the Japanese "heavies."1 To all accounts, this relationship has brought significant benefits to both sides.

From the start of the 747 program in the late 1960s through the subsequent 737 and 757 programs, Boeing procured parts and equipment from Mitsubishi Heavy Industries (MHI), Kawasaki Heavy Industries (KHI), and Fuji Heavy Industries (FHI). Starting with the 767 program in the late 1970s and continuing with the 777—which is scheduled to enter service in 1995—the Boeing-Japan interaction has evolved from one in which the Japanese companies "built parts to specification" to actual design and engineering interaction from the earliest stages of product development. The work share and the technical sophistication of the manufacturing tasks undertaken by the Japanese partners have also increased steadily over time.

Boeing's primary motivation for approaching the Japanese heavies about significant participation in the 767 program was the perception that the linkage might bring market leverage. The Japanese were probably most motivated by a desire to gain access to technology as well as indirect access to the global aircraft market. MHI, KHI, and FHI designed and now manufacture approximately 15 percent of the airframe of the 767, a wide-body twinjet. As "risk-sharing subcontractors," the Japanese partners assumed the risk for their nonequity share in the program, including tooling and other investment. The Japanese government provided funding through success-conditional loans for much of this investment.

Boeing, the three heavy industry companies, and the Japanese government through the JADC negotiated a "program partnership" for the subsequent 777 program. This alliance is similar to the 767 arrangement, although Boeing originally offered the Japanese partners significant program equity participation, which they were not willing to assume. The Japanese work share in the 777 program is higher than in the 767—Japanese partners essentially build all the fuselage parts except for the nose section, as well as the wing center section, the wing-to-body fairing, and landing gear doors.2 Indirect Japanese government support and Japan Development Bank loans have also been made available to the heavies for their participation in the 777 program.

Japanese technical responsibilities increased with the 777. There were many more Japanese engineers involved in 777 development than in 767 development, with several hundred sent to Seattle during the most intensive design phase. As was the case in the 767, the Japanese are limited in the engineering effort to their own work package.

1  

There are three other linkages of note: (1) the Japanese heavies manufacture some components for McDonnell Douglas; (2) Mitsui & Co., McDonnell Douglas's trading company, played a key role in financing the launch of the MD-11 (more a business alliance than a technology linkage); and (3) the Toyota-affiliated Ishida Group has made several direct investments in small U.S. companies, including an undertaking to develop a tilt-rotor aircraft, which was reportedly suspended earlier this year.

2  

Japanese companies also build the wing-to-body fairing on the 767.



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