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Japan Might Delay F-35 Purchases

Jun. 10, 2013 - 03:45AM   |  
By PAUL KALLENDER-UMEZU   |   Comments
Japan wants to buy 42 F-35 joint strike fighters, but the former defense minister believes the annual purchase rate could go down. Here, the seventh Lockheed Martin F-35 takes its first flight in April.
Japan wants to buy 42 F-35 joint strike fighters, but the former defense minister believes the annual purchase rate could go down. Here, the seventh Lockheed Martin F-35 takes its first flight in April. (Lockheed Martin)
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TOKYO — Former Japanese Defense Minister Satoshi Morimoto, the architect of Japan’s decision to purchase F-35 joint strike fighters to boost Japan’s deterrence against China, now believes cost pressures caused by the recent plummeting value of the yen could delay the rate of annual purchases for the country’s planned buy of 42 fighters.

In an interview with Defense News, Morimoto, who served as Japan’s defense minister until December and is one of Japan’s leading defense experts and strategists, said he now believes the Defense Ministry may be forced to delay annual purchases of F-35s, should the yen continue to hover around 100 to the US dollar.

“Because this was a decision by the government of Japan to introduce the F-35A, no matter what the price becomes, we cannot change our principle or our policy. We had to introduce the F-35 to replace the F-4. But the problem is … the price is increasing. The question then is how to manage it. I think the MoD has to reshape [the] number of purchases each year.

“The problem is whether we can catch up with the competition for air superiority with Russia and China, so we cannot postpone more than three years. I guess we might postpone one or two years,” he said.

Japan had planned to have all 42 aircraft in its inventory by 2021, and a delay in annual purchases could push that to 2023.

When asked about the possible delay, Defense Ministry spokesman Takaaki Ohno said the complex program is still being worked. “We recognize the F-35A contains the most advanced technology but we also recognize that it is a project that is still under development,” he said. “Whatever happens with the introduction of the F-35, we will continue to maintain the closest contact and cooperation with the US.”

Last year under Morimoto, Japan agreed to import four F-35s in 2017 and locally assemble the remaining 38, which will be built in small lots by two main local prime contractors led by Mitsubishi Heavy Industries.

Under a June 29 foreign military sales agreement with the US, Japan committed to purchase the first four at ¥10.2 billion a unit, which was about US $124 million each under the exchange rate at the time of 82 yen to the dollar.

The price was already well over the earlier agreed price of ¥9.9 billion, due to the then-continuing development and testing difficulties the F-35 program was facing. However, over the past six months, the value of the yen has plummeted to around 100 to the dollar.

“This is a very, very serious problem for the Japanese taxpayer,” said defense analyst Shinichi Kiyotani. The problem is compounded by the fact that Japan’s purchasing costs are plagued by small-lot, piecemeal procurement, meaning local production costs can be sometimes double those of US-made counterparts. “People are wondering if Japan can afford it,” Kiyotani said.

Morimoto stressed that the total number of aircraft would remain at 42, but also said if future prices bust budget ceilings set by the Finance Ministry — as they are likely to do if the yen stays so cheap — the MoD could spread out the purchase over several consecutive years.

The MoD has committed to purchasing the first 10 units in tranches of four, two and four, he said. After that, “if the price is still higher, the Ministry of Finance will be relatively reluctant to purchase the planes. We can’t change the basic plan for the first two or three tranches,” so the changes will come later, he said.

Richard Aboulafia, vice president of analysis at US-based think tank Teal Group, anticipated potential problems because the more fighters are built in Japan, the more costs are likely to rise.

“[S]tanding up a Japan Final Assembly and Check Out [organization] … would greatly increase costs, a factor that has hobbled generations of Japanese fighter procurement programs and might mean a gap in firming up details, as Japan decided how much equipment would be built in country,” Aboulafia said. “It’s quite possible that the Japanese government hasn’t decided what it’s willing to pay for in terms of fighter manufacturing and industrial sovereignty.”

Paradoxically, while the longer-term future of Japan’s F-35A buy now looks more hazy, the overall stabilization of the F-35 program means delivery of the initial four is on schedule for 2017, sources said. Further, Japan is already making moves to recalibrate the Japan Air Self-Defense Force (JASDF) to accommodate them.

Steve O’Bryan, Lockheed Martin F-35 vice president of program integration, earlier told Defense News that negotiations with Japanese partners were progressing and both sides were looking to hit the 2017 target delivery date.

In anticipation, the MoD has already begun preparations to receive the planes, Ohno said earlier. These include budgeting ¥29.9 billion this year for purchasing the first two units and ¥83 billion for initial costs to help industry set up plants and facilities to build various parts of the planes.

The MoD is spending an additional ¥21.1 billion for training equipment and expenses to start rebuilding Misawa Air Base in the northern part of Honshu.

Meanwhile, this year the MoD has begun beefing up defense and deterrence of Japan’s far-flung Nansei Shoto, or southern island chain, which stretches southwest of Okinawa to within 70 miles of Taiwan.

The MoD has begun reinforcing the 20 F-15J/DJ fighters with a further squadron in 2015. The MoD has budgeted ¥3.4 billion on facilities construction at the JASDF’s Naha Air Base and invested an initial ¥50 million to study how it should improve airborne radar, deployment and logistics issues to accommodate the move, Ohno said.

Finally, the MoD is spending ¥12.2 billion to upgrade both its F-15s and F-2s in response to what the MoD calls the need to “adapt to the modernization of the aerial combat capabilities of neighboring countries.”

This year, six F-15s and an undisclosed number of F-2s will get improved radars, a medium-range air-to-air missile and modernized data systems, Ohno said.

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