Lockheed Martin says F-16 orders flowing in

Lockheed Martin anticipates $16 billion in new F-16 orders, $6.5 billion in upgrades, more upgrades ahead

By Ajai Shukla

Business Standard, 17th Dec 17

Lockheed Martin, the US firm that is offering to relocate F-16 fighter production to India as the world’s only F-16 line, has rebutted the argument that perceptions of the F-16 as an “outdated fighter” would mean very little international business flowing to India.

The company points out that, over the last three months, the US State Department has informed the US Congress of the proposed sale to Bahrain of 19 fighters in the F-16V configuration for an estimated $2.8 billion; and the upgrade of 123 Greek F-16s for an estimated $2.4 billion.

Asked about further F-16 orders, a Lockheed Martin spokesperson revealed that, beyond the 100-200 fighters India would buy, “F-16 production opportunities include multiple countries in the Middle East, the Mediterranean, Central Europe, Southeast Asia, and South America — approximately 200 aircraft altogether.”

Further, “Lockheed Martin also has three F-16V upgrade programs on contract today — a total of around 325 aircraft — and is in discussions with several other customers interested in upgrading their F-16 fleets with the latest technology.”

Assuming a price of $80 million for each current version F-16 Block 70 fighter, the production of 200 new fighters would bring to India business worth $16 billion.

And, extrapolating from the Greek order an upgrade cost of $20 million per F-16, Lockheed Martin already has $6.5 billion worth of upgrade orders. With 4,588 F-16s delivered over the decades to some 25 air forces, and an estimated 3,000 of them still in service, the Indian F-16 line could expect to upgrade some 1,000 F-16s over the years, bringing in $20 billion of business.

Lockheed Martin is competing to build the F-16 Block 70 in India, with its rival being the Gripen E fighter offered by Swedish company, Saab.

In the absence of an Indian production line – which would only be established if the Indian Air Force (IAF) selects the F-16 – these orders will flow to an alternate F-16 production line Lockheed Martin has set up in Greenville, South Carolina.

Randy Howard, who heads Lockheed Martin’s international business development, told Business Standard, the Greenville production line had to be established as a “temporary measure”. This was to meet continuing F-16 orders, since the India line was uncertain and the old F-16 production line at Fort Worth, Texas was being given over to building the F-35 joint strike fighter.

Were India to choose to buy the F-16, the Greenville line would be shut down, says Howard. “What’s on offer for India is to establish a production line here that would be the world’s only production line.”

The India line would be gradually ramped up to build 3-4 fighters per month, says Howard, a production rate India has never come close to achieving while building other fighters like the Jaguar, Sukhoi-30MKI or Tejas.

“This would position Indian industry at the center of the world’s most extensive and successful fighter aircraft supply ecosystem. We expect Indian industry… to be highly competitive within that global supply ecosystem, which in turn opens the door for new relationships and opportunities… around the globe”, says a Lockheed Martin spokesperson.

A confident Howard points to Lockheed Martin’s success building up the Turkish aerospace industry: “[The Turkish F-16 production line] was a wheat field. There was nothing there. Today it is the largest aerospace facility in Turkey, and there is a complete eco-system around it. We know how to do this.”

If Lockheed Martin has a compelling business case for India to choose the F-16 and transfer the production line to India, Sweden’s counter is the offer of unmatched technology transfer to India. A senior Swedish government official told Business Standard on Wednesday: “We all know the F-16 would have technology ‘black boxes’ that the US would not part with. The Gripen E comes with far greater levels of technology transfer.”

Defence analysts point out that the US defence industry is in a win-win situation. India’s choice of the F-16 would be a windfall for US firms. But if New Delhi opts for the Gripen E instead, US industry would still benefit, since 40 per cent of the Gripen E is American.