Friday, 28 October 2011

BAE Systems careful in expanding HAL role in Hawk

The Eurofighter undergoing final assembly at Warton, Lancashire. BAE Systems is dispensing with the capability to build Hawks at Brough, but says it will retain that capability at Warton (pictured here) and Samlesbury. BAE sees this capability as vital for competing in the T-X contract, the supply of trainers to the USAF

by Ajai Shukla
Business Standard, 29th Oct 11

Public sector aeronautical giant Hindustan Aeronautics Ltd (HAL) is in talks with BAE Systems about an expanded role in building Hawk jet trainers for the global market. A month after the UK-headquartered giant effectively shut down a decades-old UK production line for Hawks, HAL says that a share of that could move to the Hawk production line in Bangalore.

Transferring production to Bangalore is logical, says HAL’s chief, with the Indian Air Force emerging as the largest operator of the Hawk advanced jet trainer (AJT) outside the UK. Close to 150 Hawks will wear the IAF roundels: an initial order for 66 Hawks, bought for Rs 6,600 crore in 2004; and another 57 contracted last year for Rs 5,500 crore. A third order for 21 more Hawks is currently being processed. Other than the first 24 Hawks that were imported ready built, HAL Bangalore will be manufacturing the rest.

“Last year, while negotiating the contract for 57 Hawks, BAE Systems wanted to give HAL additional work in building Hawks in the future. If BAE Systems gets a fresh Hawk order, HAL is looking for a large role in that build. What exactly, is still being discussed,” HAL chief, Ashok Nayak, told Business Standard.

The stakes are enormous for BAE and HAL. Up for grabs is the US Air Force’s “T-X program”, potentially the world’s largest-ever overseas aircraft procurement. With the USAF replacing its 40-year-old fleet of Northrop T-38 Talon trainers, BAE Systems is eyeing an order for at least 350 Hawks, with that initial order possibly rising to over 1,000 aircraft. The Hawk’s rivals in this contract are expected to be the T-50 Golden Eagle, built by Korean Aerospace Industries and Lockheed Martin; and the M-346 Master built by Alenia Aermacchi.

BAE Systems confirms to Business Standard that it is in discussions with HAL, but the company is keeping its cards close to its chest. There is sensitivity in transferring manufacturing to India at a time when BAE has just laid off 3000 skilled aerospace workers in the UK. Furthermore, if the Hawk is selected for the T-X programme, the USAF would probably insist that the initial, ready-built aircraft be sourced from the UK.

Says Andrew Gallagher, Managing Director and Chief Executive, BAE Systems India: “BAE Systems retains the capability to build Hawk in the UK to manage any additional export orders which may arise and will also continue to work closely with HAL on both current and future Hawk activities.”

According to the BAE website, “the Company has commenced consultation on ending (Hawk) manufacturing capability at (Brough).” But that capability will now be kept alive at two other BAE facilities --- Warton and Samlesbury --- which build the Eurofighter Typhoon and components for the F-35 Lightening II Joint Strike Fighter.

HAL is understanding of BAE Systems’ sensitivities, but also confident that there is a business case for HAL to play an expanded role in building Hawks. Says Nayak: “Naturally BAE Systems is worried about the comfort level of potential customers, who might prefer a made-in-UK Hawk. After all, you would want to buy a Mercedes only from the original dealer… not from a sub-vendor. For now, BAE Systems is looking at getting only a part of the production work done in HAL. But we have a fully up-and-running line… and we’d be happy building the entire Hawk.”

Notwithstanding the HAL chief’s confidence that HAL’s role will expand as a major Hawk production centre, industry sources point out that the USAF will insist that the bulk of the T-X order be built in America. Only the initial aircraft might be imported fully built.

Underlying BAE Systems’ continuing interest in HAL is a strategic logic that extends beyond the Hawk to the Eurofighter Typhoon. Having partnered HAL in setting up the successful Hawk line in Bangalore, BAE Systems (a major partner in the Eurofighter programme) believes that it has a credible argument that the Typhoon production line will also be set up smoothly.

“If Eurofighter is selected as the MMRCA solution for India there will be further opportunities to strengthen our relationship through Typhoon manufacturing and support,” says Gallagher.

