commercial airplanes and the largest foreign customer country for Boeing, even though the level of domestic air travel is low relative to the wealth of the country because of geography and the highly efficient rail system (see Figure B-1). Boeing projects that the total commercial jet market in Japan between 1993 and 2010 will be $60.5 billion in 1993 dollars (440 airplanes), second to the U.S. total of $280 billion and ahead of the rapidly growing Chinese market ($41 billion). Japan Air Lines (JAL) is the largest customer for Boeing's largest airplane, the 747 (having bought a total of 114); All Nippon Airways (ANA) is the largest foreign buyer for the 767 (having bought 82 thus far).

Boeing has procured parts and equipment from Mitsubishi Heavy Industries (MHI), Kawasaki Heavy Industries (KHI), and Fuji Heavy Industries (FHI) since the start of the 747 program in the late 1960s, with MHI and FHI supplying Boeing on the 757 and KHI on the 737. With the 767 program in the late 1970s and now the 777, the Boeing-Japan interaction has moved from one in which the Japanese companies ''build parts to specification,'' to actual design and engineering interaction from the earliest stages of product development. Table B-1 lists the components built by the three "heavies" on various Boeing aircraft; while Table B-2 shows the involvement of other suppliers.

In looking at the U.S. versus foreign content of Boeing aircraft, on average U.S. content is 85 percent by dollar value across all models, and 60 to 70 percent of subcontracted work is given to U.S. firms. The big change over the past 20 years is the main fuselage sections. Northrop builds most of these parts on the 747, whereas most of the fuselage of the more recent 767 and new 777 models is built in Japan. However this has led to only a moderate shift in U.S. versus foreign content because the fuselage does not constitute a large percentage of the value of an airplane. Foreign content of the 777 will be 16.7 percent including engines (12.6 percent not including engines); foreign content is 12.2 percent for the 767 and 14.6 percent for the 757.1 When describing their participation in Boeing programs, the Japanese companies use figures for percentage of the airframe by value, which are higher.

767 Program

Boeing had worked with the Japanese companies in the late 1960s when they supplied parts for the 747. Discussions concerning closer collaboration on future aircraft started in 1970; the 767 program was launched in 1978 and a contract was signed with the Japanese to supply parts. The first ship sets were delivered in early 1980. In 1991 the two sides renegotiated for a second 500


Rolls Royce accounts for the largest share of foreign content. Boeing calculates these figures based on cumulative and projected engine purchases, and uses information provided by suppliers on foreign content of subsystems. It is generally possible to project engine purchases because airlines need to make a significant investment to support the maintenance of a particular engine. It is, therefore, very difficult (but not impossible) for engine makers to dislodge entrenched competition. For example, United generally buys Pratt & Whitney engines, and British Airways generally buys Rolls Royce.

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