Japan Just Wants To Make Planes

[Mulboyne]

Boeing and JAL executives enjoying the orderflow

No suggestion of bribes but shady subsidies and aerospace companies seem to go hand-in-hand in Japan. No different in Europe, mind you.

FT: Boeing links drag Japan into state aid row
The FT links are only free for a week so the whole article will follow in another post on this thread.

At the Japan Aerospace show in Yokohama last week, the transatlantic divide in the aircraft manufacturing industry was highly visible. The leading defence contractors were neatly partitioned: Europeans largely on one side, Americans on the other.
...Tokyo was dragged into the dispute when the European Commission questioned Japanese financial aid for Boeing's 7E7 Dreamliner project. The EU alleges that Tokyo has earmarked $1.6bn (€1.3bn, £892m) in subsidies for the development of the 7E7, or 35 per cent of its total costs. Privately, many observers estimate the total figure much higher: between Y200bn-Y300bn ($1.8bn-$2.7bn, €1.5bn-€2.2bn, £1bn-£1.5bn).
...Japan is the single biggest overseas contributor to the project that has the participation of Mitsubishi, Kawasaki and Fuji. Japan has in the past provided aid to the three "Heavies" for the development of the Boeing 767 and the 777, on which they had a 15 per cent and 20 per cent work-sharing agreement respectively.
The exact amount of aid each company received is unclear. The money is either channelled through non-profit agencies, most notably the International Aircraft Development Fund (IADF), or goes to the companies directly from the Development Bank of Japan.

[Mulboyne]

Boeing links drag Japan into state aid row
By Mariko Sanchanta
Published: October 11 2004 03:00

At the Japan Aerospace show in Yokohama last week, the transatlantic divide in the aircraft manufacturing industry was highly visible. The leading defence contractors were neatly partitioned: Europeans largely on one side, Americans on the other.


The divide was a harbinger. The air show opened a day before the European Union and the US launched the biggest dispute in the history of the World Trade Organisation in an effort to curb what both sides say are massive subsidies to Boeing and Airbus. A day later, Tokyo was dragged into the dispute when the European Commission questioned Japanese financial aid for Boeing's 7E7 Dreamliner project.

The EU alleges that Tokyo has earmarked $1.6bn (€1.3bn, £892m) in subsidies for the development of the 7E7, or 35 per cent of its total costs. Privately, many observers estimate the total figure much higher: between Y200bn-Y300bn ($1.8bn-$2.7bn, €1.5bn-€2.2bn, £1bn-£1.5bn).

Japan is the single biggest overseas contributor to the project that has the participation of Mitsubishi, Kawasaki and Fuji. Japan has in the past provided aid to the three "Heavies" for the development of the Boeing 767 and the 777, on which they had a 15 per cent and 20 per cent work-sharing agreement respectively.

The exact amount of aid each company received is unclear. The money is either channelled through non-profit agencies, most notably the International Aircraft Development Fund (IADF), or goes to the companies directly from the Development Bank of Japan.

Subsidies can also be provided via indirect research programmes. Japan's Ministry of Economy, Trade and Industry (Meti), the IADF and the Japan Aircraft Development Corporation, an industry consortium, would not disclose how much support the three "Heavies" had received for the 767 and 777 projects. Mitsubishi Heavy also declined to comment. Japan hopes the technological gains reaped from participating in such projects could help the development of its own aerospace industry.

Meti said: "We support Japanese companies in participating in the 7E7 project if we think that they can contribute to technology improvements in the Japanese aerospace industry."

The Japanese industry has had its share of commercial failures. The YS-11, a turboprop airplane, was rolled out in 1962 but production ceased almost a decade later due to massive losses.

But since then, observers say, Japanese manufacturers have become extremely skilled component makers and builders of aircraft parts and assemblies. Mitsubishi Heavy and Ishikawajima-Harima (IHI) are currently working on a feasibility study to make a 30 to 60-seat regional jet fitted with a Japanese-made engine.

Boeing, many say, is the main reason for the Heavies' technological progress. As proof of its strong ties with Japanese government and industry, the US aerospace company last year released a glossy coffee-table book entitled Pacific Partners: 50 years of Boeing in Japan

Historically, the Japanese aerospace industry has depended heavily on the defence agency (JDA), which at its peak provided 90 per cent of its orders.

"Miti [the predecessor to Meti] at the time became worried about this imbalance," said Eiichiro Sekigawa, a contributor to Aviation Week, the trade magazine. "Today, the balance is about 60 per cent military and 40 commercial, and a large reason for that is because of Boeing."

[Ol Dirty Gaijin]

It was a very strange show. Lots of European study group looking for finance backing from Japanese companies. Same again with locality groups, lots of European and one or two American.
Trade only was the first two days, not exactly busy, and the remaining three days open to public. A lot of abandoned stands on the last two days showed what the priorities were..

[Mulboyne]

[Ol Dirty Gaijin]

Even the "companion" girls were a sad looking bunch although you could have picked up a ballistic missile or two.
Saturday's typhoon would of been an excellent day to do some Helicopter trials. Wasted op. All for the money.

[Mulboyne]

Bloomberg: Mitsubishi Heavy Gets Half of Japan's 7E7 Production Contracts
Mitsubishi Heavy Industries Ltd., Japan's largest maker of heavy machines, ships and planes, said it will get half the contracts from Boeing Co. to make the proposed 7E7 aircraft....Mitsubishi Heavy, which has a contract to make wings for 2,000 Boeing 7E7s over 20 years, will get half of the value of the total contract awarded.
Japanese companies will make about 35 percent of every 7E7 aircraft, each carrying a catalogue price of $120 million. Japan's participation lets Chicago-based Boeing cut the 7E7's development costs and also make the planes more attractive to the nation's airlines. The so-called industrial subsidies of the 7E7 are the subject of a complaint filed by the European Union at the World Trade Organization. Mitsubishi Heavy and other Japanese makers have been seeking aerospace contracts to counter the loss of shipbuilding work to lower-cost rivals in China.

[Charles]

Ah, this reminds me of the good old days of the bubble, when I first got acquainted in the Japanese business world. One of my clients was a Japanese industrial bank, Mitsubishi or Mitsui, one of those, I forget. I would go up to their offices, they had a whole floor of clerks filling out papers, they all had little airliner models on their desks, dressed in JAL markings.
The traders all had huge piles of 747 lease contracts in their in box, and they were furiously filling out the forms as fast as they possibly could. As fast as they filled out one form, 5 more would appear in their in box. The bank literally could not lease 747s fast enough. It appeared that their sole business was aircraft leasing.

Oh well, we all know what happened to THAT little niche in the economy.