Finnish DefMin Interest in F-35s NOT Gripens

Program progress, politics, orders, and speculation
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loke

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Unread post07 May 2014, 12:11

hornetfinn wrote:
loke wrote:
hornetfinn wrote:South Korean F-35 deal is supposed to be somewhat smaller than the original tender was (about $6.79 bn vs $7.7 bn). Also the final price and details are not yet negotiated, so changes in details are more than likely.

Seems you are partly right, budget was reduced from 7.43 to 6.79, a reduction of 8.6%, still not enough to explain the 60 vs 40 (33% less a/c).


Actually it was from 8.3 billion won to 7.34 billion won (to keep exchange rates out of this), a reduction of 13,1%. Of course that still doesn't fully explain the 60 vs 40 aircraft thing, but we do not know of exactly what these numbers contain. The 8.3 billion won was a hard limit for that tender (which proved very difficult to achieve) and that 7.34 billion won is very likely just the upper cap for the F-35 acquisition. Since we do not know what the equipment fit and all kinds of support stuff would've been, it's very difficult to compare these numbers reliably. Let's see if the Koreans publish the numbers after they have been finalized.

Well, to nitpick further, in won it is actually 11.6% reduction in budget.

I find it interesting that after a lot of general claims that Gripen and F-35 will cost roughly the same, when Typhoon seems to come out much cheaper than the F-35 in one and the same competition it suddenly becomes "very difficult to compare these numbers reliably".....

Of course that's difficult however how on earth can people then claim that they already "know" that F-35 and Gripen will cost roughly the same?

For South Korea (or Switzerland) to be able to compare different offers, the vendors must follow rules and specifications of the customer that are designed to allow a comparison of the offers. Thus, although there will be some uncertainty and variance, in one and same competition one should expect to see comparable offers and packages, otherwise the "competition" becomes completely useless.

My take-home is that LM believes F-35 costs will drop very significantly the next 4 years; but that not everybody (including SK) is convinced yet that the prices will drop as much as LM insist they will. And that as of today, F-35 is still a very expensive plane, and (surprisingly to me) is still more expensive than the Typhoon, which is known to be a rather expensive fighter jet.
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bring_it_on

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Unread post07 May 2014, 13:32

From what i remember reading Lockheed was able to adjust its offering during R2 of the competition as it had hard data from the LRIP7 deal and from prelim work on the LRIP8 deal. The trend of cost etc was right in front of them as opposed to the last time they did such an exercise based on LRIP4 and LRIP5 costs. Any future FMS deal would given them the hindsight of seeing how the cost equation changes from LRIP7 to LRIP9 (production bump from 34 to 57) and beyond LRIP 10 as the program enters full rate of production. While the Gripen and Typhoon programs are mature and much into their overall production numbers, the f-35 is just getting started. To nail down the cost at full rate of production years out is not an easy task especially given what can happen between then and now with the ramp up.

You are correct in the assessment that Lockheed would/could better convince future buyers if they present hard data from negotiated contracts from previous sales. Just as they were armed with LRIP 7 data instead of LRIP4/5 data for the FX competition, they'd be much better armed to drive home their cost-assesment if they show up to a future competition with LRIP 9 data or one from the first few full production lots.
Last edited by bring_it_on on 07 May 2014, 14:13, edited 1 time in total.
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loke

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Unread post07 May 2014, 13:40

XanderCrews wrote:I'm an idiot.

Don't be so hard on yourself! :)
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SpudmanWP

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Unread post07 May 2014, 16:01

loke wrote:Thus it seems to me that a package of 60 Eurofighter Typhoon (of which 6 are twin-seat) cost roughly the same as 40 F-35A.


Keep in mind that it was 60 FRP Eurofighters vs 40 (mostly) LRIP F-35As.
"The early bird gets the worm but the second mouse gets the cheese."
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loke

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Unread post07 May 2014, 16:31

SpudmanWP wrote:
loke wrote:Thus it seems to me that a package of 60 Eurofighter Typhoon (of which 6 are twin-seat) cost roughly the same as 40 F-35A.


Keep in mind that it was 60 FRP Eurofighters vs 40 (mostly) LRIP F-35As.

I know, and I already pointed out that also for the Gripen E the first a/c will be more expensive than those produced later on.

For SK, I believe it's LRIP 10 or so? How many F-35 have been produced by then? will it be around 300?

To compare like with like, let's compare the price of the first 50 Gripen E with the first 50 F-35....

Or we can compare the price of Gripens 300-350 produced, to F-35 300-350 produced... :devil:
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bring_it_on

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Unread post07 May 2014, 17:48

loke wrote:
SpudmanWP wrote:
loke wrote:Thus it seems to me that a package of 60 Eurofighter Typhoon (of which 6 are twin-seat) cost roughly the same as 40 F-35A.


Keep in mind that it was 60 FRP Eurofighters vs 40 (mostly) LRIP F-35As.

I know, and I already pointed out that also for the Gripen E the first a/c will be more expensive than those produced later on.

For SK, I believe it's LRIP 10 or so? How many F-35 have been produced by then? will it be around 300?

To compare like with like, let's compare the price of the first 50 Gripen E with the first 50 F-35....

