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OM in the News: Japan Ascends From Parts Supplier to Plane Maker

April 11, 2013
Mitsubishi jet to fly in 2013

Mitsubishi jet to fly in 2013

Japan’s golden era of aviation, with its feared Mitsubishi Zero fighter planes, ended in 1946 when American occupiers allowed that nation to manufacture only parts for American military jets. But this year, reports The New York Times (April 10, 2013), Mitsubishi plans the first flight of its Regional Jet, a sleek, 90-seat commercial plane that is Japan’s bid to break into the industry’s big leagues after almost 70 years. Mitsubishi’s comeback was abetted in large part by Boeing’s outsourcing more of its aircraft manufacture to overseas suppliers. As Boeing came to rely on foreign contractors, Japanese manufacturers moved in, designing and supplying some of the jet’s most vital sections.

Over a third of Boeing’s new 787 Dreamliner is supplied by Japanese manufacturers, including Mitsubishi, which makes the jet’s carbon-fiber composite main wings. Japanese suppliers have played an increasingly bigger role in building Boeing aircraft, supplying 15% of the older 767 jet and 21% of the 777. The Japanese government is one of the largest financial backers of these parts projects, handing out billions of yen (about $1.6 billion) in subsidies to help Japanese suppliers develop technology and win lucrative contracts from Boeing. These Boeing contracts have kept tens of thousands of Japanese workers busy for years, and still account for about 40% of jobs in the industry. And in a cozy quid pro quo, Japan’s biggest airlines have for years bought their planes almost exclusively from Boeing — an unusual practice among global carriers.

Mitsubishi has 165 firm orders for the $42 million jet, and it aims to secure as many as 5,000 orders over the next two decades — a goal some experts dismiss as unrealistic. It faces well-established rivals like Bombardier (Canada) and Embraer (Brazil), while the Russians and Chinese are also making jet inroads.

Discussion questions:

1. Did Boeing make a mistake in outsourcing so much of its planes to a future competitor?

2. Why did Boeing outsource over a third of the 787 to Japanese firms?

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