FLUG REVUE April 2002: JSF nets Canada and Netherlands

MORE PARTNERS FOR JSF

By Karl Schwarz

In the midst of the Carnival season, the Dutch government has cast a cloud over the mood at EADS and the Dassault Aviation-led Rafale consortium. On 8 February Prime Minister Wim Kok announced after a long cabinet meeting that his country was joining the System Development and Demonstration (SDD) phase of the JSF programme. The Lockheed Martin F-35 was the "best candidate both on price and performance,” according to Kok.

According to his statement, replacement of the Netherlands' 137 Lockheed Martin F-16's will commence in 2010. The plan is to purchase 85 JSFs, for which the sum of Euro 5.5 billion has been allocated.

Lockheed Martin X-35

The decision came as no surprise, for it was public knowledge that, despite isolated pockets of resistance in the ranks of some coalition partners, Kok himself, Minister of Defence Frank De Grave and Minister of Economic Affairs Annemarie Jorritsma were all in favour of the American solution. Most of the industrial interests represented in the "Dutch Aerospace Cluster” were also publicly in favour of the JSF.

The best endeavours of the European providers proved of no avail. For example, the Eurofighter partners offered participation in the development programme of the multirole fighter aircraft, which would have been worth some Euro 400 million. The prospect of full integration of Dutch industry in other European programmes was offered as an additional inducement. The entire package according to Eurofighter would have totalled Euro 7 billion and would have ensured that all the invested funds flowed back into the Netherlands.

Similar offers were made by the Rafale team as well. Here, as in the case of the Eurofighter proposals, it was stressed that the Dutch would be "real partners” and not just "mere subcontractors”. Dassault even tried to tempt them with a fixed price.

But ultimately it seems that the attractions of the potentially huge numbers of F-35's to be built won the day, as JSF partners participate in the production of all the aircraft. Thus the Stork group (Fokker) can look forward to revenue of US-$ 5 billion over a period of 25 years. The company hopes to develop all the wiring and various composite parts (e.g. flaps and control surfaces). Another major beneficiary will be Royal Philips Electronics.

The first task, however, will be to sort out the "admission ticket”. According to Wim Kok, the price of SDD participation as a Level 1 partner will be Euro 920 million. This amount has to be raised partly by the defence and economic affairs ministries, and partly by industry. The latter will pay a levy of 3.5% on the value of JSF orders back to the state in the production phase from 2006.

However, Dutch companies cannot expect any guaranteed workshares. This was made clear once again by Pete Aldridge, Under Secretary of Defense for Acquisition, Technology and Logistics, on 7 February. "Every company will have to compete on a fair basis,” he declared on the occasion of the signing of the JSF agreement with Canada in the Pentagon.

This agreement makes Canada the second international partner on the JSF programme after the United Kingdom. Canada is to be a Level 3 participant. The price for this is no more than $ 100 millions plus $ 50 million from Technology Partnership Canada (subsidies for companies) plus the services of the Canadian Commercial Corporation, free of charge use of Canadian test facilities and funding of the staff seconded to the JSF Programme Office.

All the same, the Pentagon plans to give full consideration to the question of whether in return for this Canada might not have to pay any development cost surcharge on the F-35's it orders. In any case, it is a positive development that a portion of the licence fees payable on sales to third countries will also go to the Canadians. And there is a backdoor as well: "The Canadian defence ministry can withdraw from the JSF framework agreement and this addendum if it is of the opinion that the participation of Canadian industry in this project is not satisfactory.”

In any case, Canada is not in a hurry to procure any F-35's. Its F-18's will remain in service until 2017-2018. By then, its requirements will be clear, according to Alan Williams of the defence ministry, who in the short- and medium-term is already dreaming of 3,500 to 5,000 jobs created on the back of the JSF programme.

From page 56 of FLUG REVUE 4/2002

Last updated 8 March 2002

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