Procurement: An Unexpected Gift

Archives

April 16, 2016: Italy has ordered another nine of the locally made M-346 jet trainers. This will double the Italian air force M-346 fleet to 18. So far 68 M-346s have been delivered or ordered by Italy, Israel, Singapore and Poland. Italy had a hard time getting M-346 sales going but now the aircraft has a growing record of good performance and satisfied customers.

The M-346 is a 9.5 ton, twin engine, two-seat aircraft. Top speed is 1,000 kilometers an hour. Max range with two drop tanks is 2,500 kilometers. The aircraft can also carry three tons of weapons including bombs, missiles, and a cannon pod. The M-346 is an excellent dual use (as a trainer and fighter-bomber) aircraft. The M-346 began production in 2011. Development began in the 1990s as a joint venture with Russia. But the two projects split in 2000 with the Russians continuing to develop theirs as the Yak-130.

What has since happened to the M-346 had more to do with economics than military necessity. Thus years of economic problems in Italy led to the defense budget cuts that hampered the ability of the air force to buy many M-346s. In 2015 alone the $16 billion defense budget was cut six percent lower than planned. Since the Italian economic mess (similar but not as bad as the one in Greece) is not likely to completely disappear any time soon the military is making plans to do what they can with less money. This means that military personnel strength will have to be cut more than intended. The original reduction from 216,000 troops to 190,000 has now been revised so that there are only 175,000 troops currently and that is to shrink to under 140,000 in the next decade. A major reason for this decline was the decision to end conscription in 2002. The American experience in Iraq and Afghanistan also made it clear that highly trained and well equipped volunteer troops could get the job done better than a larger conscript force. Moreover a smaller force can afford more new and improved weapons and equipment.

Italy has made its procurement budget go farther by being creative in obtaining more customers for Italian made weapons. This makes these weapons cheaper for the Italian armed forces. An example of this creativity took place in early 2012 when the Israeli Air Force decided to buy 30 Italian M-346s. Before the Israeli government signed off on the deal it negotiated a barter arrangement whereby Israel will pay for the M-346s with Israeli weapons and military equipment. Since Israel is paying $993 million for the M-346s, the Italian armed forces had to buy an equal value of Israeli stuff to complete the transaction. Since Israel is one of the top ten arms exporters on the planet, Italy has no problem finding needed useful items to buy. Italian defense firms were not happy with this deal. While the barter arrangement may cost Italian firms some sales, the Italian military realizes that Israeli firms make a lot of high-tech military gear that is not produced in Italy. American and other European firms are likely to lose more sales from this deal. Thus the Italian military gets gear not produced locally and increases exports of Italian weapons.

An unexpected bonus from the Israeli deal was a boost for M-346 sales because the Israelis were not shy about discussing how much they liked the Italian made trainer.

 


Article Archive

Procurement: Current 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 


X

ad

Help Keep Us Flying!

Each month we count on your subscriptions or contributions. You can support us in the following ways:

  1. Make sure you spread the word about us. Two ways to do that are to like us on Facebook and follow us on Twitter.
  2. Subscribe to our daily newsletter. We’ll send the news to your email box, and you don’t have to come to the site unless you want to read columns or see photos.
  3. You can contribute to the health of StrategyPage. A contribution is not a donation that you can deduct at tax time, but a form of crowdfunding. We store none of your information when you contribute..
Subscribe   Contribute   Close