F-35 Survival / Cost Question

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avxva

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Unread post27 Mar 2012, 23:46

Second question: According to the article below additional cost overruns in the F-35 program will come out of the F-35 US buy.

http://www.chicagotribune.com/news/poli ... 7738.story

After the above announcement (according to the articles below) Australia announced that it is delaying its F-35 purchase and Italy is cutting its order. And the article below that says Turkey has left the program and the Netherlands is also delaying.

With all these international partners bailing out, how can the price of the F-35 not rise? And if the price continues to rise, the US will cut the buy. So based on all of this, logically, how is the F-35 not dead right now. (Please don't attack me, these are honest questions.) The F-35 is in an impossible financial/fiscal position. How can it possibly survive?

Al

Australia delays F-35 order: reports

http://www.timescolonist.com/technology ... story.html

Excerpt:

[...] The Australian government is delaying its order of F-35 fighter jets, joining a growing list of countries that were committed to the program but are now scaling back because of the global economic crisis.

The Canberra Times also reported that Lockheed Martin vice-president Tom Burbage told an Australian parliamentary defence committee the postponement of plane orders by the U.S. and other countries was ''the single largest contributor to the increases in the unit cost of the F-35." In Canada, the Conservative government has recently wavered in its support for the F-35 jets, after supporting the program for two years.

On March 14, Associate Defence Minister Julian Fantino said the government has not ruled out walking away from the program. Fantino also revealed Defence Department officials have been considering "all kinds of contingencies" should the F-35 not be ready to replace Canada's aging fleet of CF-18s. He acknowledged the government does not know how much each F-35 will cost.

And according to a leaked memo dated Oct. 21, the Pentagon's top official in charge of equipment testing and evaluation expressed "serious concerns" about starting F-35 pilot training last fall, saying the plane needed another 10 months of testing.

Last month, Italy announced plans to cut its order from 131 planes to 90 planes.

Read more:
http://www.canada.com/technology/Austra ... z1qMFvb5E1


http://www.atimes.com/atimes/Global_Economy/NC28Dj04.html

SYDNEY - The world's biggest international defense project, the United States-designed F-35 strike-fighter aircraft, was put on probation by international partners at a formal meeting held this month in Sydney, Australia.

Responding to the latest in a series of cost increases and delivery delays, representatives from the Australia, Canada, Denmark, Italy, Netherlands, Norway, Turkey and the United Kingdom have all threatened to pull out of the project unless the Pentagon and lead private contractor Lockheed Martin can deliver the fighter plane more quickly and cheaply.

In March 2011, Turkey put its 100-plane order on hold indefinitely, apparently in response to a US refusal to share source codes. After learning of the cost increases, the Netherlands postponed making a definite order until 2014, while on February 9 Italy's newfound fiscal sobriety saw projected orders drop from 131 to 90.
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spazsinbad

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Unread post27 Mar 2012, 23:53

The 'atimes' link [http://www.atimes.com/atimes/Global_Economy/NC28Dj04.html] has a classic quote: "...Canadian opposition parties have pledged to do [hold a competition], even though it means facing down two powerful constituents: top air force officers who can marshal persuasive facts behind professional opinions..." Yep facts can be persuasive for sure. :D

And I don't believe IF Turkey has put their order on 'indefinite hold' (news to me but whatever) that that is a cancellation. Turkey has been arguing about the 'F-35 codes' since whenever with this sort of on and off threat since whenever. :roll:
Last edited by spazsinbad on 28 Mar 2012, 03:43, edited 3 times in total.
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stobiewan

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Unread post27 Mar 2012, 23:53

Shock news, Turkey *not* abandoning it's order..further stunning shocking news, Norway is ordering jets *earlier*, worse, Japan has confirmed plans to buy F35..

http://www.reuters.com/article/2012/02/ ... IM20120223

http://www.bloomberg.com/news/2011-12-2 ... ghter.html

http://www.reuters.com/article/2012/03/ ... CQ20120323

DISASTER! DOOMED!

DOOMED I SAY!

Are you actively trolling ? If not, read some of the various threads on this forum please.
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munny

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Unread post27 Mar 2012, 23:55

Japan, South Korea, Israel are non-partner buyers which more than offset the Italian cutbacks.

Australia is not reducing its order, merely postponing it until later.

I would say the second report is plain incorrect.
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avxva

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Unread post27 Mar 2012, 23:57

stobiewan wrote:Shock news, Turkey *not* abandoning it's order..."


