Raping the Navy and Marines to subsidize the F-35A

For years the cost of the F-35 has been “coming down.” I put the quotes around “coming down” for a few reasons. The first being that the F-35A purchased in 2013 will largely not be fully compatible with an F-35A purchased in 2019 the differences in airframes and engines means that the USAF is going to have to spend even MORE money upgrading and retrofitting the aircraft it has already purchased (which Lockheed Martin will not advertise as a purchase cost, but try to hide in a maintenance budget instead of an authorized upgrade budget). The second is that all these cost savings projections are based on estimated sales, and the reality is that when you constantly advertise that the cost will drop in the future to spur a big international community group buy of aircraft in the present you only incentivize the poorer countries to wait longer.

To illustrate the ever falling F-35 prices….

2013: http://www.cbc.ca/news/politics/f-35-fighter-jet-price-to-fall-with-new-pentagon-deal-1.1366279

2014: http://www.reuters.com/article/us-lockheed-fighter-idUSKBN0HD2QB20140918

2015: http://www.janes.com/article/50102/f-35-procurement-cost-estimate-drops

2016: http://www.military.com/daily-news/2016/03/16/f35-cost-may-drop-to-85-million-by-2019.html

Wow! What a bargain, possibly 85 million per copy of F-35A by 2019 for a plane that won’t be mission ready until 2022 at the earliest: http://news.yahoo.com/why-f-35-may-not-180600040.html

But you want to know why this “news” is bullshit? Because it is nothing more than “creative accounting” to rob Peter to pay Paul.

The B and C variants designed for the Marine Corps and Navy, which are heavier and purchased in smaller quantities, are not included in the 2019 goal.

Yup, you heard that correct, Lockheed Martin is publically signaling that it is going to utterly rape the US Navy’s budget in order to subsidize the F-35A in an effort to attract more international sales in the hope that economies of scale come into play and keep the F-35 gravy train rolling.

I’ll bet you dollars to donuts that the “per unit cost” across the three variants of JSF doesn’t budget much if at all, but as the USN and USMC ramp up purchases, Lockheed Martin will get another cool billion per six F-35Bs or four F-35Cs it sells…

Just to be clear, if a plane that cost 120 million per copy in 2013 costs 85 million per copy in 2019 it truly would represent an astounding, amazing, miraculous sustained 30% cost reduction per unit over a six year period, or 5% per year. Of course the previous talking points were “2%” and “4%” and “6 to 8%” so it’s not like the discounts weren’t getting higher and higher as Lockheed Martin got more and more desperate as public notice started plaguing the program.

And the title of this post says “Navy and Marines” and I don’t mean just the US Navy and the US Marine Corps….

The biggest clue that the F-35 will never achieve the economies of scale? The British government is converting one of the aircraft carriers built to house the F-35B into an amphibious assault platform to house Royal Marines and their helicopters. http://www.upi.com/Business_News/Security-Industry/2016/03/16/New-carrier-to-be-modified-for-amphibious-operations/7501458149536/?spt=sec&or=bn

As a reminder the Queen Elizabeth class carriers were funded at 6.2 Billion Pounds for the two of them. At a 1.4 Dollar to Pound ratio that works out to 8.68 billion dollars. At 6 F-35Bs per billion dollars the two Aircraft carriers cost the same as 52 F-35Bs. The QE Class carriers were slated to carry 40 aircraft, with up to 50 possible. The F-35B cost made it financially preferable to take a 4.4 billion dollar aircraft carrier and give it the same mission as a 750 million dollar Wasp class Amphibious Assault Ship. Think about that for a moment.

The Brits just gave up an aircraft carrier because it didn’t make sense to keep it as an F-35B platform. I’m sure it will be the most awesome Amphibious Assault Ship ever, but still, for 4.5 billion it should be.

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