Japanese will get key 7E7 work

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Friday, November 14, 2003

Japanese will get key 7E7 work
Having others make wings is seen as huge shift by Boeing

By JAMES WALLACE
SEATTLE POST-INTELLIGENCER AEROSPACE REPORTER

Taking a bold new step toward the development of its next new jetliner, The Boeing Co. will award the critical 7E7 wing work to Japanese industry.

Unions say giving work to Japan will mean lost jobs, technology

The move is unprecedented for Boeing and represents one of its most important airplane manufacturing decisions ever. The aerospace giant has never before allowed a supplier or partner to take the lead in manufacturing the wings of its jetliners.

Boeing commercial executives will announce next week who will build what large structures of the 7E7, with the Japanese getting most of the wings, sources confirmed.

Japanese industry also will build some of the 7E7 fuselage.

Union officials say the wing and fuselage work on the 7E7 represents about 1,000 new jobs that now appear headed elsewhere. And while a dozen years ago, engineering professionals couldn't have imagined sending wing work somewhere else, many employees say this latest move is just the continuation of a trend.

"The company doesn't even view it (the 7E7) as an American-made product," said Bill Barrett, who works at Boeing's Auburn plant.

It had been widely expected for some time that Japanese manufacturers would get to make the high-value composite wings of the 7E7. But Boeing has repeatedly declined to spell out who will make what airframe sections of its new plane, saying only that an announcement was likely before the end of this year.

Boeing said the same thing yesterday when asked to comment for this article.

But sources provided the Seattle Post-Intelligencer with details about Boeing's work-share plans for the 7E7. The sources confirmed what has been considered likely for months: that the only large section of the 7E7 that will be manufactured in the Puget Sound area is the composite tail fin. It will be made at Boeing's Frederickson plant near Tacoma.

Japan will get most, but not all, of the 7E7 wing work. Some of that work will be done by Boeing in Tulsa, Okla.

Boeing's Wichita, Kan., division, which includes the Tulsa operations, will make the 7E7 nose section and cockpit. Wichita builds the nose sections of other Boeing jetliners.

Boeing's Winnipeg division in Canada will manufacture what's known as the wing-to-body fairing.

The aft fuselage and the horizontal stabilizer assembly, with the exception of the vertical fin, will be a combination of Alenia Aeronautica in Italy and Vought Aircraft Industries in Texas, the sources said.

Some fuselage work has not yet been assigned.

Industry analysts said it is not surprising that Boeing picked the Japanese to play a leading role on the 7E7 program.

"To put it simply, Japan is one of the last jewels left in Boeing's crown," said Richard Aboulafia of the Teal Group, an industry consulting firm in Fairfax, Va.

"There is nothing like Japan in terms of market size and market loyalty and industrial loyalty," he said.

Japan's two major airlines, All Nippon Airways and Japan Air Lines, are expected to be key launch customers for the 7E7. Both are loyal Boeing customers.

Airbus, which has made great inroads at Boeing's expense in other parts of the world, has yet to crack the Japanese market in any significant way. Airbus made an all-out push to get Japanese industries to take an equity stake in its A380 superjumbo project, but the European airplane maker was rebuffed.

Japanese industries will make parts for the A380, but they won't be partners with Airbus.

Instead, the Japanese will partner with Boeing on the 7E7.

"Playing the Japanese card is not just an offensive move for Boeing, it is a sound defensive move as well," Aboulafia said. "Look at the A380 business case and the importance of Asia. If Boeing can keep Japan out of that, they are really doing some damage to the A380 business case."

Mitsubishi, Fuji and Kawasaki, often referred to as the Japanese "heavies," are getting the lion's share of the 7E7 work going to Japan, with Mitsubishi taking a lead role. They are among Japan's five major aircraft manufacturing companies. The other two, Shinmaywa and Nippi, will also participate in the 7E7.

These companies now have about 21 percent of 777 airframe work for Boeing and about 15 percent of the 767.

That percentage is going up for the 7E7.

"One of the many reasons that Boeing absolutely needs to launch something new is to keep the Japanese in their camp," Aboulafia said. "If the Japanese can get good technical and industrial transfer terms from anyone else, they will do so and leave Boeing."

Development of the 7E7, a superefficient, twin-engine jetliner about the size of the 767, is likely to begin next year once Boeing's board has given the OK. The plane would enter service with airlines in 2008.

Boeing has not yet decided where the 7E7 will be assembled. It is weighing sites in several states, along with Moses Lake in Eastern Washington and the Boeing plant in Everett. Boeing assembles its widebody 777, 767 and 747 jetliners at the Everett factory. It builds the single-aisle 737 and 757 in Renton, though the 757 will go out of production late next year.

The much-anticipated announcement of where the 7E7 will be assembled is expected in mid-December.

The 7E7 will usher in a new era in airplane manufacturing for Boeing. Large, completed structures will be transported -- the wings will come from Japan in modified 747 freighters -- to the final assembly site and joined together. Boeing believes it will be able to assemble a 7E7 in as little as three days using these new methods.

With the exception of the 717, the wings of Boeing's jetliners are essentially manufactured around the Puget Sound area. Some parts of the 777 wing come from Japan.

The big center wing box for the 777 is shipped from Japan.

The 747 center wing section is supplied by Bombardier in Canada. The parts are in a kit that is assembled and built up in Everett. Mitsubishi will begin to take over this work next year.

The wings of the 717, Boeing's smallest jetliner, are manufactured by Boeing Toronto Ltd. in Canada. It is assembled in Long Beach, Calif., the only Boeing jetliner put together outside of the Puget Sound area. But this operation was part of McDonnell Douglas before the 1997 merger with Boeing. It was the decision of McDonnell Douglas, long before the merger, to outsource the wing work on the 717, which was known then as the MD-95.

Hyundai Space and Aircraft Co. of Korea made the MD-95 wings at one time.

Boeing had announced at the Paris Air Show in June that Fuji, Kawasaki and Mitsubishi, along with Alenia and Dallas-based Vought, had been selected to make major structural sections of the 7E7. But Boeing has kept quiet about the specific allocation of work.

The Japanese companies already do wing work for other airplane makers. Mitsubishi supplies the wings for Bombardier's Challenge 300 and Global Express business jets.

Fuji recently has signed a partnership agreement to build the wings of the Eclipse 500, a program headed by former Microsoft executive Vern Raburn to develop a business jet costing less than $1 million.

Kawasaki is a partner with Embraer of Brazil for the wings of the ERJ 170/190 jets.

But landing the wing work for Boeing's 7E7, the company's first all-new jetliner since the 777, is a major coup for Japanese industry.

"The Japanese have done a very good job over the years and have just strengthened the relationship with Boeing," said Peter Jacobs, an industry analyst with Ragen MacKenzie.

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