As Japan purchases more of the F-35 stealth fighter aircraft which is made in the United States, IHI, the local jet engine builder, understand it as its most profitable business being under threat.
The government of Japanese Prime Minister, Shinzo Abe, has profited 701.3 billion yen in 2019 for procurements through the foreign military sales platform of the U.S. this is greater than 70% from the preceding year. Most of the cost will be sent to the 105 Lockheed Martin F-35s. This deal was, during his latest visit to Japan, emphasized by the U.S. President Donald Trump.
On Tuesday, President Donald Trump, while on-board the Kaga (Japan’s Maritime Self-Defense Force ship), stated that this purchase would lead to Japan obtaining the biggest fleet of F-35s among all of U.S.’s allies.
Japanese defense industry executives, however, will possibly not be too delighted with this attainment, nor from the fact that the purchases of U.S. military equipment by Tokyo are rising. The program, for foreign military sales, allows Washington to define the terms and conditions, thus leaving no open avenues for the Japanese contractors.
492.2 billion yen (roughly 30%) of the heavy industry group’s transactions, was generated by IHI’s aerospace and defense sector, and 46.4 billion yen (nearly 60%) of its operating revenue, during the economic year that concluded in March.
Defense-associated deals made up nearly 100 billion yen of the segment’s transactions. However, industry watchers say that as a consequence of Tokyo’s purchases in the United States, mainly, the defense business of IHI may fall by nearly 10% in the upcoming years.
Since IHI is responsible for developing the first jet engine in Japan, it enjoys a near dominance in developing, for the Ministry of Defense, aircraft engines from the initial design stage up to the manufacture stages.