Chart Credit: Lockheed Martin
Posted on 10/29/2013 10:11:31 PM PDT by sukhoi-30mki
U.S. Fighter Aircraft Pricing Themselves Out of the Export Market
By Sandra I. Erwin
At a time when U.S. arms manufacturers are turning to overseas markets to help make up for declining sales to Pentagon, analysts warn that the high prices of American fighter jets could place U.S. firms at a competitive disadvantage.
The arrival of the F-35 Joint Strike Fighter gives manufacturer Lockheed Martin Corp. an opportunity to sell the world’s most technologically advanced aircraft. But its price tag, in excess of $100 million per airplane, will make it unattainable for most non-U.S. buyers, according to new analysis by The Teal Group, a market research firm. Other perennial contenders in international competitions, Boeing’s F/A-18E/F Super Hornet and F-15 Eagle, also are becoming out of reach for many nations.
“We've jacked up the price of fighters,” says Teal Group Vice President Richard Aboulafia. “The export market’s reaction? ‘No, thank you,’” he tells industry executives at a meeting hosted by the Air Force Association, in Arlington, Va.
Although the average unit price of fighters sold internationally today is $65 million — about the cost of a Super hornet — the bulk of the export market increasingly wants F-16 prices, which is about one-third less, says Aboulafia.
Of 52 countries that buy fighters worldwide, 30 are in the $35 million to $50 million price range, he says.
American firms face a “ real issue” trying to sell higher end machines, Aboulafia says. There are currently just five F-15 users after 40 years of trying to sell it internationally, and one non-U.S. user of the Super Hornet after 15 years of competitions, he says. “That's not good.”
As the manufacturer of the F-16, Lockheed effectively owns the keys to the kingdom of export fighters, says Aboulafia. The problem is that the company is focusing its marketing efforts on the F-35 as it courts international buyers, and only a handful of countries can afford it.
“It's very telling when you go to [Lockheed’s plant in] Fort Worth, Texas, that the F-16 line is treated like the red-headed stepchild,” he says. “I don't think it's necessarily in their interest to keep it going. … But it is concerning because, in terms of the export market, the F-16 line is extremely relevant and necessary.”
The majority of buyers over the coming decades will shop for fighters in the price range of the F-16 or the Mirage 2000, made by France’s Dassault Aviation, Aboulafia says. “And that is the market that we're in danger of abandoning.”
It is estimated that only seven countries could afford the Super Hornet and another seven might be candidates for the F-35, including Singapore, Japan, Israel and South Korea.
That is a very small pool of buyers, says Aboulafia. For most countries, “a buck and a quarter isn't going to cut it,” he says, referring to the current price of the F-35. “If prices don't go down, the U.S. risks losing a considerable chunk of the world export fighter market which isn't only important from an economic standpoint, but also for strategic relations and keeping allies happy.”
The United States already riled key allies when the Air Force decided to end production of Lockheed’s F-22 air-superiority fighter at 187 airplanes, before it could be sold internationally. “It is bad enough we killed the F-22 before satisfying Japan and Australia," Aboulafia says. The F-35 is now the only high-end fighter in a position to compete for a small number of wealthy nations’ business, he adds. “Having a one-size-fits-all $100 million fighter is just as dangerous in a lot of ways. The market might not grow to pay that price.”
A shrinking pool of buyers is simply the result of global economic trends.
A group of countries that used to buy lower end fighters bifurcated into haves and have nots. The haves, such as South Korea, moved up into the F-15 or F-35 market. The majority of the have-not countries — including Kenya, Bolivia and Argentina — no longer buy anything except used planes, says Aboulafia. “The market either migrated up or down.”
This puts the United States in a tough spot trying to compete in the developing world as U.S. manufacturers struggle to keep their production lines going. “The last F-15 gets delivered in 2018 or 2019 to Saudi Arabia. … The last F/A-18 E/F exports deliver in 2015 or 2016 unless we win Brazil or Kuwait,” says Aboulafia. Current orders for F-16s would extend production until 2017. “This is worrying.”
The biggest pot of future fighter business, which he calls the "undetermined" sector of the market, is in developing countries that demand lower prices and more technology transfer. “If you want to survive in the fighter market and you're not Lockheed or [Russian manufacturer] Sukhoi, this is what you have to access before the next decade.”
The United States blew a major opportunity in India last year, where Lockheed and Boeing lost to Dassault’s Rafale, he says. “It's pretty clear we did a bad job of promoting U.S. products and make sure that everybody in Treasury, State and Defense were on the same page in terms of technology transfer and offset issues.”
U.S. firms should worry about Sukhoi’s T-50 fighter, he says. “Russia fell from grace, but they've done a good job reinventing their industries,” Aboulafia says. “The T-50 looks real to me, although it's going to happen slower than expected.”
There are only four remaining fighter competitions — in Brazil, Malaysia, Kuwait and Qatar — where the F-35 is not participating and the stakes are huge for the F/A-18, F-15 and F-16, he says. For U.S. industry, winning these deals could be a matter of survival, he says. “If you want more than one fighter line, you have to start accessing the undetermined market. ... That is why it was such a disaster when the F/A-18 lost India.”
