Magazine article National Defense

F-35 Industrial Base Relies on International Participation

Magazine article National Defense

F-35 Industrial Base Relies on International Participation

Article excerpt

The F-35 Lightning II joint strike fighter has become a model for international cooperation.

According to Aerospace Industries Association's Remy Nathan, who runs AIA's international trade division, aerospace is a global industry and an increasingly competitive international marketplace and is becoming more so all the time.

That international competition is a good thing, broadening the market that may offer new, better or different products. "We can tap into the best technologies at the best possible price," Nathan says. "Our warfighters and customers worldwide benefit."

There has been an emphasis of security cooperation and building partnerships, especially in the post-9/11 environment. "There is international content in every single defense platform," Nathan says.

There is a direct relationship between having foreign customers for your products, to include major systems like the F-35, and having foreign content. "It can be a discriminator," Nathan says.

In an average program, a country buys the airplane and they have either a policy or law that stipulates some percentage of the purchase price of that airplane has to be offset back in the purchasing country. Countries can spend literally billions of dollars buying the weapons system, and most of them are looking for some economic return for that large an outflow of cash. So many programs require "offsets."

Offsets come in two forms--direct and indirect--direct meaning equipment that is installed on the airplane weapons system, and indirect being anything that stimulates their economy that may not be related to the purchase of that weapon system.

Some offset programs require investment, and some just include foreign content. The more flexibility the better. "It can be a challenge to discharge offset obligations and have a value in the foreign buying country. But it behooves both sides of the transaction that they succeed," according to Nathan.

Despite offset obligations, every supplier has to meet a high standard. "A customer may want to provide content, but the prime also has an obligation to that buyer and every other buyer to provide the best aircraft at the best price," Nathan says.

"A program of the magnitude of the F-35 is all about partnerships," says Steve Over, Lockheed Martin's director of F-35 international business development.

"It starts off first at the government-to-government level, because the F-35 is a tool of U.S. foreign policy and developing stronger relationships with all these international partners around the world," Over says. "And it's about building coalition capacity, where the U.S. is providing the absolute best, state-of-the-art, 5th-generation fighter technology to partner nations that someday in the future they anticipate going into combat with against the forces of evil. As they look forward 10 years from now, 15 years from now, 20 or even 30 years from now, these international partners have the capacity to go to war with the United States."

There are currently no offsets with any of the partner countries purchasing the F-35, but industries in the countries that are buying the airplane have been given an opportunity to participate in its global supply chain, he adds.

For Denmark's Terma A/S, participation in the F-35 program is critical to the company today and for the future. Terma is providing composite components to Northrop Grumman, which is responsible for the center fuselage; Marvin Engineering, which is making the missile pylons; and General Dynamics Ordnance and Tactical Systems, which is building the gun pod. Terma is also providing the horizontal tail leading edge and the data acquisition, recording and telemetry pod directly to Lockheed Martin.

Over says Denmark and Terma are good examples of the F-35 global supply chain. "Terma had to compete against U.S. and other countries' providers of equipment. In each of these competitions, the selection was based on a cost/ value basis, meaning that their prices and the equipment that they operate is a best value to the overall F-35 supply chain. …

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