One silver lining in the dark clouds of economic malaise accumulating in Western skies is that military spending must inevitably drop. The Stockholm Peace Research Institute (SIPRI) reported that world military expenditures reached a record $1.6-trillion (U.S.) in 2010, an unprecedented government outlay that is clearly unsustainable. Some states may increase military expenditures in the near term but the big spenders like the U.S. and European states – jointly responsible for more than two-thirds of global military spending – will need to take a long, hard look at defence programs as they sharpen knives for fiscal spending cuts.
It should be obvious, therefore, that the project that is planned to be the most expensive equipment purchase in history will come under additional scrutiny. Not that it has missed the spotlight to date. There are almost daily reports on how it is grossly over budget, years behind schedule, and unlikely to deliver on many claims including, ironically, benefits to the economy. I speak of the F-35 Joint Strike Fighter, of course, the U.S.-developed “fifth generation” combat aircraft that several Western states – including Canada – want to procure over the next decade or so.
Where Canada differs from other F-35 customers is that the Canadian government steadfastly adheres to an immutable picture of the JSF that defies reality. In spite of mounting evidence that both F-35 production and operating costs continue to rise, the government maintains that no additional spending will be needed by Canada. Other program partners – such as the U.S. itself – openly acknowledge that the higher costs will affect their purchase plans.
Perhaps the greatest Canadian self-deception is the level of expected industrial benefits from the F-35 “global supply chain.” As part of pre-election stumping in early 2012, government Cabinet ministers appeared across the country, re-announcing F-35 contracts with Canadian aerospace companies and promising more to follow. The figure of $12-billion was frequently used as the total contract value Canadian companies could or would win, suggesting that Canada would gain more in JSF contracts than the projected $9-billion cost of 65 Canadian aircraft.
The ministers did not dwell on the fact that Canadian companies must bid for contracts against the aerospace industries of other JSF program partners as well as the industry of every other state that purchases the aircraft. They did not mention that government budget constraints have already led to reductions in orders, including by the U.S., the U.K. and the Netherlands. They may not have known that in Australia at least three companies have failed while waiting for F-35 contracts that have been pushed back by program delays.
But, most significantly, across the Western industrial world, hard government spending decisions will be made in the next weeks and months that will affect thousands if not millions of peoples’ lives. Fat military budgets and cost overruns in military programs will rightly become ready targets. It is possible if not likely that the F-35 program will enter the “death spiral” as declining orders lead to higher costs leading to a further drop in orders. Canadian companies looking for F-35 contracts would be advised to have a plan B.