Japan Weighs Options for Pricey Fighter Jets
By CHESTER DAWSON
TOKYOJapan is upgrading air defenses increasingly tested by China and Russia, and officials are wrestling with a fundamental question: Can the country still afford to pay for the most advanced technology and nurture its domestic industry?
In a move expected as soon as this month, Japan's Defense Ministry will pick a replacement for its aging squadrons of Vietnam-era F-4 fighters from among three finalists, two American and one European. The order for a new fighter is expected to total 40 to 60 planes valued at an estimated $4 billion. It is Japan's biggest fighter contract yet and one of the world's largest military contracts this year.
The decision comes as China is overshadowing Japan on many fronts, including overtaking it last year as the world's second-largest economy. Beijing has also ratcheted up its military spending, which is rising 12.7% this year to 601.1 billion yuan ($94.3 billion). Meanwhile, Japan's defense budgetat 4.6 trillion yen ($59 billion) this yearhas declined for nearly a decade, and the country now faces mounting bills for its post-earthquake and nuclear-crisis cleanup.
Of Japan's fighter-jet options, the pricey, cutting-edge choiceLockheed Martin Corp.'s new F-35 Lightning II JSFis seen as the favorite because it incorporates the latest, so-called fifth-generation, stealth technology, providing radar-evading capability both in front of and behind the aircraft.
But a pair of lower-cost, combat-tested fightersBoeing Co.'s F-18 Super Hornet and the European consortium Eurofighter GmbH's Typhoon fighterare getting serious consideration.
"Japan always wants the latest technology, so that means the F-35 has an edge, but the F-18 is a viable option in the current budgetary environment," said Toshiyuki Shikata, a professor at Teikyo University and retired lieutenant general in the Japanese Self Defense Forces.
The F-35's stealth technology is a big attraction for Japan, which has grown increasingly worried about the debut of two rival stealth prototype fightersChina's J-20 and Russia's Sukhoi T-50. Recent aerial sorties by both those countries have forced Japanese jet fighters to scramble to intercept them. Japan's Defense Ministry says there were more such incidents last year than at any other time since 1990.
When Japan last contracted a new fighter jet two decades ago, it was running annual fiscal surpluses and could easily afford to make planes at home, despite Japan's much higher production costs. Nevertheless, a compromise with the U.S., which worried about a loss of defense business and competition from an all-Japanese fighter jet, laid out that the Japanese would develop 60% of the new planea derivative of the U.S. F-16, which Japan now calls the F-2and U.S. firms would be responsible for the rest. The cost for the F-2 was about 13.2 billion yen ($171.4 million), according to the Defense Ministry, well above the price of an F-16.
Two decades later, as Japan weighs its next-generation fighter options, the use of foreign technology is a given and cost looms large, as Japan's debt has soared to 200% of gross domestic product.
"The situation has changed today. It would be expensive to build it all themselves," said Jeffrey Kohler, Boeing's vice president of business development for military aircraft and a retired Air Force lieutenant general. "Japanese industry has realized that it's not all or nothing."
Even by tapping foreign expertise instead of going it alone, Japan will find the planes might not come cheap, and Tokyo wants to build much of it locally. Details on the three bids, submitted in September, haven't been disclosed, but industry officials say the F-35s cost well over $100 million each. The F-18s have been priced for as little as half that, depending on volumes ordered.
Beyond price, how much of the next fighter's production will remain local has emerged as a key question as Japanese industry is pushing to keep jobs and nurture its military avionics know-how. New production of the F-2, Japan's current mainstay fighter, ended Sept. 27. Without a ready replacement, the assembly line at Japanese contractor Mitsubishi Heavy Industries Ltd.'s South Komaki plant in Nagoya has been idled.
Lockheed Martin has offered to localize final assembly and some other production but has resisted a wholesale transfer of manufacturing rights. On the other hand, Boeing has indicated willingness to license up to 85% of production to Japanese contractors, and BAE Systems PLC, a leading member of the Eurofighter consortium, has said it could provide close to 95% localization.
"There's a business case to be made" for capping local production, said Philip Georgariou, Lockheed Martin's vice president for strategic partnering. "We think the discussion shouldn't be about what percent, but rather how much new technology is brought to the table."
Japanese Defense Minister Yasuo Ichikawa has said his chief criterion is capability, but first he must wrangle with the Finance Ministry, which has sought to cap defense outlays. The Defense Ministry has prepared a request to fund an initial order of four fighters costing 13.7 billion yen eachslightly more than the average cost per plane of producing the previous generation F-2 fighter.
Most experts say the Eurofighter's Typhoonpriced somewhere between the F-18 and the F-35is a worthy contender for Japan's air-defense needs. But it faces an uphill battle due to pressure from Washington, which, as Tokyo's top security ally, has quietly pushed the case for a U.S. jet. As a result, they say the F-35 is the top contender, followed by the F-18.
"It's the Americans' competition to lose," said James Hardy, a senior analyst for Asian Pacific region with Jane's Defense Weekly. "The fact is that the U.S. is Japan's security partner, and the Japanese Air Self Defense Force has flown U.S. planes since the 1970s."
