Japan F-35 Update – First 4 ALREADY at a Premium!

F-35s in production (sort of). A sight we won’t be seeing in Japan.

Here’s Japan Accepts First F-35s Despite Cost Premium

Was actually stuck on a train midway between Tokyo and them mountains without my MacBook Air on Friday so filed this late, but it does feed into my take on the F-XX purchase coming later, which will be the ASDF’s and MOD’s most significant purchase of the next 20-30 years.

Things don’t look good if Japan is ALREADY paying more than was agreed on last year, see: Japan May Cancel F-35 Buy if Cost Rises.

All-in-all, with Japan being a complete novice at offset trade negotiations and with it’s defense industrial base severely weakened, it seems that the MOD might have gotten a little out of its depth!  The Pentagon is altering the deal, and let’s hope they don’t alter it any further.

Japan Accepts First F-35s Despite Cost

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Jun. 29, 2012 – 12:36PM   |By PAUL KALLENDER-UMEZU   |   1  Comments

TOKYO — Japan’s Ministry of Defense (MoD) said June 29 it had agreed to purchase the first four of 42 Lockheed Martin F-35s and two simulators for 10.2 billion yen ($127.8 million) each, plus parts, for a total cost of 60 billion yen, according to a news release.

The price of the initial four jets in the Letter of Offer and Acceptance singed by the MoD is significantly above the 9.9 billion yen ($124.1 million) agreed to last December, when, in a contentious decision, the ministry selected the advanced but still developmental F-35 to replace its 1960s-era F-4EJs.

After a tough request for proposals review, the MoD opted for 42 of the stealthy F-35s over the flight-proven and less expensive Eurofighter Typhoon and Boeing F/A-18E/F Super Hornet.

The price rise comes in spite of a threat, repeated publicly by then-MoD Minister Naoki Tanaka, that Japan would consider canceling the F-35 purchase if significant troubles and delays emerged. The Pentagon’s January decision to delay orders for 179 F-35s over the next five years as part of defense budget cuts, and an admission by Lockheed that this will boost prices, has caused international concern.

Underscoring Japanese alarm that it might have stuck itself with a steadily worsening deal, Tanaka said at a Feb. 24 news conference the MoD had asked the U.S. to “strictly adhere” to the terms of the agreement, including the original 9.9 billion yen price and 2016 delivery date.

That threat appears to have melted away. Despite the retreat, local defense analyst Shinichi Kiyotani said that because the cost did not rise even higher that might be interpreted as a partial victory for the MoD, which could face an even tougher job suppressing future price rises for the remaining 38 jets if the program suffers further glitches.

“The MoD has got a pretty good price and negotiated well compared to the price rises that might come later,” Kiyotani said.

The planned purchase of the other 38 jets has yet to be formally confirmed.

Details Scant on Anglo-Japan Defense Cooperation

Japan’s leading daily, the Yomiuri Shimbun, has a long editorial (see Japanese-British security ties must be strengthened) on UK PM David Cameron’s meeting with Japanese PM Yoshihiko Noda on Tuesday, but details of exactly what the potential partners are going to cooperate on remain scarce.

BAE M-777

BAE Systems M-777

My sources tell me that there is quite a bit of regret in some sections of Japan’s political and military establishment for choosing the Lockheed Martin F-35 Lightening II multirole fighter over the Eurofighter Consortium’s Typhoon, whose development is being led by BAE Systems. Analysts not troubled by ties to the U.S. who seem pretty neutral, question last December’s decision to buy American after a long and lengthy RFP say that the Typhoon, which while expensive could work out considerably cheaper than the F-35, would have actually suited Japan’s needs more.

With the cost outlook for the F-35 seeming to worsen every time you care to look, (see  Japan F-35 deal unchanged, Japan May Cancel F-35 Buy if Cost Rises, or just Google search “F-35 Canada”!)  one senior source in the UK Defense establishment called Japan’s purchase of the F-35 not so much a license to assemble the vaunted but troubled 5th generation stealth fighter so much as “a license to write a blank check” to the Americans.

