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Aussies pay 545 million canadian for Abrams, where'd our 1.5 billion go?

JasonH

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I keep scratching my head at this.

Australia – M1A1 AIM Tanks
On 21 May 2004, the Defense Security Cooperation Agency notified Congress of a possible Foreign Military Sale to Australia of M1A1 Abrams Integrated Management (AIM) tanks as well as associated equipment and services. The total value, if all options are exercised, could be as high as $475 million.
The Government of Australia has requested a possible sale of 59 M1A1 AIM tanks, 7 M88A1 medium recovery vehicles, 80 AN/VRC-92F dual long-range Single Channel Ground and Air Radio Systems (SINCGARS) radios, 146 AN/PVS-7B night vision goggles, 73 M2 .50 caliber machine guns, 7 M2 .50 caliber heavy barrel machine guns, 1 ROC-V training device, tactical trucks, trailers, training devices, M240 machine guns, spares and repair parts, special tools and test equipment, personnel training and equipment, publications, U.S. Government and contractor engineering and logistics personnel services, and other related elements of logistics support. The estimated cost is $475 million.

That works out to be 545 million canadian, and we are getting what - 69 MGS's and 33 aircraft for 2 billion?  Where'd the other 1.5 billion go? 

If this topic has been beaten to death please lock it.  But if the above is valid then by all means please discuss.  :salute:

Source
http://www.dsca.osd.mil/PressReleases/36-b/2004/Australia_04-12.pdf
 

RangerRay

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Cheers!  :)

Edit: I think I was under a rock for a while...what are the 33 aircraft you speak of?
 

Kirkhill

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Perhaps he is referring to the 33 MMEVs (Multi Mission Effects Vehicles) converted from Anti-Aircraft duties?
 

dapaterson

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There are lies, damn lies, and statistics.  And the same logic applies to costs.

A "cost" can be however you choose to define it.  In Canadian terms, the money on MGS will pay for vehicles, spares, training,m new buildings, elimination of old buildings... in short, everything associated with bringing the eqpt into service and with maintaining it through its anticipated useful life.

The figure cited below is what the Aussies will pay the Americans, but it is not "the cost".  Before comparing two numbers, you have to make sure the basis is the same - otherwise you end up with Apples vs Oranges discussions.


One reason we report on costs this way in Canada is to avoid what could be termed the Gilette syndrome.  Gilette all but gives away razors, and makes hefty profits on the sale of blades.  Some producers of military equipment work the same way.  Looking at lifecycle costs avoids the"cheap to buy, expensive to operate" trap we sometimes fall into.


I do not know what an apples to apples comparison of M1s vs MGSes would show in terms of cost.  But the information in this thread is inadequate to make a comparison.
 

muskrat89

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I see your point Sir, but according to the referenced article, and your defined costs - the only thing (apparently) missing is new buildings and demolishing old buildings... for apples to apples

59 M1A1 AIM tanks, 7 M88A1 medium recovery vehicles, 80 AN/VRC-92F dual long-range Single Channel Ground and Air Radio Systems (SINCGARS) radios, 146 AN/PVS-7B night vision goggles, 73 M2 .50 caliber machine guns, 7 M2 .50 caliber heavy barrel machine guns, 1 ROC-V training device, tactical trucks, trailers, training devices, M240 machine guns, spares and repair parts, special tools and test equipment, personnel training and equipment, publications, U.S. Government and contractor engineering and logistics personnel services, and other related elements of logistics support.
 

Gayson

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You may even be able to consider "related elements of logisitics support" to be those buildings.
 

dapaterson

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How long is the Aussie contract for?  What does it include?  Are there other agreements providing something of value to the US not captured in this particular contract, but still considered as part of the overall deal?  And what all is included in the MGS costing?  All basic questions that need to be answered before we know if we are truly talking"Apples to apples".

I have not read the SS(EPA) documentation for the MGS, nor have I read the Aussie contract.  To say"Oh, well, they're the same" is a rather remarkable leap of logic in the absence of solid facts.


I am not arguing "MGS is where the sun shines, everything else is horrible".