Japan Weighs Options for Expensive Fighter Jets - WSJ.com
By CHESTER DAWSON
TOKYOJapan is upgrading air defenses increasingly tested by China and Russia, and officials are wrestling with a fundamental question: Can the country still afford to pay for the most advanced technology and nurture its domestic industry?
In a move expected as soon as this month, Japan's Defense Ministry will pick a replacement for its aging squadrons of Vietnam-era F-4 fighters from among three finalists, two American and one European. The order for a new fighter is expected to total 40 to 60 planes valued at an estimated $4 billion. It is Japan's biggest fighter contract yet and one of the world's largest military contracts this year.
The decision comes as China is overshadowing Japan on many fronts, including overtaking it last year as the world's second-largest economy. Beijing has also ratcheted up its military spending, which is rising 12.7% this year to 601.1 billion yuan ($94.3 billion). Meanwhile, Japan's defense budgetat 4.6 trillion yen ($59 billion) this yearhas declined for nearly a decade, and the country now faces mounting bills for its post-earthquake and nuclear-crisis cleanup.
Of Japan's fighter-jet options, the pricey, cutting-edge choiceLockheed Martin Corp.'s new F-35 Lightning II JSFis seen as the favorite because it incorporates the latest, so-called fifth-generation, stealth technology, providing radar-evading capability both in front of and behind the aircraft.
But a pair of lower-cost, combat-tested fightersBoeing Co.'s F-18 Super Hornet and the European consortium Eurofighter GmbH's Typhoon fighterare getting serious consideration.
"Japan always wants the latest technology, so that means the F-35 has an edge, but the F-18 is a viable option in the current budgetary environment," said Toshiyuki Shikata, a professor at Teikyo University and retired lieutenant general in the Japanese Self Defense Forces.
The F-35's stealth technology is a big attraction for Japan, which has grown increasingly worried about the debut of two rival stealth prototype fightersChina's J-20 and Russia's Sukhoi T-50. Recent aerial sorties by both those countries have forced Japanese jet fighters to scramble to intercept them. Japan's Defense Ministry says there were more such incidents last year than at any other time since 1990.
When Japan last contracted a new fighter jet two decades ago, it was running annual fiscal surpluses and could easily afford to make planes at home, despite Japan's much higher production costs. Nevertheless, a compromise with the U.S., which worried about a loss of defense business and competition from an all-Japanese fighter jet, laid out that the Japanese would develop 60% of the new planea derivative of the U.S. F-16, which Japan now calls the F-2and U.S. firms would be responsible for the rest. The cost for the F-2 was about 13.2 billion yen ($171.4 million), according to the Defense Ministry, well above the price of an F-16.
Two decades later, as Japan weighs its next-generation fighter options, the use of foreign technology is a given and cost looms large, as Japan's debt has soared to 200% of gross domestic product.
"The situation has changed today. It would be expensive to build it all themselves," said Jeffrey Kohler, Boeing's vice president of business development for military aircraft and a retired Air Force lieutenant general. "Japanese industry has realized that it's not all or nothing."
Even by tapping foreign expertise instead of going it alone, Japan will find the planes might not come cheap, and Tokyo wants to build much of it locally. Details on the three bids, submitted in September, haven't been disclosed, but industry officials say the F-35s cost well over $100 million each. The F-18s have been priced for as little as half that, depending on volumes ordered.
Beyond price, how much of the next fighter's production will remain local has emerged as a key question as Japanese industry is pushing to keep jobs and nurture its military avionics know-how. New production of the F-2, Japan's current mainstay fighter, ended Sept. 27. Without a ready replacement, the assembly line at Japanese contractor Mitsubishi Heavy Industries Ltd.'s South Komaki plant in Nagoya has been idled.
Lockheed Martin has offered to localize final assembly and some other production but has resisted a wholesale transfer of manufacturing rights. On the other hand, Boeing has indicated willingness to license up to 85% of production to Japanese contractors, and BAE Systems PLC, a leading member of the Eurofighter consortium, has said it could provide close to 95% localization.
"There's a business case to be made" for capping local production, said Philip Georgariou, Lockheed Martin's vice president for strategic partnering. "We think the discussion shouldn't be about what percent, but rather how much new technology is brought to the table."
Japanese Defense Minister Yasuo Ichikawa has said his chief criterion is capability, but first he must wrangle with the Finance Ministry, which has sought to cap defense outlays. The Defense Ministry has prepared a request to fund an initial order of four fighters costing 13.7 billion yen eachslightly more than the average cost per plane of producing the previous generation F-2 fighter.
Most experts say the Eurofighter's Typhoonpriced somewhere between the F-18 and the F-35is a worthy contender for Japan's air-defense needs. But it faces an uphill battle due to pressure from Washington, which, as Tokyo's top security ally, has quietly pushed the case for a U.S. jet. As a result, they say the F-35 is the top contender, followed by the F-18.
"It's the Americans' competition to lose," said James Hardy, a senior analyst for Asian Pacific region with Jane's Defense Weekly. "The fact is that the U.S. is Japan's security partner, and the Japanese Air Self Defense Force has flown U.S. planes since the 1970s."
Japan Weighs Options for Expensive Fighter Jets - WSJ.com
