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Lockheed Martin F-35 Finland Award – Another Big Plus for UK Economy, Skills and Jobs By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

December 13, 2021 by Julian Nettlefold

13 Dec 21.  When it was announced in Helsinki on Friday lunchtime, the decision by the Finland Government to acquire 64 Lockheed Martin built F-35 ‘A’ Block 4 planes probably came as little surprise. Even so, this has been a very interesting campaign for those of us who watch highly contested competition such as this to observe and there can be little doubt that Lockheed Martin along with Boeing which was challenging with an upgraded F-18 Super Hornet to replace the existing fleet of fast jet aircraft capability in the Finnish Air Force fleet, the BAE Systems led Eurofighter Typhoon team, Saab which was offering Gripen and Dassault which was offering its Rafael, fought very good campaigns hoping to win what many believe will be the last major European based fast jet sales competition we will witness for several more  years. Well done to Lockheed Martin for achieving yet another great F-35 sales success.  

According to Defense News, the F-35 aircraft award has an estimated value of EUR 4.7 billion and the additional requirement for AMRAAM and Sidewinder air-to-air missiles adds (estimated at EUR 755 million euros) together with maintenance support through 2030 adds around EUR 2.9 billion euros. This is I believe the largest ever order placed by Finland for defence equipment of any kind and Lockheed Martin can be proud of not only achieving success against very worthy competition but also of Finland being the ninth European nation to acquire the aircraft. Deliveries of F-35 A aircraft will commence in 2026.

While those from the UK who worked so hard to compete with Eurofighter Typhoon will understandably be very disappointed, the award by Finland to Lockheed Martin is also hugely important for the UK economy as 15% of each aircraft is built here in the UK.

Amongst in excess of one hundred UK companies involved on the F-35 programme include BAE Systems, Rolls-Royce, GE Aviation, Martin-Baker, SELEX, Cobham, Ultra Electronics, UTC Actuation Systems, Meggitt, Gentex, Honeywell, UTC, Survitec, MBDA, MOOG, Stirling Dynamics,  all the way down to small family companies such as R E Thompson.

It is worth noting too that BAE Systems was only last week awarded the F-35 Air Vehicle Support Services (AVSS) contract by the Australian Government to support that countries F-35 aircraft fleet with maintenance and supply chain support – this on top of BAE Systems having been appointed by the US Government F-35 Joint Programme Office as the lead provider in the chosen Australian repair hub for the global sustainment services, maintenance and repair, overhaul and upgrade of F-35 aircraft in the Pacific region. BAE Systems is also part of an innovative joint venture formed in 2016 with the MOD (DECA) and Northrop Grumman known as Sealand Support Services Ltd (SSSL) based in North Wales and which in 2019 was awarded a second tranche of F-35 support and services work by the US Department of Defense and which over the next 40 years will see Wales being at the heart of the F-35 through life sustainment work and the direct employment of hundreds of highly skilled high tech engineering and technical jobs. Sealand Support has initial work valued at £500m and envisaged work valued at in excess of £2bn.        

A year ago almost to the day KPMG produced an independent economic UK impact study on the F-35 which not only validated the huge benefits that F-35 production brings to the UK but looked at directly managed Lockheed Martin contracts in the UK. In respect of economic benefits so far and that are expected through a build programme that extends through 2038

KPMG said that the F-35 programme will contribute £40.6bn in Gross Value Added (GVA) to the UK Economy between 2007 and 2038. Of this, £34.2bn is from Lockheed Martin-managed contracts, with £9bn generated to date. For every £1 of direct GVA by the programme, an additional £326 of indirect GVA is also generated. The greatest GVA impact is in the North West, which will see roughly £14.8bn of the total.

In respect of capital, taxes and other related investments KPMG said that the program had (by December 2020) enabled £13.5bn in exports from the UK and that the value of Lockheed Martin’s capital investment programme in the UK totalled £601.8m. KPMG calculated that the F-35 program has enabled £3.3 billion of knowledge transfer and £29.7m in training and technical assistance to UK companies – this including training and technical transfer in areas such as digital manufacturing and low-observable technologies – and that in respect of tax revenues across Lockheed Martin and Rolls Royce contracts, the F-35 programme is expected to generate £17.0bn in tax revenues through 2038.

In respect of employment KPMG said that on average it believed that the F-35 programme will sustain over 20,000 high-value engineering jobs per annum for the UK until at least 2038 and that the average GVA per full-time equivalent job is £88,049; this is greater than average for the industry (£79,516) and the UK as a whole (£59,802) – the point being that jobs created by the F-35 programme are more productive, higher-skilled and higher-earning. Not surprisingly, the largest employment impact is in the North West of England with an estimated number between 7,340 and 7,527 of annual full-time equivalent jobs – these being predominantly at BAE Systems Samlesbury plant which builds the rear fuselage of each and every F-35 aircraft built – primary works is prediction of two V angled vertical and two horizontal tail planes .

Contracts placed directly with the F-35 engine manufacturer Pratt & Whitney (and through them to Rolls-Royce) are not included. Neither are contracts placed directly by the F-35 Joint Programme Office and the UK MOD directly with UK based organisations.

However one chooses to look at it, with well over 3,000 F-35 aircraft likely to be built, the programme supports not only UK prosperity and sovereign industrial capability but also long-term sustainment of jobs, skills and export capability.

CHW (London – 13th December 2021)

Howard Wheeldon FRAeS

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon

@AirSeaRescue

 

Filed Under: News Update

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