I'm merely stating that unless you can compare the two projects in detail, and fully understand both costing methodologies you cannot state X is cheaper than Y.

 

Armymedic

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Sir,
I understand your point about the details in the contract need to be studied to understand the cost.

But why would this Aussie purchase be roughly 1/4 the price for roughly 66 armoured vehicles, then the cost for puchasing ours?

In my mind, I could understand a difference, but by 1/2 -1/4 the price, seems too big of a gap.
 

Armymatters

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Armymedic said:
Sir,
I understand your point about the details in the contract need to be studied to understand the cost.

But why would this Aussie purchase be roughly 1/4 the price for roughly 66 armoured vehicles, then the cost for puchasing ours?

In my mind, I could understand a difference, but by 1/2 -1/4 the price, seems too big of a gap.

I remember reading somewhere that the deal the Aussies got with ther M1's was a political reward by the Americans for participating in the Iraq War... hence the severe discounts. Anyone who is in the know want to debunk or elaborate on this?
 

dapaterson

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Army Medic:  I guess what I've been trying to say all along is that I don't know.  And jumping to conclusions without all the facts (or even most of them) can be quite foolish.

 

STONEY

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Other points.

1. The M1's the Aussies bought are used rebuilt tanks not new ones and are thus a lot cheaper than new one's.
2. The article quoted is 2 years old , recent price quotes are a bit higher.
3. The cost of tanker trucks to refuel these fuel hungry tanks and new tank transporter trucks to haul them + new bridgeing equipment
    to support them is not included.
4. The first few tanks have already been handed over to the Aussies and are being shipped to Fort Hood for initial crew & maintainer
    training. The remainder to be shipped to Australia in two shipments in june and december this year, so from order to delivery was pretty fast.
 

chanman

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STONEY said:
Other points.

1. The M1's the Aussies bought are used rebuilt tanks not new ones and are thus a lot cheaper than new one's.
2. The article quoted is 2 years old , recent price quotes are a bit higher.
3. The cost of tanker trucks to refuel these fuel hungry tanks and new tank transporter trucks to haul them + new bridgeing equipment
    to support them is not included.
4. The first few tanks have already been handed over to the Aussies and are being shipped to Fort Hood for initial crew & maintainer
    training. The remainder to be shipped to Australia in two shipments in june and december this year, so from order to delivery was pretty fast.

Sounds like they were surplus Abrams that the US had lying around.  Weren't some countries in Europe looking to offload extra Leopard 2's a bit earlier, or am I just imagining things again?
 

geo

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european countries and canada and australia were in the process of offloading Leo 1s
(not too many takers in our case :()
 

chanman

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just checked 

http://www.defenseindustrydaily.com/2005/11/germany-to-sell-298-leopard-2-tanks-to-turkey/index.php

298 Leo 2's to Turkey
183 Leo 1's and 150 Leo 2's to Greece

Dutch originally bought 445, but sold of 166 of them
Poland got a 128 from German warstocks recently

aha - found a defence news article http://www.defensenews.com/story.php?F=735647&C=commentary

How dramatic the Army’s transformation really is can be seen in Structure 2010, to be adopted as of 2007. The service will reduce its fleet of main battle tanks from 2,528 to 350, infantry fighting vehicles from 2,077 to 410, artillery pieces from 1,055 to 120 and helicopters from 530 to 240.

I wasn't aware they had that much armour to begin with  :eek:

And is it my imagination, or are the Turks and Greeks using a lot of similar equipment?
 

Kirkhill

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If I am not mistook the Conventional Forces in Europe agreement limiting Tanks etc resulted in European countries selling/donating 1970s vintage Tanks in Reserve units and War Reserves to non-European countries (Non-NATO? -  I don't remember how CFE counting was done, by government or by geography).  The Europeans kept the best for themselves.  The producing countries kept their own top of the line vehicles and when the still had surplus they were "transferred" and upgraded to countries like Sweden, Norway, Denmark, Holland and Spain at cut-rate prices.  Germany got the lion's share of this work.  The Leopard has become the de facto Euro standard - Challenger and LeClerc, regardless of how good they may be are strictly National endeavours for the UK and France.

