Friday, September 25, 2015

F-35 News. I told you to watch the dollar exchange rate!

via Defense Aerospace..
While the F-35’s Joint Program Office says it reduced unit costs by 3-4% in the last annual order, the value of the US dollar – and thus the cost of each F-35 to Eurozone buyers - has increased by 22% in one year -- rising from €0.73 in mid-2014 to €0.89 now.

In Norway, it will not be possible to buy the 52 aircraft currently planned if future defense budgets continue at current levels, with just the usual cost escalation. This is the official military advice that the Norwegian Chief of Defence, Adm. Haakon Bruun-Hanssen, will publish on Oct. 1, according to public broadcaster NRK.

Bruun-Hanssen believes that politicians must allocate an additional 180 billion kroner ($21.7 billion) over twenty years to get the defense capabilities they want – including all 52 planned F-35 fighters.

You can expect that exchange rate to be HORRIBLE for the next couple of years...just watch a business channel and you get doses of stark reality mixed with huge bouts of cheerleading (you have to read between the lines).

This is the real weakness of the F-35 and one I've been harping on opponents of the program to seize upon.  Debating performance is like debating a person's dreams.  You can't debate a person with their head in the clouds.

But when it comes to actual dollars and cents its a different matter.  An additional problem is that being fiscally responsible is becoming fashionable again.  Deficits for deficit sake isn't cool anymore.  Additionally the battle between guns and butter is a losing one for defense depts.  People are more entitled and expect more from govt each year.

High cost will prevent sales which will drive up costs.  Higher costs will depress further sales.  Less sales will drive up costs.....Yeah.  The freaking death spiral.

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