That Lockheed has kept the F-16 line going on exports alone is "extraordinary,” he says. Nearly 4,600 have been sold since 1970. “The F/A-18 is not going to have this future if the U.S. Navy stops buying them. It doesn't enjoy a decade thriving on exports.” The Super Hornet is “good value for money, but it's not in a sweet spot. It's not really high end, and not really 'great' value like the F-16 is.”
Lockheed Martin spokesman Ken Ross says the company does not see the F-35 limiting its opportunities in the international market. The F-35 and the F-16 are “complementary” products, he says. The F-35 is for those countries that are looking ahead to the “next level of capability,” Ross says. “We provide options.”
Chart Credit: Lockheed Martin
You get what you pay for.
as they have modded the f15 to the f15-stealth eagle, i would suggest doing as much as possible to offer a f-16 stealth version.
After all these years, the F-16 continues to be the best damn MRF ever.
It appears physics and engineering capped out in the early 1970’s.
In 10 or so years (late 60s, early 70s) we developed and deployed the F-16 MRF, the F-15 Air Superiority, the F-18 MRF, the F-14 Tomcat (killed by politics not ability) and the B-1 Lancer. Not to mention the craft that will never be bettered until we get warp drive: the SR-71 Blackbird.
The F-22’s avionics may have given it an edge, but it has never actually proven itself to be 1:1 air superiority over, say, the F-15.
The only meaningful change since then have been the F-117 Nighthawk and the B-2 Spirit. But they were incremental, not fundamental, changes.
My point is: Back then we had grand ideas that started from a napkin and ended in short order in production-ready craft that have stood the test of time.
Nowadays, we have the F-35 flying anvil which took 20 years to even get a test drive and are useless for any purpose.
A camel is a mouse built to government specifications.
bump
“After all these years, the F-16 continues to be the best damn MRF ever.
It appears physics and engineering capped out in the early 1970’s.
In 10 or so years (late 60s, early 70s) we developed and deployed the F-16 MRF, the F-15 Air Superiority, the F-18 MRF, the F-14 Tomcat (killed by politics not ability) and the B-1 Lancer. Not to mention the craft that will never be bettered until we get warp drive: the SR-71 Blackbird.”
Good points.
F14 has speed and range over newer stuff.
SR71 was abandoned but the older, slower, lower flying, everything less U-2 was kept?! What the F**K?!
With the current Obama regime, probably our next weapon system will be designed by the same people who did Obama’s “Cr*pCare”.
The “healthcare” system so bad, that the Dems were willing to shut down the Govt rather than to be required to participate in ObabaCare.
Buy F35, and you get overengineered and overpriced lard.
F22 has so many deep problems that the only people who might have been aable to solve them have been declared persona non grata, but at least they’re judenrein.
The really excellent planes in the us force are dwindling and the production means destroyed.
Anyone see a pattern?
“that the F-20” should be “what the F-20”
Yes, I’d guess it is a matter of what you pay for. Today, there are many bidders on the market for better and better products! We are no longer supreme and will have to lower prices to meet the market it seems....
This is called competition and should be rewarded... My guess is that improvements need to be made in our own products.
Say, don’t forget the xb70 Valkyrie Bomber our only Mach 3 Bomber ever.
Designed by North American Aviation in the late 1950s, the Valkyrie was a large six-engined aircraft able to fly Mach 3+
The buildup of heat due to skin friction during sustained supersonic flight had to be addressed. During a Mach 3 cruise the aircraft would reach an average of 450 °F (230 °C), although there were portions as high as 650 °F (340 °C). NAA proposed building their design out of a sandwich panels, consisting of two thin sheets of stainless steel brazed to opposite faces of a honeycomb-shaped foil core. Expensive titanium would be used only in high-temperature areas like the leading edge of the horizontal stabilizer, and the nose.[25] For cooling the interior, the XB-70 pumped fuel en route to the engines through heat exchangers.[26]
two NACA wind tunnel experts who wrote a report in 1956 entitled “Aircraft Configurations Developing High Lift-Drag Ratios at High Supersonic Speeds”.[21] Known today as compression lift, the idea was to use the shock wave generated off the nose or other sharp points on the aircraft as a source of high pressure air.[22
Wow, before computers where all over the place, men actually used their brains to come up with ideas.
We wont sell the F-22 even to nations like Japan of Australia. And nobody wants the F-35 moonpig. Its underarmed, underfueled, slow, can’t turn, and can’t accelerate.
Its the slowest machine we’ve built in decades. And its vaunted stealth will be stripped away by the next gen of computer analysis of radar images. This will likely happen before it is even fully deployed.
Who wants to buy a 25 year airframe that will have its main selling point ruined in 5 years? Better to go with a Sukhoi or a Strike Eagle. Or wait for an unmanned airframe.
“But its price tag, in excess of $100 million per airplane,[...]”
The price is in excess of $200 million per aircraft.
ping
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