Boeing may send assembly work to Japan

Associated Press

TOKYO – Two of Japan’s biggest aircraft makers, Mitsubishi Heavy Industries Ltd. and Kawasaki Heavy Industries Ltd., are negotiating with the Boeing Co. for a deal to assemble passenger jet bodies in Japan, a Kawasaki spokesman said today.

It is uncertain when a contract would be signed, if an agreement is reached, the official added on condition of anonymity.

Under the deal, the Japanese heavy machinery makers would assemble main cabin sections, work now done in the United States.

Mitsubishi and Kawasaki currently build body parts for the Boeing 777 and 767 jetliners. Mitsubishi manufactures rear parts, while Kawasaki Heavy makes front and middle parts.

If they are awarded the assembly contract, it is expected to provide a big revenue boost.

Due to a steep decline in air travel after the terrorist attacks Sept. 11, both companies had been expecting a drop in orders from Boeing.

Since then, Boeing has said it will try to cut costs by outsourcing more production.

The Nihon Keizai financial daily reported today that the potential deal would raise annual aircraft-related revenue for the two manufacturers to about $534 million to $611 million, compared with $458 million to $534 million at present.

Boeing’s partnership with the Japanese goes back nearly five decades.

Earlier this month, Boeing vice president John Roundhill visited Tokyo to discuss plans with Japanese partners for the Sonic Cruiser, a proposed plane that would fly faster and at higher altitudes than current airliners.

Japan is also a critical aircraft market for Chicago-based Boeing.

Boeing fills about 85 percent all aircraft orders from Japanese carriers. Recently European rival Airbus Industrie has begun an aggressive push to expand its business in Japan.