The US built many thousands of M1s and has upgraded declining numbers of those vehicles (Fewer M1A1s with 120mm cannons than M1s with 105mm cannons, fewer M1A1 Aims than M1A1s, fewer M1A2 TUSK than M1A2 SEPs etc  - as I understand the trend if not the actual sequence of models).  Consequently they have an inventory of earlier generation vehicles, many of them which apparently have very few miles on the clock.  It is these vehicles that are being made available to the market to compete with the Europeans.

Does anybody know if the Americans or the Europeans have built any new hulls in the last 10 years or so?
 

Armymatters

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Kirkhill said:
If I am not mistook the Conventional Forces in Europe agreement limiting Tanks etc resulted in European countries selling/donating 1970s vintage Tanks in Reserve units and War Reserves to non-European countries (Non-NATO? -  I don't remember how CFE counting was done, by government or by geography).  The Europeans kept the best for themselves.  The producing countries kept their own top of the line vehicles and when the still had surplus they were "transferred" and upgraded to countries like Sweden, Norway, Denmark, Holland and Spain at cut-rate prices.  Germany got the lion's share of this work.  The Leopard has become the de facto Euro standard - Challenger and LeClerc, regardless of how good they may be are strictly National endeavours for the UK and France.

The US built many thousands of M1s and has upgraded declining numbers of those vehicles (Fewer M1A1s with 120mm cannons than M1s with 105mm cannons, fewer M1A1 Aims than M1A1s, fewer M1A2 TUSK than M1A2 SEPs etc  - as I understand the trend if not the actual sequence of models).  Consequently they have an inventory of earlier generation vehicles, many of them which apparently have very few miles on the clock.  It is these vehicles that are being made available to the market to compete with the Europeans.

Does anybody know if the Americans or the Europeans have built any new hulls in the last 10 years or so?

Yes: Spain partially developed and licensed produced the Leopard 2E, which is an update to the Leopard 2A6. The Spanish hulls are all new builds. But take note: pratically every Leopard 2A6 is a new build hull.
 

Kirkhill

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That's interesting.

Curiously the company that I used to work for was involved in building and supplying precision machined equipment that was essentially a 100 year old design (just at the internal combustion engine is a 100 year old and counting design).  That kit was manufactured for most of its life in Sweden.  Germans were our biggest competitors.  In the 1980s, after Spain entered the EU some of the older models were downloaded to Spain for manufacture.  Still less complex models were tasked out to India.  Currently a lot of work is being done in Poland.  The German competition has done much of the same. 

This was done because there wasn't enough trade to keep a large N.European labour force standing around while waiting for orders.  It was much cheaper to keep lower cost S. Europeans, E. Europeans, Indians, standing around waiting for orders.  In the meantime reduction of costs resulted in increasing orders.

So, WRT your observation about technology transfer - an undervalued technology, an out of date technology or an overly expensive technology? 
 

Armymatters

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Kirkhill said:
That's interesting.

Curiously the company that I used to work for was involved in building and supplying precision machined equipment that was essentially a 100 year old design (just at the internal combustion engine is a 100 year old and counting design).  That kit was manufactured for most of its life in Sweden.  Germans were our biggest competitors.  In the 1980s, after Spain entered the EU some of the older models were downloaded to Spain for manufacture.  Still less complex models were tasked out to India.  Currently a lot of work is being done in Poland.  The German competition has done much of the same. 

This was done because there wasn't enough trade to keep a large N.European labour force standing around while waiting for orders.  It was much cheaper to keep lower cost S. Europeans, E. Europeans, Indians, standing around waiting for orders.  In the meantime reduction of costs resulted in increasing orders.

So, WRT your observation about technology transfer - an undervalued technology, an out of date technology or an overly expensive technology? 

It is kinda like the hub-bub over Airbus and their plans to co produce the Airbus A320 narrow body airliner in China. Quite a few pundits are screaming bloody murder that the Chinese will copy the design, but forgetting that the Airbus A320 airliner design is around 20 years old. By the time the Chinese acutally produce a copy, the design will be 30 years old and out of date because Airbus is developing a replacement.
 
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