Friday, 10 May 2013

The Swiss deal: Tempest in a Fondue pot.

Is something cheesy is going on?
Besides Sweden, the only firm commitment to the Gripen E/F model thus far has been Switzerland.  It's fair to say that the Swiss deal has not gone off nearly as smoothly as Saab would like.  Questions have been raised about whether the Gripen meets the requirements, whether it is affordable, and even if Switzerland needs a new fighter aircraft at all.

Things have not been made easier by the leaked release of a unflattering report of the Gripen in a competition between it, the Dassault Rafale, and the Eurofighter Typhoon.  In it, the Gripen was deemed inferior to the other two, and given a "failing grade" as to meeting the Swiss Luftwaffe's requirements for a new air-defense fighter.
"Given by its design, the endurance, aircraft performances and aircraft weapon load were among the main limiting factors of the Gripen."
The report goes on to praise the Rafale, but states that even the Eurofighter Typhoon falls short.  This is understandable, as the Typhoon's ground attack capabilities were still being developed.

But how did the Saab Gripen win the competition when it didn't even meet the requirements?

First of all, the "fly-off" was in the 2007-2008 timeframe.  The variant tested, the JAS 39C and JAS 39D were not the "NG" E/F models with upgraded engines, payload, fuel capacity, and IRST.  In fact, even the C/D Gripens of the time were not yet ready for GPS (JDAM) and laser-guided (Paveway) bomb delivery.  This ability was not added until 2009, a factor that most definitely hurt its rating amongst Swiss pilots.  Additionally, the Gripen C's lower power-to-weight ratio, lower payload, and shorter range were brought up as weak points.

Since then, things have changed.  Saab has progressed on its "NG" Gripen E and F designs with a more powerful engine, AESA radar, IRST, over 40% more internal fuel, heavier payload, and additional weapon hardpoints.  The Saab Gripen E has been declared the next Swiss fighter, based on the NG improvements made and demonstrated on the Gripen NG Demo.

Swiss defense minister Ueli Maurer defended the Gripen choice after the release of the leaked report stating the the Gripen E met with all the established criteria and that the report itself was obsolete and outdated.

Even Swiss Air Force General Marcus Gygax, who authored the controversial report initially supporting the Rafale, has come out in support of the Gripen, stating:
"In the meantime, the aircraft was developed. Planned further developments, where they had been sceptical at first had, meanwhile, proved to be more likely".  (Translated)
In the end, the Gripen E was declared the winner based on its value and low operating cost compared to the others.  The additional risks involved with selecting a fighter still in development were considered worth it, especially considering the Swedish government was willing to make guarantees towards price and performance.

It's still happening...  I think?
Unfortunately, that is not the end to the Swiss Gripen controversy.

A large government expenditure is almost always likely to be controversial.  Switzerland is certainly no exception.  After making an agreement in principle to acquire the Saab Gripen, the purchase needed to meet approval with the Swiss senate for the increased military funding to pay for the purchase.

On March 5, 2013, the Swiss Senate approved the Gripen purchase with 22 votes for, 20 against, 1 abstaining, and 2 absent.  Without an absolute majority, the purchase was approved...  But not the funding.  This hasn't stopped the deal, but instead debate continues and the matter may now go to referendum.

It should be noted that Switzerland has an almost pathological history of difficult fighter purchases.  Including a similar referendum needed to approve the F/A-18 purchase in the 80s and a scandal over the Dassault Mirage in the 1960s.  There is even a relatively large political movement that believes Switzerland should not be purchasing a fighter jet of any type.

Will the Swiss Gripen delay spell doom for the Gripen E/F?  Unlikely.  The Swiss purchase is still almost inevitable, and it would be hard to argue against the Gripen's long term costs when compared to the Typhoon and Rafale.  The Swedish government is still committed and additional export sales to countries like Brazil look promising.

Where does Canada fit into all of this?  It is thought that Switzerland's commitment to 22 Gripen Es, along with Sweden's decision to upgrade its Gripen fleet, is enough to make the Gripen NG program sustainable.  With a planned purchase of 65-80 new fighter jets, a Canadian Gripen order would not only secure the future of the program, but possibly speed up development and improve the future outlook of the Gripen even further.  This may lead Saab to market the Gripen very aggressively in a Canadian bid, leading to lower costs and improved industrial offsets for Canada.


  1. "Where does Canada fit into all of this? "

    Sweden needs a partner in order to develop the Gripen NG. If the swiss referendum should fail, then Canada could jump in.

    In my opinion, the technical collaboration and joint development is the main reason for Switzerland's choice. Both Dassault and Eurofighter made very competitive offers for their respective aircraft.

