The YF-16 Wins a Dogfight

The bars on Bomber Road outside the sprawling General Dynamics plant in Fort Worth began filling up as soon as the word came down from Washington, and there was plenty to celebrate. After a three-year commercial and political dogfight with a rival design built by the Northrop Corp. of Los Angeles, the company's single-engine YF-16 had finally won a bruising Air Force competition for a new generation of lightweight fighter-interceptors. The new machine is supposed to help the planners fight rising costs in military budgets, but that will not prevent it from yielding a bonanza in jobs, profits and aerospace-industry production contracts that will stretch well into the 1980s.

Barring any unforeseen problems, the Air Force's initial $418 million order for 15 preproduction YF-16s will grow into a $4.3 billion purchase of 650 planes at first, and perhaps another 400 planes later on. Although the Navy is looking closely at the Northrop jet, it too may decide to purchase a carrier version of the YF-16. Meanwhile, a consortium of four NATO allies--Belgium, The Netherlands, Norway and Denmark--is approaching a decision on whether to buy 350 of the planes. In the end, orders could total as many as 3,000 planes worth $15 billion.

More Agile. The Air Force purchase alone could create up to 60,000 new jobs in the U.S. aerospace industry, where total employment has been static at about 968,000 for the past three years. Nearly 30% of the Air Force spending on the YF-16 would flow to Fort Worth; another large slice would go to the plants in Connecticut and Florida where Pratt & Whitney will build the YF-16s' $1.5 million jet engines. General Dynamics last year overtook Lockheed as the U.S.'s largest defense contractor (total 1974 sales: about $2 billion), but the order comes at a time when the company needs a long-term contract to pick up the slack caused by a dropoff in production of the costly ($16 million each) F-lll swing-wing fighter-bomber. The YF-16 also offers General Dynamics an opportunity to polish up a reputation that was scarred by the cost overruns and mechanical problems that clouded the F-111 in the late 1960s.

The Air Force says it chose the YF-16 over Northrop's twin-engine design because it will cost less ($4.6 million per plane, v. $5 million) and offers "significant" advantages in performance; in 300 hours of testing, the YF-16 prototypes proved to be more agile at the Mach 2 speeds at which the planes were designed to fly. But General Dynamics also showed a shrewd appreciation of Pentagon pride and politics. To power the YF-16, the company chose the same Pratt & Whitney turbofan engines used in the Air Force's costly ($12 million) but cherished new McDonnell Douglas F-15 Eagle long-range fighter. The General Dynamics fighter thus meshes neatly with the concept now gaining popularity in the Pentagon of a "HiLo Mix" in weapons systems. In essence, the "mix" is an effort to make the really expensive items that the Defense Department wants (like the Eagle) more palatable to a skeptical Congress by pairing them with cheaper systems (like the YF-16) that use some of the same components and thus offer possible cost savings through "commonality."

Abroad, the Air Force order appears to put the YF-16 well in the lead in a three-way race with the Northrop plane and France's Dassault Mirage F1-M53 for the consortium's business. Because they believe in the reliability of a twin-engine plane, the Dutch, the Danes and the Norwegians were leaning toward Northrop's YF-17. But they have said that if they buy an American fighter, they would probably choose the same one as the U.S. Air Force. Reason: unit costs would be lower. They are expected to announce a decision by spring. In the meantime, both Northrop and General Dynamics are offering the Europeans fat slices of subcontracting work. General Dynamics has promised that if all four NATO countries buy the YF-16, they will get back close to 90% of their $2 billion investment.

Cash Bribes. The French have been working almost as hard to sell their latest Mirage, which is a refinement of a design that is already six years old and, experts say, obsolescent. If the Mirage is less agile and costlier (at $6 million), the French claim that it is also faster (Mach 2.5) than its American rivals. Essentially, however, the French count on a buy-European argument.

The French appeal to Continental solidarity is strongest in the case of Belgium, which has a Dassault plant that would close down if an American plane is chosen. But French influence is less powerful elsewhere; Amsterdam's public prosecutor, for example, is unhappily investigating charges that Dassault has offered cash bribes of up to $600,000 to Dutch members of Parliament to favor the Dassault plane. Lately some top French aviation officials have begun to admit privately that their once high hopes of staving off a big success by American plane salesmen in Europe this year may be--well--a mirage.

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