Boeing’s Diffusion of Commercial Aircraft Technology to Japan: Surrendering the U.S. Industry for Foreign Financial Support |
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Authors: | Alan MacPherson David Pritchard |
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Institution: | (1) Canada–United States Trade Center, University at Buffalo, Buffalo, NY 14261, USA |
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Abstract: | Japanese firms have become increasingly important first-tier suppliers to the U.S. commercial aircraft industry (large passenger
jets). Over time, this relationship has evolved from a simple “build to print” subcontractor arrangement to a turnkey “design
and build” risk-sharing partnership. Using the Boeing 767, 777, and 787 as examples, we argue that the motives for Boeing’s
commercial outsourcing to Japan are to access the Japanese market, spread risk, gain access to capital, and lower U.S. spending
on research and development (R&D). This has clear implications for U.S. trade and employment, in that Japanese-subcontracting
boosts foreign imports and reduces the need for domestic production workers and U.S. suppliers. From a trade perspective,
however, a troubling feature of allowing the Japanese to produce large commercial aircraft subassemblies is that major Japanese
public financial supports are involved which contravene existing international agreements on production subsidies. We review
the types of production contracts that Japanese companies have sought on the Boeing 767, 777, and 787 programs. These contracts
have allowed the Japanese to develop new capabilities in terms of production capacity, tooling, design, and final assembly.
Ultimately, these capabilities imply that Japan will eventually enter the market as a fully-fledged producer of commercial
aircraft. This does not bode well for the U.S. commercial aerospace sector. |
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Keywords: | Boeing Commercial aircraft industry Financial supports |
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