New life for old jets; Contractors pour into Iraq; Turkey, Russia, and U.S. arms exports.

Uncertain times lie ahead for American fighter jet manufacturing. As three...let’s call them heritage...aircraft enter the final years of production, factory jobs are at stake — but more fundamentally, so is the know-how to design and construct such sophisticated machines.

Recent events have given Boeing and Lockheed Martin assembly lines a bit more life, such as the U.S. decision to allow Bahrain, Kuwait, and Qatar to buy new F-16 Falcons, F/A-18 Super Hornets, and F-15E Strike Eagles, respectively. And new planes aside, there’s still money to be made from the large fleets that will fly for the U.S. military and others for decades to come.

Then there are the opportunities created when countries that fly perfectly good F-16s decide to get rid of them. Some are trading up to the new F-35 Joint Strike Fighter; others are shrinking their air operations amid tight budgets. Earlier this month, for example, Romania received six used Falcons from Portugal, a deal that promises new support contracts for Lockheed and related suppliers.

I asked a State Department official about the potential for more such sales. Most Eastern European militaries have old Soviet warplanes, like the MiG-21s of Bulgaria and Slovenia, or no fighters at all, like Estonia, Lithuania and Latvia. They are barely suited to protect their borders, let alone deploy, say, to strike Islamic State militants in Iraq and Syria. It’s why the U.S. Air Force and NATO need to fly the air policing missions there, intercepting the Russian jets that approach or even cross over borders.

Now Romania — which happens to be hosting a U.S. military transit hub and a NATO missile defense radar — is getting a half-dozen 4th-gen combat jets and has plans to build that up to an even dozen. As the State official put it, “These countries are joining the elite nations that fly F-16s.” That means Bucharest could help out with air policing in Eastern Europe and deepen its military relations with other NATO members through training and wargames.

Across Eastern Europe, where many countries don’t have large or modern air forces, a third-party transfer — like Portugal’s divesting its F-16s to Romania — could help strengthen their militaries, the State official said. (FYI: The State Department must approve the transfer of U.S.-built military aircraft, even between NATO allies.) The Portugal-Romania deal took three years from start to finish.

Lockheed and its predecessor General Dynamics have built more than 4,500 F-16s since the 1970s. Iraq is one on the only countries still buying new one, but many even decades-old Falcons are still more than flyable. Plenty of companies, in addition to Lockheed, offer upgrades and modifications to bring the older jets into the modern age.

Romanian also flies second-hand American C-130 cargo planes, which it received in similar fashion to the F-16s. In 2005, The Netherlands sold some of its F-16s to to Jordan. Now the Netherlands is looking to divest more F-16s to make room for its new F-35s.

For several years now, U.S. officials have been urging Eastern Europeans to swap their Soviet and Russian arms for American equipment. This would help them train with U.S. forces and seamlessly fight alongside the American military in battle. Poland is the poster child, having purchased 48 F-16s. And Polish sources have said they want more.

Helping Out in Iraq

With Iraqi forces advancing on Mosul, we thought we’d check in on the number of contractors supporting U.S. operations there — and it’s way up. Since the beginning of the year, the number has jumped 48 percent, according to the latest U.S. Central Command data.

As of Oct. 1, there were 2,992 contractors involved in the effort, up from 1,403 last October. About one-third of those workers are supporting logistics and maintenance for American troops there. The second-largest grouping (15 percent) of contractors are supporting American bases, while 14 percent are working as interpreters. About 239, 8 percent, are working in security roles.

Those 2,992 are supporting more than 4,400 American troops in Iraq, with 500 more are on the way to train and advise Iraqi security forces.

And they are just the ones hired by the Pentagon. Overall, the U.S. government has about 7,700 contractors supporting it in Iraq.


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What Turkey-Russia Relations Mean for Defense

The recent warming of ties between Russian and Turkish presidents Vladimir Putin and Recep Tayyip Erdogan could affect U.S. arms sales to Ankara, which is both a major buyer and supplier of American weapons and their components. In a note to investors, Cowen analyst Roman Schweizer wrote, “Turkey is an important customer of high-end U.S. weapon systems and a closer alignment with Russia could provoke the U.S. to rethink its FMS policy.” It’s part of a continuing story; back in Vol. 1, Issue 1, of the Global Business Brief, we told you how unrest in Turkey could affect the supply chains of major Pentagon projects, including the F-35 Joint Strike Fighter.

Boeing Opens New Composite Factory

Even as Boeing winds down fighter jet production in St. Louis, the company is planning a $300 million composite factory there for its commercial airplanes business. In a statement, Boeing said it’s part of an effort to “diversify and grow its St. Louis-area operations.”  The 424,000-square-foot factory and its 700 workers will build composite parts for the wings and empennage of new 777X jetliner.

Coming Up: Big Earnings Week

Third-quarter earnings reports are coming next week from the largest U.S. defense firms. Here’s the lineup: Tuesday, Oct. 25: Lockheed Martin and United Technologies. Wednesday, Oct. 26: Boeing, Northrop Grumman and General Dynamics. Thursday Oct. 27: Raytheon and L-3 Communications. Check out next week’s Global Business Brief for more.