Dutch Fight JSF Industry Contribution

[tigershark]

Dutch Fight JSF Industry Contribution
Jul 7, 2008
By Joris Janssen Lok/Aerospace Daily & Defense Report

The Netherlands government is locked in a head-to-head fight with the country’s aerospace and defense industry over its decision that Dutch industry should pay 10.3 percent of all revenues from F-35 Joint Strike Fighter (JSF)-related orders through 2053 to the state. The revised percentage was announced July 1 by Dutch Minister of Economic Affairs Maria van der Hoeven, replacing the preliminary figure of 3.5 percent that was agreed to in 2002.

The agreement that industry would pay a percentage of JSF-related revenues was made in 2002 when the Netherlands committed to contributing $800 million to the JSF System Development and Demonstration (SDD) program.

It was recognized that active participation in the development of a new fighter would be more expensive than buying one off-the-shelf, but that this would bring significant benefits and business opportunities to the Dutch aerospace and defense industry. To ensure that Dutch tax payers would not have to cover the difference in costs, industry would pay back a certain percentage of its JSF-related income to the state.

At the time it was agreed that the preliminary percentage would be reviewed in mid-2008, after which it would be frozen through 2053, which in Dutch planning is used as the projected end of the JSF program. But the recent fall of the dollar-euro exchange rate has led to fear in the center-left government that the benefits for the Dutch state will turn out to be much lower than was expected in 2002, even despite the fact that the value of JSF business for Dutch industry is presently forecasted to be more than $10 billion over the life of the program.

Because of this, the government on July 1 announced it would almost triple the percentage at 10.3 percent, something that is vehemently contested by the industry, represented by the Netherlands Industrial Fighter Aircraft Replacement Platform (NIFARP).

NIFARP officials say that the Dutch government (and tax payers) are in fact benefiting from the JSF program, as this will generate business worth twice the amount that has to be paid for the F-35 program. Participation in the program provides financially advantageous know-how and skills also on the side of the government and military. Furthermore, the JSF program will deliver what the Defense Ministry itself says is the “best aircraft for the best price.”

Industry also warns that “the dollar-euro exchange rate is very much against us; we have to be extremely creative to win business on a best-value basis and still make a profit.”

If the government insists on the 10.3 percent figure, there is a “serious danger” that Dutch companies will no longer be able to compete under the JSF program’s best-value business model and lose business to competitors in other JSF partner nations, sources say. During July, government and industry are expected to engage in difficult negotiations over the new percentage.

Photo: Lockheed Martin

Source
http://www.aviationweek.com/aw/generic/story_generic.jsp?channel=aerospacedaily&id=news/JSF07078.xml&headline=Dutch%20Fight%20JSF%20Industry%20Contribution