The article reaches the same sort of conclusions Andrew Chuter and I printed last week:

“Small equipment, such as chemical protective suits, is considered a strong candidate at the initial stage of the joint development between Japan and Britain. The British side suggested a helicopter as a candidate. We hope the two countries will study and select a program advantageous to both countries.”

The article also contains some disturbing information about those perpetually cast Japan as some sort of nationalist warmongering nation not weaned of/ harboring secret intentions to regain past imperial pretensions aided and abetted by the U.S.

“To the Defense Ministry’s knowledge, 35 tank-related companies, 26 vessel-related companies and 21 fighter-related firms have either withdrawn from the defense industry or gone bankrupt since 2003.”

Japan Begins Building Technology Demonstrator Fighter Shinshin

As one commentator on my story said, by the time the the F-35 is perfected and the Shinshin is flying, the U.S. will probably let Japan have the F-22 anyway, as it will be old hat by then. That’s a very cynical point of view as the F-35’s troubles continue, mainly in terms of cost growth.

 However, Japan is being sensible, at least on the surface of it. Whether or not TRDI and MHI can deliver on the Shinshin is an issue that is going to emerge over the next three or four years. The TRDI is often criticized for being too research orientated and not product driven. Questions about the Shinshin include just how much stealth technology will the DOD let Japan have. After the FSX debacle, Japan’s strategy has been to make sure it keeps at the edge of certain elemental technologies and subsystems while not remaining too far behind on systems technology just in case. So what sort of hedge is Shinshin? An interesting question. And what sort of leverage will it give Japan if any against the F-35?

Anyway, here is the brief story I put in for Defense News.

Japan F-35 deal unchanged…says David Venlet

Just seen an article from Reuters; Navy Vice Admiral David Venlet, who heads the Pentagon’s F-35 program office, has assured Japan, one of the first two foreign countries outside the eight original international partners to buy the stealth fighter, that the terms of its agreement in December to buy 42 F-35s would not change as a result of the Pentagon’s announcement that it would delay US orders for 179 of the fighters.

“Their deal is firm,” Venlet is reported to have told  a defense conference hosted by Credit Suisse and defense consultant Jim McAleese in Turkey.

At the same conference, Venlet is also reported to have admitted that per-unit costs of the F-35 will rise because of the delay, although he declined to quantify the changes. He also said the U.S. was still on course to order 2,443 fighters.

Background: earlier this year the Pentagon said it was postponing orders of  179 F-35s to save $15.1 billion through fiscal year 2017, and allow more time for development and testing, provoking international concern, not least from Japan. As I reported in Defense News a few weeks back (see Japan May Cancel F-35 Buy if Cost Rises), Japanese Defense Minister Naoki Tanaka said Japan could cancel orders for F-35 jets if the price rose. Japan is due to pay 9.9 billion yen ($121.62 million) per fighter for an initial four F-35s scheduled for delivery by March 2017. Japan had sent a senior defense official to the United States to demand that the US stick to the price and delivery date for F-35 fighter jets.

“We can look national leadership in the eye and say, ‘Your deal is good, with the (terms) that you were offered,'” Venlet is reported to have told reporters after his speech at the conference, referring to his conversations with Japanese leaders.

Japan Assessing Lockheed Offer To Assemble F-35s

You couldn’t make it. We’d been hearing a lot of rumors about discussions between Japan and the U.S. and MHI and Lockheed Martin about the terms of the offer for local assembly and build of the 38 F-35s agreed to by Japan last December, with the whole deal looking increasingly contentious following the DOD’s decision to slow down its procurement of the JSF. This led to shockwaves around the world as JSF partners and many other countries considering the F-35 were given more food for thought to reflect on the decision. I’ll keep my own counsel on the F-35, but it is clear that in the following weeks Japan needed to vocalize and publicize its misgivings.

