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Author Topic: Jet Fighter Costs to hit $1 Trillion  (Read 5928 times)

Offline WRCKid

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Jet Fighter Costs to hit $1 Trillion
« on: March 13, 2008, 08:55:07 PM »
Well, this is just fantastic to the American Tax payer like myself...See link below

http://biz.yahoo.com/ap/080311/jets_high_costs.html?.v=1

Offline Webmaster

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Re: Jet Fighter Costs to hit $1 Trillion
« Reply #1 on: March 14, 2008, 03:10:04 AM »
I don't know, yes the JSF is over budget in time and money bigtime (as with all defense/tech developments), it looks so bad because it's a big program/development. But this 1 trillion number is a big total, even taking in fuel costs for the lifetime. Get this kind of number for the entire F-16 and F-18 fleet from start to finish, apply inflation index, and I won't be surprised if you get the same number, maybe even bigger. For more aircraft yes, but less capable, so... should the tax payer worry? only if he doesn't see why this thing is needed.

The second part which looks at the reasons is more interesting. Most importantly, imho:

Quote
Auditors criticized both the military and the contractor for pressing into the jet's development's phase before key technologies were mature, started manufacturing test aircraft before designs were stable, and moved to production before flight tests showed the aircraft was ready.

I'd have to agree that this is what mostly caused the snowballing of delays and cost overruns. In consumer electronics market this strategy works, but for this kind of market/product it just doesn't, financial risk is just too high, especially for the customer, the most traditional buyer of all times, the government. Luckily for LM, lack of alternatives/switching cost, ensures that it is unlikely the program will be scrapped.

Quote
Smith, however, said the company has been careful stewards of U.S. tax dollars by trimming costs wherever possible.

"We continue to apply the same kind of oversight, budget alignment and lean thinking to the program," he said.

The manufacturer can try everything in the books to save costs, it still won't make it a cheap thing. Cuts which require major effort bring in little savings on the total pictures, especially once you start dropping the number to be acquired and losing export sales. Save 1 million per aircraft now, and it looks you saved almost 2.5 billion. Great, give the manager a million dollar bonus for this great work so he can retire. 10 years later only 1000 are produced, savings are just 1 billion. Plus 500 of them might need this thing you saved on upgraded or replaced earlier, bang, you now lost more money, because it took more man hours and 2030 raw material prices among others are higher making the cheaper part/process as expensive.

But it's good the government keeps a close watch on the cost, but eventually it comes down to: buy or scrap. Because the alternatives are not good enough, it will be 'buy' and it will be expensive.

381 Raptors became 183... in 10 years 2458 JSF will become 1180?
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Offline WRCKid

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Re: Jet Fighter Costs to hit $1 Trillion
« Reply #2 on: March 14, 2008, 06:37:07 AM »
I don't know, yes the JSF is over budget in time and money bigtime (as with all defense/tech developments), it looks so bad because it's a big program/development. But this 1 trillion number is a big total, even taking in fuel costs for the lifetime. Get this kind of number for the entire F-16 and F-18 fleet from start to finish, apply inflation index, and I won't be surprised if you get the same number, maybe even bigger. For more aircraft yes, but less capable, so... should the tax payer worry? only if he doesn't see why this thing is needed.

The second part which looks at the reasons is more interesting. Most importantly, imho:

Quote
Auditors criticized both the military and the contractor for pressing into the jet's development's phase before key technologies were mature, started manufacturing test aircraft before designs were stable, and moved to production before flight tests showed the aircraft was ready.

I'd have to agree that this is what mostly caused the snowballing of delays and cost overruns. In consumer electronics market this strategy works, but for this kind of market/product it just doesn't, financial risk is just too high, especially for the customer, the most traditional buyer of all times, the government. Luckily for LM, lack of alternatives/switching cost, ensures that it is unlikely the program will be scrapped.

Quote
Smith, however, said the company has been careful stewards of U.S. tax dollars by trimming costs wherever possible.

"We continue to apply the same kind of oversight, budget alignment and lean thinking to the program," he said.

The manufacturer can try everything in the books to save costs, it still won't make it a cheap thing. Cuts which require major effort bring in little savings on the total pictures, especially once you start dropping the number to be acquired and losing export sales. Save 1 million per aircraft now, and it looks you saved almost 2.5 billion. Great, give the manager a million dollar bonus for this great work so he can retire. 10 years later only 1000 are produced, savings are just 1 billion. Plus 500 of them might need this thing you saved on upgraded or replaced earlier, bang, you now lost more money, because it took more man hours and 2030 raw material prices among others are higher making the cheaper part/process as expensive.

But it's good the government keeps a close watch on the cost, but eventually it comes down to: buy or scrap. Because the alternatives are not good enough, it will be 'buy' and it will be expensive.

381 Raptors became 183... in 10 years 2458 JSF will become 1180?

Very eloquently put...

Offline Raptor

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Re: Jet Fighter Costs to hit $1 Trillion
« Reply #3 on: September 23, 2008, 12:08:07 PM »
Sometimes you have to look at the big picture. Even the recent wall street thing. Which is pretty stupid actually... If all the country's companies crash and the country loses its economy, what happens to the jobless taxpayers?

So think about it. If they scrap the program and the F-16s and '15s are eventually de-commisioned, there won't be many options for the nation to draw on. It's a long-term thing i guess.  :-\
-JCLim

 



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