RichardAboulafia.com 

:: July 2019 Letter ::

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Dear Fellow Pacific Rim Low Cost Carrier Fans,

Do you like five bars on your smartphone at all times in all places? Trains and subways that arrive every five minutes, and go everywhere? Large electrical facilities that guarantee power, except when menaced by a huge, scaly reptile? If so, Japan is the place for you. The Japanese love infrastructure spending, and everything seems kind of overbuilt. Iím spending the summer here (and South Korea), and really appreciate the virtues of a hyper-First World kind of place.

But thereís one part of Japanese infrastructure thatís under threat: its fighter industry. Last year, when the country upped its order for F-35s from 42 planes to 147 (making it the biggest single export customer), it also proposed shutting down the Mitsubishi FACO (Final Assembly and Check Out) line, along, presumably, with the associated component assembly arrangements.

This would represent a huge course change for Japanís industry. Since World War II, the country has built all its fighters in-country. It can build almost every part of a jet, from tires to AESA radars. With the semi-successful F-2, Japan also developed a limited design capability, and can design and build major upgrades to its existing fleet. Of course, thereís a premium for this: typically, foreign jets built in-country come with a 100% price markup. And the F-2 was basically an F-16 Block 60, built ahead of its US equivalent but with a much higher price tag.

Despite the big F-35 commitment (the biggest outside the US), Japan has a requirement to replace its 90+ F-2s, and some of its F-15s too. In addition to its F-35s, the country needs 150-200 more fighters over the next 20 years. What happens next represents a big inflection point for Japan, its military, and most of all, its aerospace industry. There are five options, presented below, on a range from least to most indigenous:

1. More F-35s. As Canadian prog rock band Rush sang, ďIf you choose not to decide, you still have made a choice.Ē Yet the absence of a production line means thereís no industrial or political constituency, so it might be tempting to switch tracks to something with local jobs.

2. Return to Co-production. This means standing up a local line for any current fighter and its associated components. The easiest might be F-15s Ė Japan built 199 of these, so they could resume the line and the supply chain with a newer model. Or they could build anything else.

3. Something Co-developed. The new European fighters Ė the UKís Tempest or the Franco-German FCAS Ė would welcome a new partner (who would get their own line) and its funding.

4. Something joint and unique. The most intriguing possibility is an F-22/F-35 mashup, using the formerís airframe and the latterís advanced systems, with additional improvements. This would give Japanese industry lots of new technology and work, and is a very appealing concept. Even the USAF could buy in. But it would also be almost as expensive as an-all new jet.

5. An F-3. An all-new, all-Japanese solution. The country has funded demonstrators and prototypes, but a full-up fighter jet would be exceedingly costly. Itís the least likely option.

Here are the five factors that will influence Japanís fighter decision:

1. Regional rivalries. Relations between South Korea and Japan continue to worsen. Koreaís KF-X will be late, but it continues to move forward, and it might be difficult for Japan to abandon its fighter industry while its frenemy next door develops its own. And the rise of China will help shape Japanís response too, including what fighter it buys to counter the threat.

2. The STOVL factor. Everyone in this part of the world is squabbling over flyspeck islands and the associated resources (and nationalist bragging rights). Unsurprisingly, both Japan and South Korea are building or deploying pocket aircraft carriers. These will need F-35Bs. Japan has already ordered 42 Bs as part of its 147 aircraft F-35 buy, but if they decide that more are needed it will put off the next procurement decision.

3. Domestic politics. The Liberal Democratic party won big in Julyís election, and in November Shinzo Abe will become the countryís longest-serving prime minister. This party, and this leader, are the strongest proponents of higher defense spending, and, perhaps, a national fighter program. Much depends on whether the LDP retains power, and on who succeeds Abe in 2021.

4. The usual battle between suits and flight jackets. With any decision like this, thereís a clash between the military, which simply wants the best plane at the best price, and the politicians, engineers, and businesses who talk about fighter sovereignty, jobs, and technology development.

5. Japanís Aerospace Industry. While this decision is being made, there are other big challenges. Boeingís vertical integration initiatives imply a shrinking pool of work for Japanís all-important aerostructures business. The MRJ, despite its re-launch as the SpaceJet, is just getting by. Exports of the few new military airframes like the P-1 or C-2 donít look likely, and domestic buys are quite limited. And the countryís helicopter industry is fading out, too. The fighter decision might be a broader make-or-break inflection point.

Hereís one thing that wonít impact the decision: US techno-xenophobia. Back when Japan was making the FS-X decision, many US politicians and other geniuses worried that Japan was taking over the ĎKeys to the Kingdom,í and needed to be stopped. My friend Joel Johnson, Tealís Executive Director, International, suffered through those debates while at the Aerospace Industries Association. He notes that these fears are now focused (with a bit more credibility) on China. Japan can decide its fighter path without worrying about any dimwit lawmakers bashing Japanese laptops on Congressís lawn.

So, in 25 years, when the JASDF scrambles to fight off the huge, scaly reptile thatís knocking over all that overbuilt infrastructure, what will its fleet include? Around 150 F-35s, and another 150 of something else, but we really canít forecast what. That something else will determine what happens next in the worldís seventh most important fighter producer country.

Yours, ĎTil South Korea and Japan Create a Joint AsiaFighter,
Richard Aboulafia
 

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