High-Stakes Aviation U.S.-Japan Technology Linkages in Transport Aircraft (1994) / Chapter Skim
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4 Future Trends
4 Future Trends
Pages 65-73
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From page 65... ...
.2 McDonnell Douglas envisions a somewhat higher $1.0 trillion global market for aircraft over the same time period, representing a total of 14,072 units.3 'Boeing Commercial Airplane Group, Current Market Outlook: World Market Demand and Airplane Supply Requirements (I993)
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From page 66... ...
and global airline businesses may permanently affect traditional purchasing criteria. Airline deregulation, both in the United States and internationally, implies a continuation of strong price competition among airlines leading to average profit levels over the next several decades that will remain lower than in the past.
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From page 67... ...
Although the political factors that influence military aircraft demand are even more difficult to foresee than commercial trends, the important point is that restructuring strategies for diversification, acquisition, and divestment are now being formulated on the basis of the current outlook. Although military and commercial businesses (including manufacturing and design)
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From page 68... ...
Most experts believe that there is a market for one of these very large planes, and the bulk of that market is in either transpacific or domestic Japanese routes.5 The relatively limited size of the global market, in terms of the total number of such planes that would be produced, leads industry experts to believe that efficiency in production implies only a single producer. Furthermore, the high development costs associated with a very large aircraft suggest that firms will have difficulty convincing capital markets or governments to supply the necessary capital.
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From page 69... ...
Companies at the prime level through almost~all parts of the supply chain will feel continuing pressure to achieve higher quality at lower cost. · Japanese aircraft companies are currently investing heavily in manufacturing technology.
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From page 70... ...
· In addition to its advantages as a manufacturer, if Japanese industry can retain its traditional access to long-term capital, it will likely gain more leverage in partnership negotiations for new programs. The strong economic expansion, accompanied by extremely low interest rates and financial asset inflation, gave all Japanese manufacturing a temporary advantage in raising capital in the late 1980s.
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From page 71... ...
is already occurring and would not raise the national security concerns comparable to the acquisition of a prime contractor. Japanese companies are not awash in cash right now, but they could probably come up with sufficient funds for strategic acquisitions that make business sense (especially since the yen rate makes it attractive to move some manufacturing out of Japan anyway)
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From page 72... ...
The issue of reallocating Airbus work share to make room for the Asian partners could also prove to be a stumbling block to such an alliance. Japan Squeezed Especially if Japan makes aggressive moves to increase its global presence (by making a major acquisition at the integrator level, launching an independent program, aggressively playing both sides against the middle in its international alliances, or other circumstances)
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From page 73... ...
However, the opportunity now exists to take steps-at the corporate and national levels that can change these trends and enable the United States to retain its technological strength, maintain a full-scale manufacturing base, and compete strongly in world markets on the basis of superior technology, design, and manufacturing performance. By introducing advanced technologies into new aircraft while lowering manufacturing costs, U.S.
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