Eurofighter-affiliated executives also argue that the Hawk is the natural trainer for fighter pilots who will fly the Typhoon. But this logic cuts two ways; in the T-X procurement, this argument is deployed by BAE Systems’ rival, Lockheed Martin, who argue that their T-50 Golden Eagle is the natural trainer for pilots who will eventually fly their F-22 Raptor and F-35 Lightening II, both built by Lockheed Martin.


Anonymous said...


The Korean trainer is a little too advanced (closer to our own LCA) The Alenia trainer fits the bill, it looks better, is newer, and packs more tech thant the Hawk. But the Hawk genes are more robust/proven, meets the basic T-X requirements (hopefully), and comes from a stronger US ally (UK vs. Italy) of course, a 350 plane Hawk order will boost the longevity of the product (which is also operating in India), not to mention spin off orders just have to come to sure at least later built planes will come off HAL lines.

Wishful thinking. But why not!

Anonymous said...

it is a day dream. the US ambassador has himself (wikileaks) questioned the capability of HAL to churn out modern fighters. will his country ever agree to buy anything made by such organization?. outsourcing will work if the reliability comes from numbers (like iphones/ipads made in china). but here the case is not so. Also as mentioned in the article it will not be digestible for US that tech jobs which could be done in US be done in a third country even though at reduced cost.

HAL better stay with what they are required to i.e build planes for our airforce as per schedule, and if they have production excess capability spares or parts could be made if it makes sense.

Ajai ji, early i read i guess from your own blog about a proposal for future trainer aircraft to be jointly developed by India and US. Hope it didnt suffer from a still birth. it would be nice if it could be worked out.

Anonymous said...

So your story is probably an indication which MMRCA vendor might be better able to meet TOT and India's industrial strategy? and I as an observer am all for such a type of partnership for India.

But are there really potential orders for the EFT outside Europe and India?.

Hari Sud said...

HAL has too much too soon on its plate without management accountancy of the company share holders. It has to be privatized and split into more manageable pieces.

This mantra has to be followed more dilligently.

Once this happens then it is ready for capital infusion and joint ventures.

BAE Hawk is one example. There are a lot more especially newer aircrafts are introduced and return for re-furbishing and upgrade.

The above problems were identified long before including during the development of LCA aircraft.

Now, the IAF wants to place its own man at the top instead of civil servants more reliable to the political system than their business skils.

HAL is a Cold War era monolith. Its time is over.


Hari Sud

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Rahul said...

Everyone knows an order as big as T-X would required local production or atleast assembly and even BAE lines in UK are not getting penny, let alone HAL. Only thing up for grab is sub-assembly and since BAE has decided to retain two line, it is now quite obvious that whatever that will come from outside US will be made in UK. While doing so, BAE won't care a foot for HAL because it has already grabbed what could be called 'maximum possible'.

Anonymous said...

Heard of the saying better late than never?

Manuafacturing 350 Hawks in UK alone....will take much more than 10 years or so! So Manufactung a good number of Hawks in India actually makes perfect sense.

Plus there are huge spinoff benefits for all three contries involved- USA, UK, and India:

1. For UK....this could be the all important sweetener for bagging the MMRCA contest (Typhoon vs Rafale). Because whatever the press and polls say (that Typhoon has the upper edge).....I just dont see Typhoon beating Rafale in the commercial bids.

Even the complicated maths of "life cycle costs" for Typhoon are not likely to be lower than the Rafales. The French are too willy at this.

The only way, the Typhoon will beat the with such sweeteners such as "manufacturing and exporting Hawks to a global market". HAL and India will surely salivate.

And those who argue that each contract needs to be looked at independently........ there is such a thing called "national interest". I hope someone invokes that in the comparision file.

2. For USA....this could be another way to endear India strategically, and also some reward to keep buying US military equipment. Dont forget......USA has been kind of loosing freinds fast in the world.

3. For India.....the benefits are a no brainer.

Also, HAL divestment is on the cards, albiet in a limited way. We would do well to take a cue from this Hawk export improve quality control, and privitize HAL on a much faster track... We need to emulate Embraer which by the way has "thrived (like how!!)" in just the 10 years since the Brazil government privitised it). Why should we not unlock such value in HAL?

For all naysayers and sceptical pundits .....wait and watch. This is a serious dog fight going on here.

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