Plans by South Korea to buy 40 F-35 fighter jets from Lockheed Martin Corp. could create as many as 10,000 jobs in the United States and save the U.S. military billions by driving down the cost of the planes.
South Korea's move is seen as a boon for the country's military contractors right at the time the U.S. Air Force and Navy are facing mandatory budget cuts due to sequestration. Reuters reports the large order of F-35 jets
could save the Pentagon roughly $2 billion by cutting the per-plane price.
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"The sale of F-35s to Japan and South Korea — America's two leading industrial allies in northeast Asia — means the F-35 is now becoming the gold standard for tactical aircraft across the western Pacific," Loren Thompson, chief operating officer of the Virginia-based Lexington Institute, told Reuters.
He also said that American contractors may also receive orders from Singapore, Malaysia, and New Zealand. U.S. military officials told Reuters that U.S. military plane orders are expected to be down or even postponed if Congress does not address upcoming mandatory cuts.
The Wall Street Journal said the F-35 currently makes up 15 percent of Lockheed Martin's total revenue.
The deal, though, was a hit to another giant American military contractor in Boeing, along with a group that builds the Eurofighter, wrote the Wall Street Journal. The newspaper said Boeing's own F-15SE jet and the Eurofighter are struggling for viability in a small jet fighter market.
The Journal wrote, though, there are still countries waiting to be wooed. The newspaper said Canada has restarted a contest to supply the country with as many as 65 new fighters. Italy and Turkey are also mulling over fighter jet purchases.
Contractors like Lockheed and Boeing are smoothing over relations with a budget-conscious Pentagon created by cost overruns and technical problems with their latest batch of jets.
F-35 fighters are sold for roughly $115 million, but the Pentagon and other countries are demanding a price tag of $75 million for each plane by 2020, stated the Wall Street Journal.
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