As the F-35's total development cost has increased from $30 billion in 2002 to an estimated $40 billion, the Pentagon has paid the bill in part by delaying some planned U.S. military orders.
That has in turn driven up the cost of producing the earliest aircraft when production rates are already low.
The problem is simple economics.
As production begins, each of the relatively few airplanes built is enormously expensive. Prices fall as more planes are made.
The Pentagon's 2008 budget contains about $2.8 billion for the Air Force and Marines to buy six F-35s each. That's about $233 million a plane, compared with $50 million for a modern F-16.
Costs come down as production rates go up, but Air Force budget documents indicate that even in 2013, each F-35 it buys will still cost about $100 million -- in 2006 dollars, not taking inflation into account.
Plans now call for production to begin on lots of 16 planes in 2009, 32 in 2010 and 47 in 2011, with all but a handful of planes, at most, for the Air Force and Marines. A surge in orders that would boost production to 118 planes is expected in 2012.
Lockheed and the Pentagon would dearly love to land some foreign orders for 2011 so a production increase could be ramped up more gradually and help bring down costs sooner.
If costs grow further, as they seem to inevitably do, even the U.S. armed forces could be tempted to delay purchases further, creating a chain reaction.
Ray Jaworoski, aerospace analyst for Forecast International, says the countries that have partnered with the U.S. on developing the F-35 need to begin replacing their aging fighter fleets in the next few years.
"The big question is, is that near-term potential going to translate into near-term orders?" said Jaworoski, adding that U.S. allies' political leaders may not be likely to expand defense spending enough to buy more expensive F-35s early.
"It seems likely that the [F-35 production] ramp-up is not going to be as steep" as Lockheed and the Pentagon would like, Jaworoski said.
Britain and the Netherlands will each buy a couple of planes early for testing and training, but at this point, few other early orders are likely.
Israel's desire to buy F-35s comes with its own complications. Israel, according to published reports, wants to get planes sooner than the U.S. wants to let them out of the country. Pentagon officials don't want F-35s leaving the U.S. until all planned testing has been completed.
Israel also wants to be able to outfit the planes with its own weapons and other systems, posing more political and technical issues that governments will have to work out.
"We're not planning on their jets right now," Burbage said. "But if they choose to buy, we could get a few of their jets into production" for delivery in 2013.
Other nonpartner nations, notably South Korea and Japan, are seen as potential F-35 buyers. Japan would like to buy Lockheed's F-22 fighters, but the U.S. has so far indicated that it is unwilling to sell that highly sophisticated jet to other nations.
"If they're barred from buying the F-22, the question is, where do they go?" Jaworoski said.
But even if the Japanese military bought F-35s, Jaworoski said, it may not do so soon enough to help boost near-term production rates.
F-35 LIGHTNING II
2008 defense spending
Procurement: 12 planes, $2.65 billion
Research and development: $3.5 billion
Planned production
Lot 1, 2006-09: two planes
Lot 2, 2007-10: 12 planes
Lot 3, 2008-11: 16 planes
Lot 4, 2009-12: 32 planes
Lot 5, 2010-13: 47 planes
Lot 6, 2011-14: 118 planes
Planned U.S. purchases
Air Force: 1,763
Navy and Marines: 680
Other countries' planned purchases
Great Britain: 138
Italy: 131
Australia: 100
Turkey: 100
Netherlands: 85
Canada: 60
Denmark: 48
Norway: 48
Total: 710
Source: Star-Telegram research
Ellie