Production Ramp Ups Will Drive Cost Reductions to F-35

Thu, Apr 13, 2017

There’s no such thing as ‘cheap and cheerful’ when it comes to modern combat aircraft. The F-35 Joint Strike Fighter (F-35) is no exception.

It may come as a surprise however, that the cost of the F-35 is on a downward trajectory that will see it cost little more than less capable legacy aircraft such as the F-16 and Super Hornet.

The reason for this is simple. Escalating production and manufacturing efficiencies are a natural bi-product of turning out more aircraft in each annual production lot.

Speaking to media at the Avalon Airshow in early March, US Air Force Lieutenant General Chris Bogdan, head of the F-35 Joint Program Office in the Pentagon, pointed out that low rate initial production lot nine (LRIP9) negotiated in 2015 was for 60 aircraft; LRIP10 is for 90 aircraft and LRIP11, now in negotiation between Lockheed Martin and the Pentagon, will be for more than 130.

By the end of the decade, production lots will each feature more than 160 aircraft.

With each rise in production numbers the price has come down, with an F-35A in LRIP10 priced at US$94.6 million.


Lieutenant General Chris Bogdan (left), Head of the F-35 Joint Program Office in the Pentagon, and Air Vice Marshal Leigh Gordon (right), Head of Joint Strike Fighter Division, Australia, field questions from journalists at Avalon Airshow 2017.

US President Donald Trump, who tweeted that the F-35 program was out of control and billions could be saved, may have helped to expedite a process that was already underway.

That process continues to bear fruit for Australia. LRIP10 includes Australia’s next eight aircraft, along with aircraft for the UK (3), Norway, Israel and South Korea (each 6), Japan (4) and Turkey (2).

The RAAF aircraft are now in production for delivery next year.

According to Bogdan the JPO had consistently promised that an F-35A purchased in 2019 would be less than US$85 million.

“That is not enough. We need the airplane to be lower in price in 2019 and 2020 than US$85 million and I think we can get there,” he said during his briefing at Avalon.

“We ought to be looking at about an US$80 million airplane by that timeframe and then continuing to reduce the price of the airplane lot over lot over lot.”
Lieutenant General Chris Bogdan

Bogdan said the Trump message to both industry and the Defense Department - that he wanted better value for money – was to be applauded.

But the President’s criticism of F-35 appears to stem from the program’s plight late last decade when technical problems and soaring costs were making F-35’s unaffordable.

The Economist magazine even warned that there was risk of a death spiral in which rising costs meant fewer buyers, pushing costs up further.

Just how expensive could F-35 have been?

In 2002, this was envisioned as a US$50 million airplane but by 2012 it was looking more like a US$200 million airplane, with no ceiling in sight. There was talk of cutting production numbers, of cancelling the then troubled F-35B short take-off and vertical landing (STOVL) variant and even complete program cancellation.

That prompted a major restructure. Bogdan said since the F-35 program was “re-baselined” in 2011, the price trajectory had been consistently down and performance up.

So how low can the price go?

Bogdan suggests not much less than US$80 million per aircraft, on the basis that peak production will coincide with the planned modernisation program.

“Those two things are in conflict with each other,” he said.

Still, getting the price down around the US$80 million mark is a substantial achievement, considering Australia’s first two aircraft, produced in LRIP 6, each cost more than US$120 million.

Price reductions are most stark for the most numerous F-35A conventional take-off and landing variant. In LRIP10 the STOVL F-35B cost US$122.8 million and the F-35C carrier variant cost US$121.8 million.

To put that in context Lockheed Martin now sells a F-16 for US$60-65 million while a Super Hornet costs around US$70 million.

A number of factors will contribute to the price reduction. There’s potential for a block buy - combining three or more annual production lots so primes can negotiate the best possible prices from suppliers.

Lockheed Martin has also developed its Blueprint for Affordability program, launched in 2014 to streamline production processes.

Lockheed Martin F-35 program director Geoff Babione said price reductions didn’t occur by accident and there needed to be a persistent engineering approach to factors driving costs.

Blueprint for Affordability is now in Phase 1 and involved LM, Northrop Grumman and BAE Systems putting together around US$170 million in potential investment in ideas to reduce costs.

That included improvements to production processes and use of less costly materials with similar performance and resulted in reduction of prices by US$1 million per aircraft in LRIP9, rising to more than US$2 million by LRIP13.

“If you accumulate that over time, it starts to be billions of dollars over a 3000 airplane run,” Babione said.

The agreement for Blueprint for Affordability Phase 2 is now being finalised with the JPO and includes a couple of hundred more ideas.

“We are projecting that those two projects together will reduce the total cost of acquiring F-35 by as much as US$6 billion. That’s another 60 or 70 airplanes even at US$100 million,” he said.

Babione cited examples of how costs had been reduced through automation of processes once conducted by hand.

Each F-35 contains multiple fibre optic cable connections, each requiring careful, manual and time consuming cleaning. Under a new automated procedure, a single mechanic can do this work faster and with better results. That was an investment of US$900,000 which is expected to produce long-term savings of US$27 million!

Applying the all-important stealth coating to the forward fuselage and engine intake area within a tolerance of a few 10 thousandths of an inch, required up to 50 sprayed layers. Now a robot does all that in a single application.

Babione said it was these kinds of applications which resulted in dramatic cost reductions. Under an agreement with the JPO, it will reimburse investments made to achieve successful cost reduction targets.

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