Since 2010, when the Ministry of Defense signed the first of three deals for procuring 50 F-35 stealth fighters, US manufacturer Lockheed Martin has spent over $1 billion on reciprocal procurement from Israeli defense companies, the Ministry of Defense Procurement and Production Directorate (PPD) announced today.
The first two F-35s ordered from the US landed in Israel last December. The rest will be supplied in the coming years, eventually giving the Israeli air force two full squadrons of F-35s (called Adir).
The figures disclosed by the Ministry of Defense today show that in 2016, Lockheed Martin expanded its commercial contracts with some of the Israeli companies involving the supply of parts and systems related to the plane. Lockheed Martin's procurement from Israeli defense companies jumped 33%, compared with 2015, with orders totaling $258 million.
The bulk of this procurement, amounting to $206 million, came from a company jointly owned by Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) and US company Rockwell Collins. The orders were for special helmets for F-35s for use by every air force in the world procuring these planes. The two companies are sharing equally the profits from the sales of the helmets.
Another Elbit Systems-owned company, Karmiel-based Cyclone, produces parts for the body of the F-35. PPD figures show that Cyclone's contracts with Lockheed Martin grew by $16.6 million last year.
Addition orders were obtained from Elbit Systems subsidiary Tadiran Communications, which is supplying radio amplifiers for the airplane. Other orders for sub-systems last year were obtained by SimiGon Ltd. (AIM:SIM), which is developing a simulation program for the plane; Cabiran; and Gilboa, which produces components installed in the F-35's systems. Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), which manufactures the wings for the plane, received $26 million in order for its wings last year under a previously signed framework agreement, under which IAI will produce 800 pairs of wings for Lockheed Martin on an innovative and advanced production line founded by IAI in its Lod plant.
"The extent of industrial cooperation between Lockheed Martin and Israeli industries last year highlights the great potential of this deal for the Israeli economy," PPD head Col. (res.) Avi Dadon said today.
Another F-35 deal on the way?
It will be decided during the coming year whether to conclude another deal for stealth fighters, giving the Israeli air force a third squadron of F-35s. The other possibility is to procure a squadron of advanced F-15s made by Boeing, which are capable of carrying more larger quantities of missiles and bombs than the Adir, but which lack the Adir's stealth capabilities to evade radar detection.
In advance of this decision, Lockheed Martin is expected to offer Israel a lower price for the stealth fighters than in the previous procurement deals. Israel paid $110 million per plane in the previous deals, but with the discount offered by the company, the price is likely to drop to $85 million.
Last month, Lockheed Martin CEO Marillyn Hewson promised US President Donald Trump to lower the price of the F-35, after Trump previously severely criticized the high price of this program, considered the most expensive weapons plan in history.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 12, 2017
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