Boeing's JAL loss may bring jobs back to the US

Boeing's JAL loss may bring jobs back to the US

NEW YORK - Boeing's loss of a major Japanese airplane order to rival Airbus last week may produce a surprise US benefit - bringing aerospace work home to US companies.

Over the past 50 years, Boeing has increasingly outsourced large aircraft pieces such as wings and fuselage sections.

Its partnerships with Japanese companies carried the understanding that Japanese airlines would keep buying Boeing planes. The virtuous circle gave work to Japan's heavy industrial companies and helped Boeing keep Airbus largely out of the Japanese market.

But last Monday, Japan Airlines (JAL) appeared to shatter the alliance by ordering 31 Airbus A350s to replace 31 Boeing 777s that it will retire this decade. The US$9.5 billion JAL deal is considered by some industry experts as likely to prompt Boeing to award less supply work to Japan in the future. Boeing would send that work to other countries, including the United States.

Japanese airlines were big buyers of Boeing's 787 Dreamliner, which helped justify the large investments Japanese companies made to set up production of major components, said Ron Epstein, an analyst at Bank of America Merrill Lynch.

The 777X, the next generation of Boeing's popular wide-body jet, is supposed to have its design and building launch this year and enter service by 2020. The 787 Dreamliner is the company's latest state-of-the-art wide-body aircraft. It has been in service for two years but has encountered numerous technical problems.

Since Japan airlines are so far not big buyers of the 777X, "why would industrial policy follow the same plan?" Mr Epstein said. Many people assumed that Japan's "heavies" would be involved in the 777X, he added. "Maybe they're not going to be as big players on this." Boeing said that it is considering all options on where to build the 777X, but declined to discuss whether the JAL decision would affect its thinking.

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