Boeing says Japan could produce F-18 under license

By Mariko Katsumura and Kiyoshi Takenaka

TOKYO (Reuters) - U.S. planemaker Boeing <BA.N> said local defense contractors might build F/A 18 Super Hornets under license if Japan chose to buy the next-generation fighter jet.

The comment came after the U.S. aerospace giant, along with Lockheed Martin <LMT.N> and a consortium of European countries, submitted bids to produce Japan's next mainstay combat aircraft in a deal that could be worth up to $8 billion.

Japan, which is facing a resurgent China and its growing military as well as threats from North Korea, plans to decide this year how it will replace its current fleet of aging F-4 Phantom fighters with about 40 new combat airplanes.

Phillip Mills, Director of Boeing's Japan FX Capture Team, said Japanese makers could supply about three quarters of Super Hornet components if Japan opted for the fighter jet.

There has been great interest in how much of next-generation fighter jet-related jobs will be outsourced to the Japanese industry, which has been battered by gradual but consistent shrinkage of the defense budget.

"If you came to the Boeing production line, everything you saw Boeing doing in St Louis would be available or is available for Japan industry to do," Mills told Reuters in an interview.

"It's clear that we are going to be somewhere in the 75 percent area," Mills added, referring the percentage of F-18 component production that the company could outsource to Japanese makers.

Japanese fighter jet and aeroplane components makers include top defense contractor Mitsubishi Heavy Industries <7011.T>, Kawasaki Heavy Industries <7012.T> and IHI <7013.T>.

Boeing's F/A 18 Super Hornet is set to compete against Lockheed Martin's F-35 Joint Strike Fighter and the Eurofighter Typhoon made by a consortium of European countries for the contract.

Mills said the high rate of planned outsourcing to Japanese companies, competitive pricing and ability to deliver on time give Boeing a competitive edge against the competition.

"The lower risk and affordability and licensed production we are offering is, I think, as good as they are going to get . so all and all we are feeling pretty good about it," he said.

"We've offered an extremely fair and competitive price for not only initial aircraft but also for licensed production aircraft." said Mills.

He declined to specify the offer price.

Kazuya Sakamoto, professor at Japan's Osaka University, said the Lockheed Martin F-35's stealth, or radar-evading, capability gives it an advantage over the competition, although its cost overruns and schedule slips have cast doubts over its prospects.

Fighter jets' stealth capability has drawn heavy attention in Japan since China, which has a long-running territorial dispute with Japan, in January confirmed it had held its first test flight of the J-20 stealth fighter jet.

Mills said Boeing's multi-role Super Hornet comes with a stealth capability, but the rival F-35 is "stealthier."

Lockheed Martin, the world's biggest defense contractor, which also submitted its proposal to Japan earlier on Monday said the F-35 stealth jets would deliver "unmatched cost-effective capability for Japan's defense, now and well into the future."

"We are committed to an enduring F-35 partnership with Japanese industry to deliver F-35's transformational 5th generation capability for Japan's long-term national security," John Balderston, Director of the Japan F-35 Campaign, said in a statement.

Meanwhile, a consortium of European companies that makes the Eurofighter Tyhpoon said that fighter jet could be manufactured, maintained or integrated in Japan under license and that the aircraft's crucial data and software source code could also be handed out to Japan.

Some media reports have said U.S. makers have a better chance of winning the deal since Japan may shy away from picking European fighter jets out of fear that doing so could further ruffle its U.S. ties, already hurt by disputes over the relocation of the U.S. Marines' airbase in southern Japan.

(Additional reporting by Tim Kelly in Tokyo, and Jim Wolf in Washington D.C.; Editing by Matt Driskill, Lincoln Feast and Hans-Juergen Peters)