From its assessment, the committee concludes that although continuing and expanded U.S.-Japan cooperation is inevitable and consistent with U.S. interests, a new approach is needed to ensure that this cooperation contributes to reenergizing U.S. leadership in the aircraft industry.

MAJOR FINDINGS

1. Leadership in global competition will increasingly go to the firms emphasizing high-quality, low-cost manufacturing. This is precisely the area that the Japanese have made their top priority—at the same time that the U.S. aircraft industry is making deep cuts in capital equipment investment.

A major purpose of the assessment was to reexamine the widely held assumption that Japan's aircraft industry is unlikely to move into the ranks of global leaders. During its study mission to Japan in June 1993, the committee was impressed by the investments in state-of-the-art manufacturing equipment made by the four "heavies" that lead Japan's aircraft industry—Mitsubishi Heavy Industries (MHI), Kawasaki Heavy Industries (KHI), Ishikawajima-Harima Heavy Industries (IHI), and Fuji Heavy Industries (FHI)—as well as by dedicated aircraft suppliers such as Teijin Seiki. Japanese industry has attained world-class capabilities in manufacturing aircraft components such as fuselage panels, thick and complex composite structures, long shafts for aircraft engines, and primary actuation. Advanced technologies—including processes utilizing five-axis machines driven by design data bases—are combined with a meticulous approach to manufacturing practice to achieve high quality, low cost, and reduced cycle time. In addition, the manufacturing excellence achieved by companies such as Toray in carbon fiber and Sharp in flat panel displays has allowed Japanese industry to establish dominant positions in several critical areas of the aircraft supplier chain.

Although some U.S. companies are making the investments necessary to stay on the cutting edge of manufacturing, many are not, largely as a result of ongoing cuts in military aircraft procurement and the current commercial market slump. This is a critical issue because the forces shaping competition over the next decade—growing but price-sensitive markets, industry restructuring, and fewer brand-new aircraft and engine programs than in the past—mean that both U.S. primes and suppliers will be continually pressured to deliver more value at lower cost.

2. Japan's aircraft R&D and defense production systems actively foster an integrated and flexible dual-use technology and manufacturing base. In contrast, the commercial benefits of U.S. military aircraft R&D and procurement have declined over time—largely as a result of policies that implicitly discourage military-commercial synergies.

Although the amount of public resources expended on the Japanese aircraft industry is relatively small, Japan's government-sponsored domestic cooperative programs are more strongly oriented to technology sharing among



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