Here is a special report written by Wendell Minnick that I contributed to, followed by my story, published in February in Defense News.

Japan Delays F-X Announcement

Given the strategic importance and Alliance issues attached to the purchase of the F-35, Defense News asked me to wring every last drop out of this story. As stopped being a full-time journalist in 2002, December was an interesting month!

Japan To Launch Much-Delayed F-X Contest

Again, here is anearlier story I did (back in March 2011) with esteemed colleague Wendell Minnick about the earlier stages of the F-X RFP…

TOKYO and TAIPEI – After years of vacillation, Japan’s Ministry of Defense (MoD) plans this month to formally launch a $10 billion purchase of 40 to 50 fighter jets, a program that could make or break the country’s ability to manufacture combat aircraft.

The F-X program will release a request for proposals March 28, sources in Tokyo said. Bids will be due Aug. 31, and a contract awarded at the end of this year, they said.

The competition will be closely watched by the Japanese defense industry. Unless some of the F-X planes are produced in Japan under license, the country faces its sunset as a maker of fighter jets. Production of Mitsubishi F-2s, the country’s only active fighter line, is to close in September.

A deal to make at least some of the F-Xs will prove very profitable for local industry, “but no licensed production will be tantamount to disaster,” a Japanese defense industry source said. “We have excellent engineers, and a generation of skills will be lost.”

Three competitors are expected to vie for the contract: the Boeing F/A-18 Super Hornet, Eurofighter Typhoon and the Lockheed Martin F-35 Joint Strike Fighter (JSF).

Boeing and Eurofighter are set to offer licensed production in their bids, but Lockheed may be unable to do so. Japan is not a member of the multinational JSF partnership, thanks to its self-imposed ban on making defense items for export.

Attempts by Japan’s defense industry to repeal the ban have met stiff resistance from pacifist political opposition groups.

This makes licensed production of the F-35 nearly impossible in Japan, said Satoshi Tsuzukibashi, director of the Office of Defense Production Committee at the Japan Business Federation, or Nippon Keidanren.

And that could finally scuttle the Japan Air Self-Defense Force’s (JASDF) dreams of buying a fifth-generation fighter. The F-X program was supposed to launch in 2007, but officials delayed it in hopes that the U.S. would allow Lockheed to export the F-22. When those hopes were dashed, Tokyo set its sights on the F-35, only to see the JSF effort dogged by delays and cost overruns.

“The delay of the RfP last year was somewhat because of the delay of the F-35,” Tsuzukibashi said.

Despite the doubts over licensed production, Lockheeds plans to compete for the F-X, offering some form of industrial participation, said John Giese, the company’s senior manager for international communications. He said the F-35 “meets Japan’s F-X acquisition timeline, both to support the F-X model selection decision to be made in 2011 and for delivery of aircraft and sustainment to meet JASDF’s F-X delivery requirements.”

But for the Japanese defense industry, licensed production remains the bottom line.

Industry “will happily accept the MoD’s decision for any of the options on the table, as long as the MoD secures licensed production,” said a senior Japanese defense industry source, who added that Tokyo must “do all it can to convince the U.S. to allow for technology transfer and licensed production if the MoD does opt for the F-35.”

If not, the source said, defense industry favors either the F/A-18 or the Typhoon as a matter of survival.

Boeing and Eurofighter are taking advantage of these fears.

Boeing would offer Japanese industry opportunities to develop and produce the F/A-18, including options under the new Super Hornet International Roadmap capability program, said Joe Song, Boeing’s vice president of Asia-Pacific business development.

“We believe we can offer a substantial package to Japan that enables it to sustain and advance its defense aerospace business for follow-on development,” Song said.

Kory Mathews, Boeing’s vice president for F/A-18 and EA-18 programs, noted that Boeing had brought Japan licensed production of the F-4EJ and F-15J.

