Posted on 02/16/2016 5:21:07 AM PST by sukhoi-30mki
Boeing Co. wants Prime Minister Narendra Modi to keep something in mind as he looks to turn India into a defense manufacturing powerhouse: Size matters.
With Modi planning to spend $150 billion to modernize military equipment over the next decade, the world's largest aerospace company sees an opportunity to grow its presence in India. Boeing lost out in 2012 to smaller French rival Dassault Aviation in what was then the biggest fighter-jet deal on record.
"If India wants to jump start an aerospace economy, do you want to do that with Dassault -- that's about a $5 billion company -- or do you want to do that with Boeing, which is a $97 billion aerospace company?" Jeff Kohler, vice president of global sales for Boeing's defense unit, said in an interview on Monday in Singapore.
Modi has set an ambitious goal of shifting India from the world's biggest weapons importer into a global hub for defense manufacturing. The country sold about $150 million of arms in the last fiscal year -- a fraction of the $64 billion in worldwide defense trade and its own imports of $5.6 billion.
Oftentimes the need to quickly replenish ageing weapons has taken priority over making them in India. Last April, Modi scaled back the deal with Dassault to buy 36 Rafale fighter jets off the shelf instead of building 126 in India after negotiations hit repeated delays. That effort, too, has since stalled over price.
Fighter jet makers including Boeing and Saab AB are now gearing up for another shot at supplying India's aging fleet. About a third of the Indian Air Force's 650 planes are more than 40 years old and set to retire in the next decade.
(Excerpt) Read more at ndtv.com ...
I can’t imagine a more frustrating task than negotiating with the Indians
India would *love* to fly American war aircraft, but with that quality and depth of parts support comes complexity and expense. Most of the US stuff is just outside their pocketbook. India would be a good customer for some down-rev F-15s and F-16s. Their big problem is helicopters; the need to operate in the upper reaches of the Himalayas calls for specialized aircraft that Boeing doesn’t have on the shelf (and neither does any other big manufacturer, for that matter).
“I can’t imagine a more frustrating task than negotiating with the Indians.”
I sold Infiniti automobiles a very long time ago and one of my favorite sales stories of all time involved an Indian “customer” who of course turned out to never buy anything.
He came in with an invoice for the car he wanted and offered 1% above dealer invoice. At the time the spread between invoice and sticker was probably 13% or so on the model he wanted. Under no circumstances was the dealership going to make the deal. At best he was going to get $1,500 or so off the sticker, that’s the way of the world in high end autos at the time.
He told me we would never survive in business that he built PC’s and made 1%! He kept saying that over and over and over again. I make 1% on what I sell! 1%!
I politely informed him that his profit ratio and my profit ratio were not corollary and that many businesses could not operate on such a ratio and remain open.
He huffed off and said he would never be a customer and likely insulted my family cow in Hindi as he left.
I don’t know if it was cultural or his perception of the auto business that a $50,000 car really could be bought for $70 over invoice and we would remain open. I can’t imagine trying to sell them billions of dollars in hardware on that basis.
What happened to MD? They sell out?
I used to work in avionics and Boeing was our biggest customer. We had to negotiate with the French on a project, that was the worst!
But, from what I hear once they beat you into submission, they stick with the deal.
No, my experience with the French is they will continue the negotiations long after the work is complete and before final payment
Except maybe the union.
I also heard they make a really big deal of lunch and are disgusted with the way we scarf lunch and go back to work.
I guess Boeing has enough experience of negotiating with the Indians: they’ve signed deals for Apaches, Chinooks, C-17s and P-8 aircraft in less than a decade.
I don’t think “cost” is the issue with U.S. equipment. The Dassault Rafale and Eurofighter are far more expensive per unit when compared with U.S. fighters. And India has purchased a lot from the U.S. over the past decade despite having deals with the likes of France or Israel, both of which manufacture more expensive equipment.
The issue has primarily to do with growth potential (the U.S. won’t buying up substantially more F-16s or Super Hornets and the two platforms’ relative age) and U.S. political control over “sensitive” technologies.
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