Lockheed Martin officials are working out a plan to get key allies to place firm, early orders for hundreds of F-35 Lightning II joint strike fighters.
Much work remains to be done, but Lockheed hopes to submit a detailed proposal outlining cost, order and delivery schedules to government and military officials by early next year.
The plans calls for a consortium of the eight countries that have invested in development of the F-35 to commit to buy 368 fighter jets, with production beginning as soon as 2012-2013.
U.S. taxpayers and military services would be major beneficiaries of the consortium proposal. The sooner foreign countries place orders for F-35s and production begins to increase, the faster the cost of the aircraft should come down [emphasis added].
"The importance is stability," said Dan Crowley, the Lockheed executive vice president who oversees F-35 development and production in Fort Worth. "Stability of production, stability of cost."
Lockheed and the Pentagon have been working since mid-2007 to encourage the eight partner countries to place early orders.
Without foreign orders, the U.S. military would have to bear the brunt of the high early costs of buying tools, training workers and working out the kinks in the production lines.
Pentagon budget documents show that the Air Force anticipates ordering 42 F-35s in 2013 at an average price of about $91 million, the lowest cost of the three versions. Navy and Marine Corps planes would cost much more. Early foreign orders could bring those costs down significantly [emphasis added].
At the same time, Lockheed hopes the plan will help persuade the Pentagon to step up its planned F-35 purchases as the armed services seek to replace older, costly-to-maintain fighter jets now being heavily used in Iraq and Afghanistan and for other missions.
Tom Burbage, Lockheed's executive vice president who oversees the political and marketing aspects of the F-35, briefed officials of the partner countries at a conference last month. He will present the concept to senior government and military officials this month.
If they approve, Burbage said Lockheed and the other contractors will begin extensive discussions with suppliers to try and project cost and production schedules so that firm pricing commitments could be made to the partner countries.
"Nobody has bought into it yet," said Burbage, adding that Lockheed would have to invest a great deal of time and effort to pull together accurate cost data.
Unlike the U.S., which funds weapons-system purchases on a year-to-year basis, most of the F-35 partner countries will make multiyear buying decisions and appropriate the money upfront. Much like Boeing does with commercial airline buyers, Lockheed and the U.S. will have to commit to selling F-35s at firm, fixed prices for the life of a contract.
Burbage said that under such an arrangement, Lockheed and the other prime contractors, BAE Systems and Northrop Grumman, will take on some financial risk, as will the U.S. and foreign governments.
Great Britain and the Netherlands are expected to buy three test airplanes between them, along with 16 for the U.S. government in the 2009 fiscal year.
So far, the U.S. and Lockheed have been able to keep the partner countries on the F-35 team despite the best efforts of European fighter-jet manufacturers.
"They've kept all eight partner nations in, they've kept them funding it, which is a major accomplishment," said Richard Aboulafia, aerospace-industry analyst with the Teal Group.
Burbage just returned from a 10-day trip to Denmark, Norway and the Netherlands to meet with government and military leaders. Norway and Denmark have not yet committed to buy the F-35 and are holding competitions, mainly with Sweden's Saab Gripen fighter.
Burbage submitted Lockheed's formal bid to Norwegian officials Monday. In his remarks, Burbage told Norwegian officials that the F-35 represents a "quantum leap" in combat capabilities at 20 percent lower operational cost than the F-16s and other aircraft they are now flying.
"We made a strong proposal," Burbage said. "We're competitive on price, and we're a much more capable airplane."
Norway is expected to decide which fighter to purchase by year's end, but Burbage said a formal decision to order planes is probably several years away.
Other countries are also considering how soon to commit to F-35 orders. Italy, Burbage said, might decide to buy its own test airplane in 2009. Australian government officials have hedged at times about their commitment and have announced plans to order 24 Boeing F/A-18 Super Hornets.
But Burbage said all indications are that Australia will reaffirm its intent to purchase F-35s at some point.
Israel, meanwhile, has adopted military budget plans that call for buying 25 F-35s around 2012.
As Lockheed and the U.S. seek to firm up foreign support for the F-35, one selling point has been that partner countries, which won F-35 work by upgrading their technology and manufacturing capabilities, are beginning to win additional work from the commercial aircraft industry.
"All of the benefits [from other countries' investments] have gone into their local, high-tech industries," Burbage said, something political leaders are beginning to notice.
yes... Because that is ALL they EVER do!!