But the Super Hornet faces stiff competition from the Typhoon, the first serious effort by a European fighter to unseat U.S. dominance in Japan. Tsuzukibashi said Eurofighter officials have been promoting it as a flexible, inexpensive alternative to the F/A-18 and F-35, and they believe it has a good chance of winning.

A European industry source in Japan said technical export restrictions hamper F-35 exports, while Eurofighter has “no blackbox policy,” which means wider options for Japanese industry participation.

A senior Japanese defense industry source said, “The Eurofighter people are always talking about full disclosure technology for production and technology transfer to Japanese industry and the MoD. The guys from BAE are very hard workers … very enthusiastic for promoting the Eurofighter option for the F-X.”

Eurofighter has teamed with Sumitomo, a major Japanese integrated trading and investment enterprise, to fight for the F-X contract.

Yet the Japan-U.S. military alliance and pressure to procure a U.S. fighter may keep the MoD from picking a European fighter, Tsuzukibashi said.

The F-X will replace Mitsubishi F-4EJ Kai Phantoms due to begin retiring in 2015. Tokyo is also considering buying more fighters to replace F-15Js in the next 10 years. That could increase the number of F-X fighters to 150, lowering the cost of manufacturing in Japan.

Typhoon Tries To Wrest Japanese F-X From Super Hornet

With the selection of the F-35, here is an older story (July 2010) I did with esteemed colleague Wendell Minnick, Defense News Asia Bureau Chief, at the earlier stages of the F-X saga. Many independents genuinely saw the Eurofigher Typhoon as the most suitable option for Japan to not only fit the requirement, but to give Japan’s sagging defense industrial base a lot of work!

TAIPEI and TOKYO – A request for proposals for the Japanese Air Force’s $10 billion F-X tender is expected as early as October, and the Boeing F/A-18 Super Hornet and Eurofighter Typhoon are preparing to duke it out for the 40 to 50 fighters.

Budget allocations to replace 73 aging F-4EJ Kai Phantoms are planned for 2011, said Satoshi Tsuzukibashi, director of the Office of Defense Production at the Japan Business Federation, or Keidanren, Japan’s most powerful industrial lobby. The decision has been on hold since 2007 due to budgetary problems, political upheaval and procurement scandals.

Tokyo also delayed a decision hoping the U.S. would release the F-22 Raptor for export. But that option died last year, when the U.S. canceled further production.

There were also hopes that program delays would make available the F-35, though this appears unlikely, except for possible low-rate initial production aircraft, due to program setbacks in the U.S., sources said. Japan put itself in the back of the line when it failed to join the F-35 international investment partnership, a Japan-based U.S. defense industry official said. The F-35 is not expected to be available until 2020 or later for Japan.

But not everyone in Japan has given up on the F-35 for F-X.

“The F-35 is the most probable choice,” Tsuzukibashi said. “However, Keidanren doesn’t support any specific option. Our request is to maintain and strengthen Japan’s industrial technology and production base, and we don’t particularly favor one option.”

Sources indicate the F-35 is better suited for Japan’s F-XX program for 200 to 250 fighters, scheduled for around 2020. Many see F-X only as a stopgap to a fifth-generation jet.

Though the Eurofighter consortium is offering Japan attractive industrial participation, the Typhoon faces an uphill battle. The Japanese have never procured a non-U.S. fighter jet.

“Normally, the Japanese would not mess with the U.S. alliance, therefore the F-18 will have a political advantage,” a European defense industry source said. “But the Eurofighter might well serve as a stopgap to the F-XX program’s preferred platform, the F-35. If they want the better fighter, the Eurofighter is better than the F/A-18.

“But for some, they may be nervous of drawing into question the U.S. alliance by picking a non-U.S. fighter,” he said. “We do not want to be viewed as a threat to U.S. relations with Japan or perceived as doing anything to endanger them.”

One strategy is to offer the Eurofighter as a pragmatic “stepping stone in terms of capability, industrial participation and technology transfer to either the indigenous development of the F-XX or the F-35,” the European source said. Eurofighter is offering Japanese industry licensed production.

