F35 supply chain already benefits Canada

KEN POLE  –  Aug 26, 2019

Lockheed Martin is promising significantly lower capital and operating costs of its F-35 Lightning II Joint Strike Fighter (JSF) even as it continues development of what a company spokesman describes as a truly “mature” aircraft.

The Maryland-based aerospace giant is one of four potential bidders to supply the Royal Canadian Air Force with 88 replacements for the RCAF’s still capable but steadily ageing fleet of Boeing CF-188 Hornets, the first of which entered service in 1982.

The other contenders currently reviewing the government’s Request for Proposals, issued July 23, are the larger enhanced F/A-18 Super Hornet from Boeing, the Gripen E from Sweden’s Saab, and the Eurofighter Typhoon from an Airbus-BAe Systems-Leonardo consortium.

Billing the F-35 as “the world’s most advanced fighter”, the spokesman noted that more than 410 F-35s had been delivered to eight customers and were in operating from 19 bases. The fleets have logged more than 205,000 flight hours in the process. “We’re delivering airplanes . . . several times a week,” he said, speaking on an unattributed background basis.

Ninety-one F-35s were delivered last year and 135 are scheduled in 2019 and with production steadily ramping up, the goal is to have delivered more than 860 in three variants by the end of 2022. That would about when Canada should be signing a contract for its next-generation fighters.

If Canada does choose the F-35, it would be the land-based A variant, which cost US$89.2 million in 2017, compared with the B, a short take-off and vertical landing variant at $115.5 million, and the C, a ruggedized carrier-based variant at $107.7 million.

Those prices were for aircraft produced in Low-Rate Initial Production (LRIP) 11 in which costs were down 5.4 per cent from LRIP10 for the A, 5.7 per cent for the B and 11.1 per cent for the C. “That indicates a 60 per cent reduction in unit flyaway costs from LRIP2 to LRIP10,” said the spokesman. “That’s going to continue to come down.”

A chart provided by Lockheed Martin projects that the average LRIP13 cost this year at less than $80 million for an A, likely a key number for Canada. The spokesman said that is a year earlier than expected and is “a confidence factor that we’re very proud of.”

Hourly operating costs currently average an estimated $35,000 but the Lockheed Martin spokesman said the goal is to reduce that to $25,000 by 2025. When FrontLine asked what is factored into operating costs, the spokesperson replied that there was “no simple answer.” He explained that costs are broadly defined by their operators. “Every customer might have a different set of mathematics that goes into . . . all the operating costs that they track for a particular program. Some will amortize broad costs into each program; some don’t.”

Continued economies in Lockheed Martin’s F-35 supply chain could be a factor in cost-containment overall, he added. Already part of that chain, are 71 first- and second-tier Canadian suppliers – a clear benefit of Canada’s long-term involvement in the multi-national JSF project.

Continued involvement is expected to benefit those suppliers through opportunities to sustain the entire global fleet of F-35s, which is projected at close to 4,000 with the U.S. expected to buy more than 2,600. “Canada is well positioned because it is co-located with the biggest fleet of F-35s,” the spokesman said. “As we build up sustainment capability in Canada to sustain your aircraft, that will inherently be an opportunity to support the F-35s in North America collectively.”

– Ken Pole