Procurement: Priced Out Of The Market


April 14, 2009: South Korea has decided not to design, develop and build its own helicopter gunship. Like many other industrializing countries, South Korea sought to boost local industry, and cut down on expensive purchases of foreign high tech weapons, by developing their own. But this only works if you can export, because very few countries have a large enough domestic market to create sufficient demand to make domestic production cheaper, or at least just as expensive, as importing these complex weapons. It all comes down to numbers, and with the current global recession, and sharp drop in South Korean non-military exports, South Korea cannot afford to develop high tech weapons it can't sell abroad, and can't really afford itself.

The locally designed gunships would end up costing the South Korea Army about three times what they are paying for American refurbed choppers. Since aircraft are constantly rebuilt over their service lives, there's no difference in performance between new AH-64Ds, and refurbished ones. The one difference would be higher maintenance cost for the refurbs down the line, because some of the components already had some wear on them when they entered South Korean service.

Last year, South Korea bought 36 recently retired U.S. AH-64D Apache helicopter gunships. With refurbishment, each cost $27 million. That's about half what brand new, similarly equipped Apaches would cost. South Korea will be using the AH-64s to replace elderly AH-1 gunships. The AH-64Ds are arriving over the next few years.

Many South Korean politicians and industry leaders want to go ahead with developing the Korea Attack Helicopter (KAH) anyway, and get the AH-64Ds mainly to upgrade current helicopter gunship capability. But the first KAH would not be ready for service for another ten years, and many South Koreans believe that their biggest military threat, North Korea, will have collapsed, or decayed into military insignificance by then. Meanwhile, Korea will continue its project to design and build a transport helicopter. These have much brighter export prospects, and a large domestic market as well. More foreign attack helicopters will be bought to replace 29 AH-1 gunships and fifty TOW missile equipped 500MDs, as they become too old to operate.





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