There also is European interest in helping Japan develop its own indigenous stealthy fighter for the F-XX competition.

In 2009, Japan’s Ministry of Defense (MoD) initiated a $500 million research program, through the Technical Research and Development Institute, for the Advanced Technology Demonstrator-X (ATD-X) Shinshin stealth fighter.

Boeing also is offering attractive industrial participation options.

“We are prepared to work with the Japanese heavies as well as other firms to identify opportunities for local assembly and licensed production, including a tailored indigenous logistics support package,” said Joe Song, Boeing’s vice president of Asia-Pacific business development.

Boeing has a long history of working closely with the Japanese defense industry, including deals with Kawasaki Heavy Industries and Mitsubishi Heavy Industries, Song said. These deals include co-assembly and co-production of CH-47 Chinook helicopters, AH-64 Apache Longbow helicopters and upgrades for F-15J/DJ fighters.

Song said recent sales to Australia provide evidence of a strong vote of confidence in the acquisition of Super Hornets. “Boeing delivered five Super Hornets in March – and six this week – on time and on budget.

“In addition, our affordability is the most important factor that can ensure robust licensed production for the Japanese industrial base under the current Japan Ministry of Defense F-X budget,” Song said. “Our known cost, delivery schedule and proven track record of industrial participation in Japan is how Boeing brings the best value to Japan.”

The Super Hornet has a lot going for it, said one Tokyo-based U.S. industry analyst. Most important is commonality with the U.S. Navy and Marine Corps, which both fly it. Boeing also has a long history of cooperation with Japanese industry. However, there are shortcomings. The F/A-18 has only 11 hardpoints to accommodate weapons and a range of 2,300 kilometers compared with the Eurofighter’s 13 hardpoints and 2,900-kilometer range, the analyst said.

Not everyone agrees Japanese industrial participation is economically viable for just 40 to 50 fighters.

“It’s also hard to see the Japanese government spending a lot of money to set up a production line for a small number of fighters that, while competent and deadly, are certainly not on the cutting edge of stealth or control technology,” the analyst said.

“I simply don’t see where the Japanese industry would gain that much with either F/A-18 or Eurofighter limited co-production,” he said. “Full licensed production is probably not remotely realistic, but the question is, what do they get in terms of technology to build any part of either fighter? Both are long in the tooth compared to the latest and greatest fifth-generation fighters. So the Japanese industry will be hard-pressed to make the technology transfer case in this instance.”

Lockheed Touts Production Tech as F-35 Sales Point

The F-X saga continues: here is a story I wrote back in October about the Lockheed Martin fightback against Boeing’s Super Hornet (see F-X Wars Redux: Boeing Improves F-X Offer) about local production terms for the F-35 JSF.

Cyber Attacks Penetrate MHI (and many others)…

I am very lucky in that my academic adviser and deputy director of the Global Security Research Institute (G-SEC) where I am a lowly acociate researcher, is none other than Prof. Motohiro Tsuchiya, who is one of the six outside consultants at Japan’s National Security Information Center.

The media reports about the cyber security attack on MHI are just a tiny part of the story of course. Prof. Tsuchiya believes that both nuclear power reactor and SM-3 Block-IIA data could have been compromised, although it may take the sponsors behind the attacks some time to comb through undifferentiated data.  So worried are Lockheed Martin that they told me at the time that they would demand that they would have to check MHI’s cyber security before they would pass over F-35 data; and that’s just a private company talking!

Hackers first penetrated a vulnerable target, a PC at the IIPS and then managed to delve into Kasumgaseki and other places from there…attack modes switched en mass from DDS attacks on Japanese government and related websites to much more sophisticated email message bombs following the Chinese ramming of a Japanese Coast Guard vessel protecting the Senkaku Islands.

Following that Japan was successively attacked in waves, and a number of companies were netted, including MHI and IHI, which is due to assemble the F-35’s engine.