LM to blame over T-50 lost in UAE?

By Kim Hyun-cheol

Korea's latest shot at selling its homemade trainer jet overseas ended in failure and attention has been drawn to the role Lockheed Martin played. Lockheed was the main supplier of F-16 fighters to Korea, with the development of the T-50 being a key part of their deal as an ``offset program.'' Repeatedly, the U.S. defense contractor promised to help sell the trainers to third countries but there are signs that Lockheed has not exerted enough influence. Korea spent at least two trillion won, or about $1.5 billion, on the advanced trainer project.

Last month, KAI, Korea's only aerospace firm, lost a bidding competition to supply next-generation military jet trainers to the United Arab Emirates (UAE). The T-50 Golden Eagle lost out to the M-346 from Italy's Alenia Aermacchi in the $1.3 billion UAE contract, which included the building of 48 jets for the Middle Eastern country.With the disadvantage of higher prices, the T-50 was assessed to be ahead of its rival because of its better quality and performance than the M-346. Currently, the T-50 is the only modern supersonic military jet trainer in the world. Critics say a lack of overall support from the parties concerned produced the disheartening consequence, and while Lockheed Martin had control over the KAI throughout the bidding process, the company was not efficient in sharing information needed in the competition.Lockheed Martin, a leading multinational aerospace manufacturer, has been engaged in projects since the very first stage of development. In November 2006, KAI signed a memorandum of understanding that outlined strategy to broaden sales of the T-50, including a joint marketing campaign. Lockheed Martin Executive Vice President Ralph Heath came to Korea to sign it with then-KAI CEO Chung Hae-joo.

However, Lockheed Martin's subsequent actions were far from cooperative. Industry sources say it changed its stance on exports of the T-50 since Heath took part in 2005; before then the company left KAI to do most of the work, but Heath purportedly shook up the system to take control of exports from the Korean partner.KAI had an edge over Alenia Aermacchi, a leading company in the design and production of trainers for military pilots, when the UAE tested the two jets in 2006, as the M-346 was not sufficiently developed to check its safety.

The Italian company subsequently suggested establishing a pilot-education institute for the UAE air force before the latter bought the jets. The UAE accepted the suggestion and delayed the selection of the bid's winner, originally expected in late 2007, giving it time to complete the development of the M-346. Upon finding out, Lockheed Martin contacted the UAE to suggest that it would also set up an education program, causing the UAE to further delay selection. KAI denied any discord with Lockheed Martin. ``We don't have any notable problems with the U.S. company,'' said Lee Kyung-ho, a KAI executive.

As for the cause of the bidding failure, Lee said it was not an easy competition for many reasons. ``Maybe the price was too high for the UAE's standards, or maybe our marketing was not good enough. KAI is just a beginner in this area. But I believe, quality wise, the T-50 is not inferior to the M-346,'' he said.Lockheed Martin has not given a response to questions from The Korea Times and its Seoul office chief was not available for comment.

The turn of events during the UAE bidding might also affect upcoming bidding, as Korea plans to take part in similar bids, buoyed by claims from experts on the jet's performance. KAI is participating in the bid for a $500 million deal in Singapore this year, and is expected to compete for another with Poland next year. However, the outlook is not too positive due to its track record.``Bidding on jet provision is most focused in the beginning, determining if it will sell well in most cases,'' a military analyst said on condition of anonymity.

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