    By the way, the anti-g suit used in Austrian and German typhoons is manufactured in Switzerland. It is called Libelle (dragonfly) and uses a film of liquid instead of pressurized air. It is arguably the best system on the market.

  2. "In my opinion, the technical collaboration and joint development is the main reason for Switzerland's choice. Both Dassault and Eurofighter made very competitive offers for their respective aircraft."

    Maintenance costs are undoubtedly a major factor, since the army budget is limited and the Gripen provides the "best for the buck". I'd say political factors are also important, since the neutral Sweden is the "most compatible" with Swiss views. At a time where the EU put lot of pressure on the Swiss financial system (remember France's former president formulating a direct attack at the G20 prior to the choice of the aircraft?), Sweden had definitely an additional edge over its two competitors.

  3. Looking at Canada from an overall industrial/jobs point of view (which is arguably what the Governments are really interested in - after all jobs mean happy voters which equals happy politicians ), the JSF offers much more.

    Taking the plan to acquire 65 F-35s to replace the existing 80 CF-18s. Let's assume that they went with something else (don't really care which) and even doubled that number (assuming it was that simple - people might be surprised to find what the alternatives really cost, but they don't get the same pressure on this front as the F-35) to 130. One then might get a larger share of producing 130 aircraft (they certainly won't get 100%), say over 3 - 6 yrs, instead of a smaller % share of 3000+ F-35s over 20+ years. I know from a business case point of view, which I'd prefer.

    Even if Canada somehow managed to spin some 'offset' deals and also start producing parts for the rest of the aircraft type they have acquired (i.e. make parts for the same aircraft used by other nations), they still lose out. For one they are coming in late on many of these programs and so, to put it bluntly, all the good stuff is gone anyway (and don't think those countries/companies already producing those parts will make it easy for you either - I know I wouldn't).

    More over, let's look at the production quantities for some of those programs (remembering also that many of these are already produced):

    Eurofighter Typhoon: around 559 total to date across all tranches. Even if you add in a couple of hundred more, it still won't top 1000;

    Dassault Rafale: approx 180 ordered total. Even if Dassault get more orders domestically and manage to eventually get some export customers, you won't see this even reach 500;

    Saab Gripen: something like 250 produced to date. Again, even if they get more exports (and good luck to them - personally I like the Gripen and believe the JAS-39 is the heir apparent to the Northrop F-5 series), they will also not reach 500; and

    Super Hornet: Something like 600 - 700 already on order (with most already produced). Maybe with additional exports/domestic sales it will reach just over 1000.

    None of these programs offers the industrial participation opportunities that countries are looking for.

    Therefore from an industrial point of view, the F-35 wins hands down. And this doesn't even touch on sustainment opportunities.

    1. The JSF program is certainly a very large pie. No denying that.

      It is important to note that being a parter in the F-35 program does not guarantee offsets. Nor does buying the aircraft. Partner nations are simply entitled to bid on related industrial contracts. The Canadian aerospace industry may be in store for a huge windfall... Or maybe next to nothing. It all depends on the bidding.

      The good news is, Canadian industry has already done fairly well. Canada has already invested in the program. Yet there is no imposed penalty for dropping out of the program. There is also no real commitment for Canada to actually purchase the F-35. We may instead choose to buy less than 65, buy none at all, or even put off buying the F-35 for a later date.

      Canada paid money "upfront" to be a Tier 3 partner in the JSF program. That should grant us access to that big pie, regardless of our decision to buy.

  4. Norway is sulking at their current level of signed F-35 orders for parts. They feel that they are being shut out of the competition with tons of paperwork and rigid security protocols, and as the least fussing partner, they should have some advantages.
    I believe the F-35 project needs as many subcontracts as possibly kept within the USA right now to keep all the local politicians happy. They need to be happy to keep the project on track and up to speed. The jets that have been produced are mostly for internal usage anyway. I also believe that once a company gains an order, it will be a very bad financial decision to give that subcontract away to another external contractor and start the validation process over again. So...what is given stays. (Naturally with the exception where quality, quantity or price can't keep up with specifications.)
    Some external producers will succeed due to their knowledge and skills , simply because they are market leaders in their sector, or can produce something much cheaper than their American rivals, but please please : do not expect LM to throw alms around, especially AFTER a F-35 contract have been signed.

    1. You hit the nail right on the head. There are no guarantees for F-35 industrial contracts.

      With the US economy the way it is, you know that the pressure is on for the JSF contracts to stay in America. Barring that, contracts may have a way of finding their way to countries with wavering support as a way to "sweeten the pot".

      Just look at the recent JSF contracts announced for Japan and Israel... Both suspiciously soon after those countries confirmed orders.