Mei 31 2012

Australian companies: problems because of delays with F-35

Gepubliceerd door om 6:32 onder Global F35 News

Newspaper “The Australian” revealed on Monday that there exists a confidential (again confidential, as always!) business intelligence report in Federal Industry Ministry that warned that a large number of small and medium-sized companies providing defence equipment were at risk of collapse because of cuts and delays in several projects, one of the projects being the F-35.

The businesses, encouraged for a decade by the federal and state governments to take advantage of a promised booming defence sector, are now reeling from federal budget cuts and project delays.”

The return on huge investments, done by the global industry based on promises of selling “over 4.500 F-35 fighter jets” is very bad. With order intake, sometimes below 30% of original promised order intake during the 2010-2014 timeframe a lot of companies will have problems. The fixed costs of the investments is much higher then the profits.

One quote:
Chief executive Paul Levett said yesterday that the company, based in Adelaide’s northern suburbs, had invested A$ 4 million to obtain work on the Joint Strike Fighter but now faced the prospect of difficulties because of delays to the project.
“Our company is not yet at risk of folding, but the chain of events with project rescheduling and defence budgets being cut means we are trying to make ourselves a lot more efficient — if it continues it becomes a perilous situation,” Mr Levett said.
“But despite the contracts we have in place, the revenue has not covered the investment, at this point in time,” he said. “According to how the build schedule was looking five years ago, there should have been up near 100-plus aircraft being manufactured this year, but with all the delays it is down to 32 aircraft.”

Another South Australian company told the newspapier it is also in difficulty, because of the delays and after investing A$ 10 million to obtain work on the JSF.

The Australian situation will not differ from many other countries involved in the global supply chain of the F-35. Would be interesting for professional aviation press to publish a good overview article about this subject.

Source: The Australian, 31-May-2012; “Suppliers battle to survive defence cuts

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