Or we can compare the price of Gripens 300-350 produced, to F-35 300-350 produced... :devil:


To be honest, that would be a rather questionable way to compare programs. The Gripen program was never designed to have a production line at triple digit production rates for example (starters). What might be an LRIP production rate for the JSF may be the highest other fighter programs will ever achieve per year, at full production. The No of F-35's ordered between LRIP 1 and 9 would be 255. Not sure what the scheduled purchase for LRIP 10 is but if it is the same as LRIP 9 then around 300 fighters (which is still around 10-15% of what the total production is expected to be) would be delivered or in some stage of assembly / long lead procurements by the time the LRIP 10 jets get into production. The F-35 rolls out of an assembly line (irrespective of LRIP block) with an AESA, An integrated targeting, FLIR/IRST combo, and HMD (which the rafale for example gets just now) therefore its not a very straight forward way to compare programs.

The best way to compare the gripen or any other fighter with the F-35 as a matter of "economics" is to take it on a per BID / CONTEST basis. The ROKAF competition showed us that the F-35 was perhaps 30-35% more expensive to procure for those delivery dates (deliveries starting LRIP 10, and going into an unknown production ramp up post that). The status of the F-35 program is way different from the Typhoon. The F-35 is still in testing, with mission capability delivery out into the future. The F-35's production is still in LRIP mode etc etc etc. It would be tough for Lockheed (given the circumstances) to live up to the expectations that it could still be under the typhoon bid amount. Perhaps once block 3 capability is handed over the warfighter ( 2018 or so) and full production rate is well in motion, can the F-35's true upfront cost be determined as a relative to that of fully tested, certified and In service (FOC) Typhoons or any other program that is looking to offer upgrades to its proven designs.
Last edited by bring_it_on on 07 May 2014, 18:05, edited 1 time in total.
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XanderCrews

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Unread post07 May 2014, 18:03

loke wrote:
XanderCrews wrote:I'm an idiot.

Don't be so hard on yourself! :)


I seem to be given more credit than you did the Finnish Defense Minister though, so thats a plus. The Poor thing is apparently helpless.
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lookieloo

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Unread post07 May 2014, 18:57

loke wrote:
XanderCrews wrote:I'm an idiot.
Don't be so hard on yourself! :)
I had wondered if you possessed the wherewithal to answer the question to which that hyperbole was attached... guess not.
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bumtish

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Unread post07 May 2014, 19:31

The Finnish defence minister have good reason to predict that Gripen E and F-35A pricing will be in roughly the same bracket.

The Finnish air force need to recapitalize post 2025.

In 2019 F-35A is anticipated to cost $75 mn in 2014 dollars.

1. Learning curve effects will take place beyond 2019 and into the first half of of the 2020s. It would be reasonable to expect lower unit costs post 2025 when the learning curve effects are fully realised.

2. Full rate production takes place after 2019 which is an LRIP lot; e.g. US orders for F-35s in 2019 stand at 96 units and 120 in 2020+.

3. AFAIK MYP contract effects are not included in the SARs. If so then further reductions can be expected. Example: latest Super Hornet contract reduced price with 6%.

It seems Gripen E URF comes in at $50-60 mn. With SH in the same ballpark. The cheapest fighters in the West!

But if the F-35A comes in at 10-20% above that, then in acquistion terms we are roughly in the same bracket. Because at those differences, the systems which provide the better capability will win!

Which is what the Finnish minister of defence is hinting at. He won't sacrifice capability over a cost saving of that magnitude. And not for industrial cooperation with Sweden either.

Yes I know the naysayers seek refuge and comfort in announced contract numbers and look to Briganti and Wheeler style analyses of the numbers. But hey, they ignore the three points above. B&W also amortize the huge costs of standing up bases and squadrons and establing training facilities and many other things over current lots consisting of a few scores of aircraft. Costs which will largely go away post 2018 and at that time will be spread over larger quantities.

They are ignoring what these numbers mean.

So cometh 2018 are Briganti and Wheeler going to change their premise for their methods at that time, because it will look really bad continuing presenting them like this? Or is it part of the calculation that they do more damage now and the heck with what comes later?

Hummm..

What about operating costs?

F-35A will at 2025 plug into a huge logistics system. Bigger aircraft can beat smaller ones on this parameter if built in multiples of numbers. Win F-35.

RDT&E for F-35 is spread across a huge customer base. The F-35 will beat Gripen E on this cost variable. Unless Gripen E development is very modest. Did I mention Gripen E development is not funded post 2026?

Outside of the US the concept of staffing for the same tasks and readiness/depoyability is also much less lavish than what is reflected in US numbers. Expect that Finnish (and partner) costs for operating the aircraft to be lower (this is what Bogdan is talking about when mentioning that CPFH for individual customers should be developed).

In short, Gripen E, being the smaller aircraft, may have lower direct costs, where only fuel and basic maintenance is included. But owning an aircraft - a capability, over a lifetime - and producing flight hours, is much more than that.

F-35A eats the Gripen E on items other than direct costs per flight hour.