The articles you provided pre-date by a month later articles which say Turkey has left the program. I'm not trolling, or attacking anyone, I'm merely asking honest questions.

Al
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avxva

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Unread post28 Mar 2012, 00:18

stobiewan wrote: Japan has confirmed plans to buy F35..


I'm not trying to be a pill, but the article below is directly on point. It just appears from a non-expert, but logical, point of view that the F-35 is in a financial / fiscal "Catch-22." I don't see how it ever gets out? Does it?

Japan says may cancel Lockheed F-35 if price rises

http://www.reuters.com/article/2012/03/ ... 1I20120301

(Reuters) - Japan may cancel orders for Lockheed Martin Corp's F-35 fighter jets if the price rises or deliveries are delayed, Defense Minister Naoki Tanaka said on Wednesday, casting doubt on Tokyo's choice of next-generation combat aircraft.

Tokyo has warned Washington against increasing the price, but this was the first time Tanaka publicly raised the possibility of cancelling the order.
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Unread post28 Mar 2012, 00:23

'avxva' perhaps if you awake from your 'RipVanWinkle' slumber and read some recent post/threads on this forum you will see that a lot of your contentions in various recent threads you have started are just misconceived. For example an LM representative has given a firm price guarantee - same as the intiial price given to Japan - to counter this last phrase "...Tokyo has warned Washington against increasing the price...". Judging by your recent rash of posts - where have you been? Not reading this forum that's for sure.
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Unread post28 Mar 2012, 01:07

avxva wrote:
stobiewan wrote:Shock news, Turkey *not* abandoning it's order..."


The articles you provided pre-date by a month later articles which say Turkey has left the program. I'm not trolling, or attacking anyone, I'm merely asking honest questions.

Al

UPDATE 1-Turkey keeps plan to buy 100 F-35 fighter jets
http://www.reuters.com/article/2012/02/ ... IM20120223



ISTANBUL, Feb 23 (Reuters) - Turkey is sticking to plans to buy 100 of Lockheed Martin's F-35 fighter jets for $16 billion, with an initial order of two planes for delivery in 2015, its defence minister said, amid concerns about the project's delays and rising costs.
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Unread post28 Mar 2012, 03:19

Even if "all these international partners bailing out" weren't a lie, the answer to the "question" about how the price could possibly not increase when the quantity decreases would still be simple economics. The principle that more items produced = lower price only applies for production numbers from 0 up to a certain point, above which, making more doesn't get you any greater efficiency in making them. Above that amount, you can increase the quantity all you want and you won't get the price to decrease... which also means a decrease in quantity doesn't yield a price increase until the total quantity drops below that critical mass. For modern fighters, that point seems to be somewhere around 800 or 1000, and the expected total quantity of F-35, even just for for F-35A alone, is nowhere near that low, although B and C are lower.
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Unread post28 Mar 2012, 03:36

Avxva, Australia hasn't postponed ANY orders for the F-35. If you look at Australia's Defence Capability Plan (DCP) you can see, quite plainly that the Financial Year of decision for Phase 2A/B (the acquisition of 72 fighter aircraft to replace our current Hornets) is 2012/2013. We haven't entered FY 2012/13 yet, it's still FY 2011/2012.

The DCP can be read here:

http://www.defence.gov.au/dmo/id/dcp/ht ... n-2011.pdf

And the relevant page is page, 58 in that document (AIR-6000).

The Project head - Air Vice Marshall Osley stated in evidence to the Australian Parliament on 16 March 2012, that RAAF is preparing options to Government relating to these aircraft in late 2012 or early 2013 for second pass approval (ie: here's the cash go and buy them).

Consequently, we are still within our approved timeframe to acquire these aircraft. We haven't "postponed" anything.
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Unread post28 Mar 2012, 04:01

avxva wrote:
stobiewan wrote:Shock news, Turkey *not* abandoning it's order..."


The articles you provided pre-date by a month later articles which say Turkey has left the program. I'm not trolling, or attacking anyone, I'm merely asking honest questions.

Al


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stobiewan

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Unread post28 Mar 2012, 10:20

avxva wrote:
stobiewan wrote:Shock news, Turkey *not* abandoning it's order..."


The articles you provided pre-date by a month later articles which say Turkey has left the program. I'm not trolling, or attacking anyone, I'm merely asking honest questions.

Al



No, you said "In March 2011, Turkey put its 100-plane order on hold indefinitely, apparently in response to a US refusal to share source codes."

I then cited an article from 23/02/2012 - 11 months *after* your unreferenced quote.

