Mohawk Defense: Fighter Jet Manufacturer

A U.S. defense contractor manufactures the Mohawk Light Fighter Jet for the British Royal Air Force. After 12 years of production, the British government is putting the contract out to bid. To win the re-bid, the client must reduce its manufacturing costs by 5% on a $20M jet. BCG is engaged to identify cost reduction opportunities. This case tests a candidate's ability to structure a cost-reduction problem across design, manufacturing, procurement, and overhead — while working within the constraints of defense contracting and regulatory compliance

Client: A U.S. defense contractor with a long-term production contract to manufacture the Mohawk Light Fighter Jet for the British Royal Air Force (RAF). The jet is priced at $20 million per unit. Situation: The British government has decided to put the contract out to competitive bidding after 12 years. The client's own purchasing agents estimate that winning the new bid will require a 5% cost reduction — a savings of $1 million per aircraft. The client has engaged BCG to identify how to achieve this cost target. Competitive Context: The RAF is a sophisticated, repeat buyer that is likely evaluating both price and performance. Other defense contractors may bid for the contract, creating genuine competitive pressure for the first time in over a decade.

How can the client reduce the cost of manufacturing the Mohawk Light Fighter Jet by 5% (approximately $1M per unit) while maintaining quality, performance, and compliance with RAF specifications?

Step 1 — Cost structure decomposition: Request a full cost breakdown by category (materials, labor, overhead, design/engineering). This establishes where the dollars are and which levers have the greatest potential. Step 2 — Procurement benchmarking: Audit the supplier base for the Mohawk's major components. Identify single-source suppliers and assess whether competitive re-tendering or volume renegotiation can yield 5-10% savings on key components. Step 3 — Labor and manufacturing efficiency: Review production line headcount, shift patterns, and output per labor hour vs. industry benchmarks. Identify automation investments that have positive payback within the contract period. Step 4 — Design value engineering: Work with engineering teams to identify components that are over-specified for RAF requirements. Propose design changes that reduce material cost or simplify manufacturing — subject to RAF approval. Step 5 — Overhead rationalization: Examine overhead allocation to the Mohawk program. Identify shared services costs, facility costs, and management layers that have grown disproportionately since program start. Step 6 — Prioritize and sequence: Rank initiatives by (a) magnitude of savings, (b) implementation timeline, and (c) risk of customer or regulatory pushback. Build a phased roadmap with quick wins and long-term structural changes. Key Insight: After 12 years of uncontested production, the most significant cost reduction opportunity is likely in procurement — long-running sole-source supplier relationships are a classic source of cost inflation. A competitive re-tendering process for the top 10 components by spend may alone deliver the 5% target. This is the highest-leverage, lowest-risk starting point before touching labor or design.