Thursday, 19 July 2012


The Canadian government has tried to justify purchasing the F-35 by the production work the program will provide to industry, and the high-tech jobs this work will create and support. They imply that buying the F-35 guarantees highly profitable, high-tech work for the buyer’s national aerospace industry.

In Fact the F-35 is the only international aircraft program in recent history to guarantee no industrial benefits whatsoever to its partners.

The truth is that no partner country has a guaranteed work-share on the program. Being an F-35 partner only gives the right to compete for contracts, with no guarantees of winning, and there is no entitlement to any work at all, however much a country has invested, except for major partners Italy and the United Kingdom.

In return for having contributed several hundred million dollars to F-35 development Tier 3 partner countries, including Canada have obtained a single privilege: their industry is allowed to compete and bid for production work. 

 No country, nor its industries, has any guarantee of winning work, because contracts will simply go to the lowest compliant bidder. This is a crucial aspect of the program. Industry Canada now estimates Canadian companies are eligible to bid on as much as US$9.8 billion in contracts — down from an estimate of US$12 billion just last year, The Canadian Press reported May 4. However, none of these figures are guaranteed, as the Opposition New Democratic defense spokesman stressed in the same article. 

 But, even then, a senior government official told a parliamentary committee that “this projection assumes the contracts are renewed throughout the nearly 50 years the fighter is expected to be in service,” the newspaper reported. 

 To date, a decade into the program, Canadian companies have signed US$435 million in F-35 contracts, the paper added, out of the C$12 billion the government expected its industry to win.  Canada’s Auditor-General, in his April 3 report, voiced “concerns about the basis of the projections of industrial benefits for Canadian companies [as] Projections made by the prime contractors were (and continue to be) extrapolated over the entire production period.”

 The report adds that the far greater share of projected benefits “are based on a combination of opportunities…. that are available through competition to companies from partner countries,” but they “are the least certain, since Canadian companies must compete against companies from other partner countries.”

  The Auditor-General also noted that prior to signing on to the program, senior defense decision-makers were warned “that industrial benefits could not be guaranteed under the (Joint Strike Fighter) program.”

 What all this means is that F-35 partner nations have given up their right to industrial offsets in  exchange for the right to bid on contracts their industry might, or might not win, and on which it might, or might not, make money.

 Given that very high offset rates are normal for large fighter purchases – India and Switzerland have both requested 100% of the contract value for the fighter purchases they are now negotiating – it is clear that the F-35 partner nations accepted a very bad deal, since it is arithmetically obvious that none will be able to offset its F-35 purchase by anywhere near 100%.

 The Government can not claim that purchasing the F-35 guarantees anything. That being the case, why do they seem so intent on going through with the program? One can only assume that they would rather do anything, even make a mistake, as long as they do not have to admit that they have made a mistake.