Turkey are still in the program.
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Unread post28 Mar 2012, 10:33

avxva wrote:
stobiewan wrote: Japan has confirmed plans to buy F35..


I'm not trying to be a pill, but the article below is directly on point. It just appears from a non-expert, but logical, point of view that the F-35 is in a financial / fiscal "Catch-22." I don't see how it ever gets out? Does it?

Japan says may cancel Lockheed F-35 if price rises

http://www.reuters.com/article/2012/03/ ... 1I20120301

(Reuters) - Japan may cancel orders for Lockheed Martin Corp's F-35 fighter jets if the price rises or deliveries are delayed, Defense Minister Naoki Tanaka said on Wednesday, casting doubt on Tokyo's choice of next-generation combat aircraft.

Tokyo has warned Washington against increasing the price, but this was the first time Tanaka publicly raised the possibility of cancelling the order.



Of course they'd cancel if the price rose considerably - that's basic consumer decision making. Thing is, the final UFR cost of an F35A hasn't shifted by so much as 5% in three years. Where the concern arises is that the aircraft's transition into full rate production has been delayed by the US shifting buys of about 180 aircraft to the right - that makes some orders for some customers a bit more expensive *during the timescale they were planning on buying* - so the years 2014-2019 are low rate initial production, and the prices will move accordingly.

I suspect the smart thing for the US to do is to help some of the tier 1 and 2 customers out a bit by guaranteeing them the prices for the early jets in their orders in order to keep the lines moving but this isn't a huge disaster.


Have a look around the forums and read through them - a lot of this has all been dealt with in detail and short of sequestration landing very heavily on the F35, the program looks like it's delivering results, the aircraft is looking pretty good the international partners are all looking forward to getting hold of their jets.
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Unread post28 Mar 2012, 14:41

avxva wrote:
After the above announcement (according to the articles below) Australia announced that it is delaying its F-35 purchase and Italy is cutting its order. And the article below that says Turkey has left the program and the Netherlands is also delaying.

With all these international partners bailing out .....


Name one country bailing out? … Lately, all level partners even declared they will stick to -/ and have confidence in the program.

The Australian government is delaying its order of F-35 fighter jets, joining a growing list of countries that were committed to the program but are now scaling back because of the global economic crisis.


Global crisis? Yep, but as in history, other crisis did happen and this crisis will come to an end as well.


Fantino also revealed Defence Department officials have been considering "all kinds of contingencies"


As said by Farantino, "all kinds"!! .... Nothing strange about that.


representatives from the Australia, Canada, Denmark, Italy, Netherlands, Norway, Turkey and the United Kingdom have all threatened to pull out of the project ...


Same as reply quote one

Secondly: As well as, delaying orders does not mean bailing out.
Concerning the Netherlands, ten F35’s are expected in 2019, after ordering the F35. So when expected in 2019, they at least will have to order in 2015 (some four years between ordering and delivery of a F35).

They already did order 2 F35A, first delivery aug 2012, second delivey march 2013.
Bailing out? That would be the most ridiculous thing ever, after already ordering these two IOT&E F35’s

Another thing, countries as the Netherlands and Norway were already investing, investments in their home countries, in for example infra structure (specifically F35) for the arrival of the F35 for quite some time.


After learning of the cost increases, the Netherlands postponed making a definite order until 2014, while on February 9 Italy's newfound fiscal sobriety saw projected orders drop from 131 to 90

Italy:
This had to do with a lower Italian defence budget, not specifically with a price of the F35

Netherlands:
Concerning the Dutch, only the next government (2014/2015) will be able (allowed to) to order, the F35.
Even when the Dutch would like to order the F35, at $10 a piece, the Dutch government, in charge now, has no authority to order the F35.



New competition by levelpartners?
Quote: The eject-seat option is for allies to write off their development costs and open their fighter procurements to an open competition, pitting the F-35 against the Typhoon, Rafale and Super Hornet.
http://www.atimes.com/atimes/Global_Eco ... 8Dj04.html

Some $2 billion ... writing off the Netherlands. Not to forget Italy and especially the UK
This journalist has some brain damage, or can’t count at all.


Concerning a new competition (Netherlands), letter of the min. defence (march 27, 2012)
Quote: Zoals ik tijdens het debat van 13 maart jl. heb uiteengezet, is een nieuwe
kandidatenvergelijking niet aan de orde

Translation: As I during the debate on 13 March have pointed put, a new
competition/comparison of candidates is not on the agenda

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