Thursday, December 11, 2014

Canadian report confirms continued F-35 price increase.

Major thanks to ELP Blog!


via Ottawa Citizen
Defence officials estimate they will actually need more than $1 billion in contingency funds to protect against the effects of a weaker Canadian dollar, inflation and other countries cutting back on how many planes they purchase.
The report suggests that if an extra $1 billion is needed, “the remaining shortfall could be met by buying fewer aircraft.” It adds that the government “will consider the frozen acquisition envelope,” suggesting the $9-billion cap could be removed.
An attached government-commissioned review of National Defence’s numbers by Quebec accounting firm Raymond Chabot Grant Thornton noted defence officials had not actually studied whether it was feasible to buy fewer than 65 F-35s.
Canada had originally planned to purchase 80 F-35s to replace its CF-18s, but scaled back the order in 2006. The government has not said why it reduced the plan, but senior military commanders have suggested 65 is the minimum the air force needs.
Read the whole thing but what you see in the above passage is a classic "death spiral" scenario.

You heard it here first boys and girls.

This turkey is about to die.  The world economy is probably going to be the main culprit too.  The F-35 was based on a weak dollar, high oil prices and continued growth in Europe and China.  We're seeing the exact opposite now.  A strong dollar (getting stronger all the time as Southern Europe and China continue to slow down), cratering oil prices and weak consumer spending world wide.

This does explain the "extra" F-35 in that sinful Congressional bill though.  They're trying desperately to increase production but it just isn't working.

This is going to be fun to watch.