Japan fears aftershocks of JAL’s Airbus order

Japan fears aftershocks of JAL’s Airbus order

TOKYO - For five decades, Boeing has awarded bigger and bigger shares of its supply contracts to Japanese firms, but that could change after Japan Airlines' shock defection to Airbus and as the US planemaker seeks to win orders in China.

Boeing's carbon composite 787 is 35 per cent made in Japan - as big a share as it builds in-house - but Japanese aviation insiders fear the Dreamliner could be the high water mark of the industry's partnership with the US company.

The close co-operation has not only benefited Japan's industrial giants Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Fuji Heavy Industries - it has also enabled Boeing to dominate one of the world's biggest aviation markets with a share of more than 80 per cent.

That status quo crumbled on Monday, when JAL signed a deal to buy 31 Airbus A350s, its first purchase of European jets. In rejecting the rival Boeing 777X, JAL could only have increased the likelihood that the US company's next project will be less Japanese.

"Negotiations for the 777X work share are ongoing, and that may be influenced by the JAL decision," a government official said. Tokyo, he added, was looking to win a work share for Japanese suppliers greater than the 21 per cent that Mitsubishi Heavy, Kawasaki Heavy and others build of the current 777.

The fear in Japan is that Boeing, which says the business it gives Japan adds up to 22,000 jobs accounting for around 40 per cent of nation's aerospace workforce, may be tempted to shift more production to China, Korea or elsewhere.

"If I was Boeing, I would hold their feet to the fire," said Lance Gatling, founder of aerospace and defence consultancy Nexial Research. "International competition for what they build can only increase."

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