Initially the production will meet domestic demand for the aircraft in Argentina's air force and the navy but government planners are looking ahead to Argentina entering defense export markets, analysts said.
The government-run FADEA aircraft factory in Cordoba, a former Lockheed Martin facility, plans to roll out at least 100 Pampa II training and combat aircraft in association with German Grob Aircraft AG over the next five years.
Plans are also afoot to produce a new upgraded model, tentatively called Pampa NG, industry reports said.
FADEA President Raul Arganaraz said the 100 units are planned to be built with several key components supplied by Grob.
The current FADEA operations employ more than 120 experts, technicians and workers but the labor force is set to increase as FADEA expands, officials said.
Argentina took over the aircraft maker formerly known as Lockheed Martin Aircraft Argentina and relaunched it in 2010 as Fabrica Argentina de Aviones "Brigadier San Martin" S.A.
The revival of the divested factory in agreement with the United States has also involved a wider quest for better and more competitive components.
These include the U.S.-made Honeywell engine for the Pampa range. Grob, too, says it is happy with the arrangements and plans to help FADEA build at least 60 advanced training and attack IA-63 Pampa II aircraft plus another 40 aircraft of the older version.
At least some of the new Pampa aircraft will join the inventory of Argentine naval forces, which want to be better equipped against increasingly powerful narcotics smuggling gangs.
It wasn't immediately how the upgrade aircraft will be priced. Argentine media reports said each aircraft could cost $9 million-$12 million. Whether that is a list price or the price to be paid by the Argentine military remains unclear.
The IA-63 is seen by the Argentine military as an answer to the well-resourced criminal gangs' increasing maneuverability. Results from government anti-narcotics efforts have been lackluster.
Meanwhile, FADEA is still pursuing plans to develop a next-generation Pampa NG that is likely to include an air-to-air refueling feature, redesigned air intakes, strengthened landing gear and a radar or laser rangefinder.
FADEA is also upgrading the Argentine air and naval forces' older Pampas to near Series II standard. Only about a dozen of the 16 still reported to be on the military inventory are operational.
Plans are also afoot for Argentina to enter into cooperation with Brazilian aircraft maker Embraer. Current trade tensions between the neighbors have put the project on the back burner.