And this is where there the naysayers put the tinfoil hat on and say that the Norwegian competition reports are fudged. But they were not. They just took the above points into consideration. And also added a fair deal of project risk on top.

(in fact, if you remove the $9B of project risk added to the Gripen E in the Norwegian eval you end up with the F-35 being 10% more expensive!)

P.S. I know the 414 may be more fuel efficent that the 404. But if the Gripen A/B had a fuel per flight hour design-to-cost of $3500, then not much can be done with what is left after the $4500 the Brazilian Air Force says it costs to run the Gripen for an hour.
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loke

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Unread post07 May 2014, 20:46

lookieloo wrote:
loke wrote:
XanderCrews wrote:I'm an idiot.
Don't be so hard on yourself! :)
I had wondered if you possessed the wherewithal to answer the question to which that hyperbole was attached... guess not.

You guessed wrong. It's just that I don't want to waste my time, since some people here seem to have made up their minds on a number of things. In other words, providing a response would be pointless.
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lookieloo

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Unread post07 May 2014, 23:44

loke wrote:
lookieloo wrote:I had wondered if you possessed the wherewithal to answer the question to which that hyperbole was attached... guess not.
You guessed wrong. It's just that I don't want to waste my time, since some people here seem to have made up their minds on a number of things. In other words, providing a response would be pointless.
In other words, you know exactly how idiotic said response would sound to anyone not wearing a tinfoil hat.
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loke

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Unread post08 May 2014, 06:35

lookieloo wrote:
loke wrote:
lookieloo wrote:I had wondered if you possessed the wherewithal to answer the question to which that hyperbole was attached... guess not.
You guessed wrong. It's just that I don't want to waste my time, since some people here seem to have made up their minds on a number of things. In other words, providing a response would be pointless.
In other words, you know exactly how idiotic said response would sound to anyone not wearing a tinfoil hat.

look lookieloo, you are wrong, again :doh:
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lookieloo

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Unread post08 May 2014, 07:03

loke wrote:look lookieloo, you are wrong, again :doh:
Ok, you feel that your superior intellect exempts you from explaining the basis for your claims to anyone else... we get it... you don't want to lay your pearls before us swine. Unfortunately, "nuh-uh" ain't gonna cut it around here, so go ahead and tell everyone why Gripen didn't participate in Canada, I dare you.
Last edited by lookieloo on 08 May 2014, 08:08, edited 1 time in total.
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mk82

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Unread post08 May 2014, 08:01

Loke, the Eurofighter Typhhon is not a good example of necessarily being cheaper than the F35. Auditors for the German government recently discovered that the support cost for the Luftwaffe's Eurofighter will be much more than what was originally forecasted (much much more!). Sure, its not an apple to apple comparison but it does raise the possibility that the Eurofighter consortium deliberately (?not entirely honest) underestimates the support cost of the Eurofighter.
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loke

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Unread post08 May 2014, 08:14

lookieloo wrote:
loke wrote:look lookieloo, you are wrong, again :doh:
Ok, you feel that your superior intellect exempts you from explaining the basis for your claims to anyone else... we get it... you don't want to lay your pearls before us swine. Unfortunately, "nuh-uh" ain't gonna cut it around here, so go ahead and tell everyone here why Gripen didn't participate in Canada, I dare you.

Superior intellect -- LOL remember that irony does not convey well on the internet.

OK I I'll bite :D

Several factors come into play when deciding what to buy, the most important being; technical capabilities, politics, and economy.

Canada is a very close ally of the US, and operates closely with the US on a number of different levels. Thus a 4th very important factor is interoperability with NATO allies in particular and the US in particular.

In addition to the above, Canada is also F-35 partner.

That Canada will go for F-35 is therefore a "no-brainer". One of the very few things that can potentially "ruin" that would be if some stupid politicians in Canada decides that the F-35 will be too expensive. Or that huge rocks from out space hits LM and P&W manufacturing facilities.

However in the (highly unlikely) scenario that happens, the SH will clearly be the second option; it is US made, it is quite capable, Boeing is desperate to sell more and will offer a "good deal", and it is an evolution of what Canada flies today. But again this is very very unlikely to happen.

Thus; the probability that any other fighter than the F-35 or the SH will have a chance of winning in Canada is very very close to zero.

Capabilities: Although Gripen is growing with the E version it remains a lightweight fighter and might be too far away from the capabilities that Canada is looking for. Thus; even if LM and Boeing goes bankrupt tomorrow, Gripen would probably still not be the first choice in Canada, it's probably too small.

However as if the above reasons were not enough (they should be!) I believe there is another reason why Saab is not participating in Canada: Saab is a small company and they can support only so many competitions around the world. Let's say they can target 4-5 countries at any time. The logical thing would then be to look around, make an assessment of the probability of a win, and target the countries with a highest probability of a win. Switzerland is obviously in (50% chance of "winning" in the referendum); Malaysia (Gripen cheaper than Rafale/Typhoon/SH, and can offer a cheap lease deal); Indonesia (needs a very cost-effective solution) and a few other countries.

Canada would be very long down on that list... Saab sees real opportunities in other places; in Canada it does not currently see an opportunity at all, mainly for the above-listed reasons.
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