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Lockheed hopes an uneven economy won't circumvent sale of F-16s to Chile
March 10, 1998 (by
Lieven Dewitte) -
Salespeople at the Lockheed Martin are nervously eyeing economic conditions in Chile, hoping that a drop in copper prices and Asian-related troubles won't upset a potentially lucrative sale of F-16 fighters. In August, the Clinton administration lifted a 20-year ban on U.S. weapons sales to South American nations.
That set off a furious burst of marketing by Lockheed Martin and other fighter makers seeking what could be sales of as many as 200 aircraft to Chile, Brazil and Argentina. Lockheed would certainly welcome such sales.
The U.S. Air Force is winding down its F-16 purchases - it ordered only six in 1997 and just three this year - and the company plans to lay off up to 2, 000 plant employees. The cuts might be larger, but the F-16 is still a strong force in international sales markets, and Lockheed Martin hopes it can sell as many as 1, 000 more to other countries during the next decade. Chile was expected to be first among South American nations with a purchase. The country sent a team to Fort Worth to look over the F-16 and test-fly the fighter. Since last fall, however, the price of copper, Chile's No. 1 export and the source of much of its military spending cash, dropped by a third. Also, exports of Chile's salmon and abalone to Japan and other Asian nations have fallen in recent months due to Asia's economic troubles.
Chile has been forced to devalue its currency, the peso, and raise interest rates twice since Jan. 1. The International Monetary Fund warned last month that the nation, which enjoyed strong economic growth in the past decade, must "tighten" its policies because of the its "vulnerability to Asia's economic slowdown". In addition to its economic concerns, Chile suddenly changed defense ministers. This means that everything is put on hold while the new person is brought up to speed.
As if that weren't enough, eight Boeing/McDonnell Douglas F-18 fighters are being shopped around international markets at discount prices. The jets were destined for Thailand, which had to renege on a purchase because of economic problems. Chile is believed to be in the market for up to $600 million worth of fighters, a figure that would enable it to buy as many as 20 F-16s and related servicing. Lockheed Martin is competing with Sweden's Grippen and the French Mirage 2000 as well as the F-18. American weapons makers worry that residue from the 20-year ban may work against them when Swedish and French salespeople, who have always been open to South American sales, make their calls.
The U.S. Air Force is winding down its F-16 purchases - it ordered only six in 1997 and just three this year - and the company plans to lay off up to 2, 000 plant employees. The cuts might be larger, but the F-16 is still a strong force in international sales markets, and Lockheed Martin hopes it can sell as many as 1, 000 more to other countries during the next decade. Chile was expected to be first among South American nations with a purchase. The country sent a team to Fort Worth to look over the F-16 and test-fly the fighter. Since last fall, however, the price of copper, Chile's No. 1 export and the source of much of its military spending cash, dropped by a third. Also, exports of Chile's salmon and abalone to Japan and other Asian nations have fallen in recent months due to Asia's economic troubles.
Chile has been forced to devalue its currency, the peso, and raise interest rates twice since Jan. 1. The International Monetary Fund warned last month that the nation, which enjoyed strong economic growth in the past decade, must "tighten" its policies because of the its "vulnerability to Asia's economic slowdown". In addition to its economic concerns, Chile suddenly changed defense ministers. This means that everything is put on hold while the new person is brought up to speed.
As if that weren't enough, eight Boeing/McDonnell Douglas F-18 fighters are being shopped around international markets at discount prices. The jets were destined for Thailand, which had to renege on a purchase because of economic problems. Chile is believed to be in the market for up to $600 million worth of fighters, a figure that would enable it to buy as many as 20 F-16s and related servicing. Lockheed Martin is competing with Sweden's Grippen and the French Mirage 2000 as well as the F-18. American weapons makers worry that residue from the 20-year ban may work against them when Swedish and French salespeople, who have always been open to South American sales, make their calls.
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