Re: JF-17: New Pics
pshamim said:
Skyhawk, My 40 years of experience as a fighter pilot and being a part of the defence industry is not based on reading articles and the internet. It is based on my service with PAF, my contacts within it, and the vast defence industry experience here in US.
I enjoy coming to this forum to learn some more and not engage in highly opinionated contentions which, I know now, are totally based on reading articles.
I would rather engage in an intelligent discussions where every one learns something and not with someone whose complete knowledge base is internet based.
Continuing with this issue I feel is a waste of time and bandwith. I will rather stay away from responding some of these immature postings.
With due respect to pshamim's vast professional experience (I have found most of his posts to be of great and accurate sources of knowledge) as well as his insider knowledge (that is clearly demonstrated in his posts) I feel that adding my tuppences worth might still be in order.
Firstly, aircraft manufacturing is pretty complex business, and joint development and production contracts could be quite complex legal documents, that even an experienced lawyer would take a while to unravel. Since we do not have access to the actual contract, all we can do is to either speculate, go by insider knowledge as pshamim claims to have, OR try to look at CAC /PAC agreement under the light of contemporary collaborative practices in Europe. CAC/PAC deal is not something new, most of the modern European defence projects (except French) are collaborative efforts.
All joint development / production agreements would have at least 4 essential elements:
1) Sharing of development costs. We know PAC /CAC have shared these costs 50:50. These costs are amortised over a long period and spread over the sale of hundreds of aircraft. Therefore, upto breakeven figure, both parties will be reimbursed (the relevant R&D element of the sale price) equally from the sale of each aircraft.
2) usually the contract stipulates the exact parts each partner would manufacture, and this ultimately is translated into the production percentage. If we accept that PAC/CAC are truly 50:50 partners in the whole project (and not just for sharing the development costs & hence ownership of IPR) then we should see PAC eventually producing at least 50% of JF-17 parts. However, we know from published statements that PAC will initially assemble and start off by manufacturing small number of parts BUT ultimately this percentage will increase - may be to 70 - 80% ?? This is where it differs from most European patnerships, where the exact a/c parts and production shares are distributed, according to their percentage ownership in the project (Britain's at 38% is the biggest share holder in Eurofighter). This indicates that Pakistan and China will be free to manufacture the planes in parallel. Pakistan will only be limited to what it can produce. Therefore, I would say that in fulfilling an internal (for PAF\PLAF) or an external export order, CAC\PAC would be treated as subcontractors to the consortium that sells these planes. Each subcontractor should charge for the components supplied to the selling \ assembling consortium at an agreed and regularly reviewed price, which would surely have an element of profit for the part manufacturing subcontractor.
3) the imported engine and other parts would obviously be added to the make up of price.
4) finally an overall profit element would be added.
Hence sales price for each a\c should have the following element:
i) R&D element - each partner to be disimbursed equally
ii) Cost for parts used in the final assembly should go to the supplying partner at an agreed price list (this cost would obviously include a profit element for the supplying factory)
iii) the cost of final assembly (again each factory may assemble a\c against an agreed price, containing a profit element for the assembling factory)
iv) Cost of sales / sales commission: if joint marketing venture then both would be shared, otherwise, the party that puts in the effort and money into the sales should receive the (probably pre agreed) commission element.
once the above costs are aggregated (and probably a couple of others like intermediary agents commission / may be bribing an official!!) we should get THE cost price for a JF-17. Add to this your profit element and you have sales price. I personally believe it would be this final profit element (plus R&D costs) that will be shared 50:50 between PAC\CAC, if they indeed have true 50:50 partnership in the whole project.
My apologies for the length - as you can see - precise / concise writing is not one of my strong points!!
