FORT WORTH, Texas ― Lockheed Martin will establish facilities in the U.S. for the final assembly of Korea’s T-50 supersonic aircraft to meet the possible U.S. demand for trainer jets, a senior official at the defense giant said last week.
It has already reached an agreement on this with Korea Aerospace Industries, the country’s sole aircraft maker which developed the T-50 with technological assistance from Lockheed Martin.
The move triggered concerns that the U.S. assembly line would decrease the profits South Korea can generate through the production and sale of the jets while the U.S. will benefit from the creation of jobs and other opportunities.
But officials here explained final assembly in the U.S. is needed as the “Buy American Act” bars the U.S. military from acquiring foreign-made products.
“I will say that our plan ― mutually agreed by KAI and Lockheed Martin ― is that we will do the final assembly here in the U.S. for the U.S. Air Force,” Michael R. Griswold, international vice president of T-50 Business Development, told a Korean media contingent visiting the LM production line for the F-35 fighter jet last week.
“Major components will still be built in Korea, but here (in the U.S.) for the final assembly. That is how we will comply with the Buy American (Act).”
In order to strengthen aerial defense capabilities and develop the local aviation industry, Korea had carried out the T-50 development project ― worth 2.2 trillion won ($1.96 billion) ― in cooperation with Lockheed over around eight years, starting in 1997.
The Seoul government shouldered 70 percent of the development cost, with KAI and Lockheed covering 17 percent and 13 percent of the cost, respectively. With the first jet delivered to the Korean Air Force in 2005, 50 T-50s are now in operation.
South Korea has been ramping up overseas marketing efforts for the T-50, which has a maximum speed of Mach 1.5 with a maximum range of 800 nautical miles.
In May, it signed a $400 million contract with Indonesia to sell 16 T-50s, becoming the world’s sixth country to export supersonic aircraft. Experts said the deal would have a significant economic impact with the creation of some 7,700 jobs in Korea.
For South Korea, the U.S. is the biggest potential market as its military is seeking to secure up to around 500 trainer jets.
Experts estimate that the world demand for trainer jets over the next three decades will amount to around 3,300 units. The KAI hopes to export around 1,000 trainer jets during that period.
Next month, the U.S. government’s Defense Advisory Board will determine whether it would acquire trainer jets or develop a new one. Industry watchers anticipate that the U.S. government’s request for proposals will be made in 2012 with an aim to start deploying at least one squadron of around 20 trainers in 2017.
Stressing that affordability will be key in the upcoming T-X competition in the U.S., Griswold painted a positive outlook for the T-50. Along with the T-50, the U.S. air force is studying the M-346 of Italy and the Hawk 128 of Britain as possible candidates.
“We believe T-50 has a very strong chance of winning because of its operational status. We have a long history of working together, and there is no doubt we can form an opportunity here. It is a healthy and very mature program,” he said.
As for the plan to build a new assembly line in the U.S., some critics here also voiced concern that Lockheed Martin may have to readjust the work share ratio due to the Buy American Act. The existing contract states that KAI takes 70 percent of the T-50 production work while Lockheed takes the rest.
Regarding this, Griswold said, “We can still distribute the profit in any way we choose irrespective of the act.”
There have not been any in-depth bilateral discussions made yet regarding how the two sides will operate the two assembly lines to export T-50s, officials said. Watchers say that should the U.S. air force purchase T-50s, there may be readjustments in the contract regarding the sharing of the work and profits.
Meanwhile, Lockheed Martin officials hinted that its company could transfer some stealth technologies should Seoul agree to purchase F-35 fighter jets it is producing as long as the U.S. government okays it.
“I believe, in terms of what technologies they (Korea) would like to see, we will go back to the U.S. government and get release of those technologies, and work with Korea Aerospace Industries,” Stephen O’Bryan, vice president for the F-35 Business Development and Customer Engagement at Lockheed Martin Aeronautics Company.
“I think our history speaks for itself. T-50, KF-16 … I would like to ask you to look at our history in working with Korea Aerospace Industries, and our ability and desire to transfer that technology.”
He also reaffirmed that the per-unit price for the F-35 to be delivered to South Korea will be around $65 million in 2016.
“That (price) curve is quantity-dependent, but the estimate … I expect the unit price average to be below $65 million, but I will not know until we see the ROP,” he said.
“If the ROK (Republic of Korea) number is added (to the total price calculation), that will have a positive, a lower price benefit. Japan is also not added in there. Singapore was not added. At this point, Israel is not added. So, that curve will be adjusted as the quantities change.”
South Korea has been accelerating moves to purchase a high-end fleet of stealth fighters to counter North Korea’s asymmetrical threats and keep pace with neighboring countries seeking to secure their own radar-evading combat aircraft.
Under the FX-III acquisition project worth around 8 trillion won, the Seoul government is seeking to purchase some 60 next-generation fighters with an aim to have them delivered for operational deployment to begin in 2016.
Lockheed Martin’s F-35 Lightening II, Boeing’s F-15 Silent Eagle and the Eurofighter Typhoon made by a European consortium are being cited as the likely candidates for the FX-III project.