F-35 Industrial base relies on international participation.

• Author: Lundquist, Edward

The F-35 Lightning II joint strike fighter has become a model for international cooperation.

According to Aerospace Industries Association's Remy Nathan, who runs AIA's international trade division, aerospace is a global industry and an increasingly competitive international marketplace and is becoming more so all the time.

That international competition is a good thing, broadening the market that may offer new, better or different products. "We can tap into the best technologies at the best possible price," Nathan says. "Our warfighters and customers worldwide benefit."

There has been an emphasis of security cooperation and building partnerships, especially in the post-9/11 environment. "There is international content in every single defense platform," Nathan says.

There is a direct relationship between having foreign customers for your products, to include major systems like the F-35, and having foreign content. "It can be a discriminator," Nathan says.

In an average program, a country buys the airplane and they have either a policy or law that stipulates some percentage of the purchase price of that airplane has to be offset back in the purchasing country. Countries can spend literally billions of dollars buying the weapons system, and most of them are looking for some economic return for that large an outflow of cash. So many programs require "offsets."

Offsets come in two forms--direct and indirect--direct meaning equipment that is installed on the airplane weapons system, and indirect being anything that stimulates their economy that may not be related to the purchase of that weapon system.

Some offset programs require investment, and some just include foreign content. The more flexibility the better. "It can be a challenge to discharge offset obligations and have a value in the foreign buying country. But it behooves both sides of the transaction that they succeed," according to Nathan.

Despite offset obligations, every supplier has to meet a high standard. "A customer may want to provide content, but the prime also has an obligation to that buyer and every other buyer to provide the best aircraft at the best price," Nathan says.

"A program of the magnitude of the F-35 is all about partnerships," says Steve Over, Lockheed Martin's director of F-35 international business development.

"It starts off first at the government-to-government level, because the F-35 is a tool of U.S. foreign policy and developing stronger relationships with...