Vexing Issue of Workshare Resurfaces Over Eurofighter
Aviation Week & Space Technology
10/20/2003, page 55
Douglas Barrie
London
Eurofighter Typhoon partners haggle over workshare issues
Percentage Game
The highly charged issue of work-share is reemerging as Eurofighter
partner nations play brinksmanship as they struggle to conclude
tricky Tranche 2 negotiations.
Britain, Germany, Italy and Spain are locked in contract
negotiations for the second production run of the Typhoon aircraft.
Along with industrial issues, the four partner-nations are trying
to thrash out the technical baseline for the Tranche 2 standard
which will have a significantly improved air-to-surface
capability.
The most recent target date for signing off on Tranche 2 is by
year-end but some industry executives involved in the Typhoon are
concerned that, given the difficulty of the discussions, this may
not be met.
Failure to conclude a production contract by year-end courts the
emergence of a "production gap" between Tranche 1 and 2, warned one
executive. Stop-start production would raise costs on the program,
placing further strain on funding.
The suspicion that Britain faces the near inevitability of having
to cut Typhoon numbers is fueling the debate on workshare among the
partners. At present the U.K. has 37%, Germany 30%, Italy 19% and
Spain 14%, predicated on purchases of: 232, 180, 121 and 87
aircraft, respectively. Germany was forced to relinquish work on
the program when it reduced its aircraft numbers in the mid-1990s.
Agreement on the present workshare arrangements was reached in
1996.
The U.K. is taking 55 Typhoons from Tranche 1, with 89 to be
procured as part of Tranche 2. At present, the Defense Ministry
will also contract for 88 aircraft as part of Tranche 3. However,
there is a substantial doubt as to what extent, and even whether,
any of this batch will ever be achieved.
Britain also had an option for a further 65 aircraft, but this
already appears to have been quietly discarded.
With a Defense White Paper to be published around year-end, the
British Defense Ministry has been reviewing program commitments
alongside a study conducted on future combat aircraft number
requirements.
Industry officials close to the program have told Aviation Week
& Space Technology that both Germany and Italy are pushing to
see workshare on the program reconsidered in light of concern over
a drop in the number of aircraft Britain purchases.
While publicly the British government and defense officials adhere
to the 232 aircraft, senior officials have privately admitted this
figure is almost certainly untenable. With considerable pressure on
medium- to long-term defense expenditure, there is an expectation
the U.K. will have to reduce Typhoon numbers.
Against this backdrop, the other partners, and Germany in
particular, are looking to address workshare.
Were Britain, however, to unilaterally reduce the number of Typhoon
combat aircraft it intended to purchase, it would then be liable to
compensate the other partner nations for any increase in unit cost.
The penalty-clause payments would effectively negate expenditure
savings in terms of initial procurement costs.
Industry executives and defense ministry sources have previously
suggested U.K. strategy was to try to conclude present Tranche 2
discussions before broaching the thorny issue of the number of
aircraft for a third production run.
BAE Systems is the U.K. industry lead and one of the three
companies involved in Eurofighter GmbH.; the others are EADS and
Finmeccanica subsidiary Alenia Aeronautica. BAE declined to discuss
the issue of workshare within the context of ongoing Tranche 2
negotiations.
Any discussion on workshare distribution is compounded by the
systems' area being allocated a large part of the development work.
Some program insiders admit that systems-related work already has a
bias toward BAE.
From an industrial position, BAE will be loath to relinquish work,
while EADS will push hard to garner additional responsibilities for
its German plants.
In parallel, the partner nations are also trying to pin down the
exact configuration of Tranche 2 aircraft, and the provision of
potential upgrades avenues for further enhancements.
As of late last week, all Typhoons had been temporarily grounded
following a problem with the braking system on a German aircraft.
This is being attributed to a single-component, rather than a
system, failure.
