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JLaborRes(2007)28:552–566DOI10.1007/s12122-007-9005-2ARTICLESBoeing’sDiffusionofCommercialAircraftTechnologytoJapan:ryforForeignFinancialSupportAlanMacPherson&DavidPritchardPublishedonline:13August2007#SpringerScience+BusinessMedia,LLC2007AbstractJapanecialaircraftindustry(largepassengerjets).Overtime,thisrelationshiphasevolvedfromasimple“buildtoprint”subcontractorarrangementtoaturnkey“designandbuild”heBoeing767,777,and787asexamples,wearguethatthemotivesforBoeing’scommercialoutsourcingtoJapanaretoaccesstheJapanesemarket,spreadrisk,gainaccesstocapital,ngonresearchanddevelopment(R&D).ndemployment,inthatJapanese-subcontractingboostsradeperspective,however,atroublingfeatureofallowingtheJapanesetoproducelargecommercialaircraftsubassembliesisthatmajorJapanesepublicfinancialsupportsareinvolvedwhicewthetypesofproductioncontractsthatJapanesecompanieshavesoughtontheBoeing767,777,ontractshaveallowedtheJapanesetodevelopnewcapabilitiesintermsofproductioncapacity,tooling,design,tely,thesecapabilitiesimplythatJapanwilleventialsupportsIntleadershipinproductmarketsrequiringhighlevelsofdesignandengineeringinnovation(Hayward2005;NiosiandZhegu2005).rson:ard(*)Canada–UnitedStatesTradeCenter,UniversityatBuffalo,Buffalo,NY14261,USAe-mail:davidjpritchard@rsone-mail:geoadm@

JLaborRes(2007)28:552–sectorformorethan50years(mentofCommerce2004),,automotive,electronics,ethanfourdecades,aerospaceproductsandpartshaveaccountedfor7–10%ntyears,however,cialaircraftindustry(NAICS336400)hasexperiencedsubstantialemploymentdecay,reducedexportsales,elast10years,theindustrylostmorethan120,000employees—movingfrom552,000jobsin1994toanestimated432,sttheseemploymentfigureswith1990data,whentheindustryaccountedforover840,paceofonly15years,thissector’icantly,ofLaborStatistics(2004)forecastsafurther17%ortpictureisequallydisturbing:OveralltrendsforSITC792(aircraftandassociatedequipment)mple,totalexportsin2002wereapproximately$44billion,comparedto$52billionin1998(adropof15%,or$8billion).Whilepartoftheexportandemploymentdeclinecanbeblamedonshrinkingcommercialaircraftordersinthepost-9/11environment(aswellasincreasedcompetitionfromAirbus),thetrenntyears,forexample,ctureroflargepassengerjets(Boeing)hisbusinessmodel,keycompo-nentsecompanieshavebeenespeciallyfavoredbyBoeingformajorsubcontracts(PritchardandMacPherson2004).Althoughthisisalogicalstrategyfromafinancialstandpoint,adownsideisthatJapaneserisk-sharingpartnersmustreceiveinfusionsoftacitscientificknowledgefromBoeing—chnologytransferraisesanimportantquestionfortradepolically,doestechnologytransfertoJapacefirms?Setagainstthisbackdrop,“ResearchContext”sectionprovidesaresearchcontextforthediscussionandreviewstheevolutionanddevelopmentofindustrialoffsetagreementsandothertypeso“Japan’sCommercialAircraftIndustryNationalProject”sectionreviewstheJapaneseaircraftindustryasa“NationalProject”thathasevolvedunderBoeing’“Boeing’sGrowingDependencyonJapan”sectiondiscussesBoeing’sgrowingdependenceonJapan’mentinmaterials-basedresearchanddevelopment(R&D).The“Japan’sNewStrategiesfortheBoeing787”sectionintroducesanumberofnewstrategicissueswithregardtoBoeing’firsttimeever,Japanesecompanieswillbe“Japan’s787FundingandWTOIssues”sectionreviewstheJapanesefundingontheBoeing787andWorldTradeOrganization(WTO)ludewithabreve

554JLaborRes(2007)28:552–566thattheJapanesecommercialaircraftindustrywillsooncreateitsownstandaloneaircraftprchContextTheterm“industrialoffset”referstoacompensatorytommercialaircraftindustry,theoeing’searlyoffsetswaswithJapanin1974,whenofthesecases,thegoalhasbeentosecureasalicantly,Boeinghasbecomethenation’slargestcorporationintermsofoffset-relatedcommitments(Pritchard2001).In1960,importsofaircraftandpartsamountedtoonly5%,thatfigureis44%.TheforeigncontentofaBoeing727inthe1960swasonly2%.Forthe777inthe1990s,foreigncontentwasnearly30%.Inthecaseofthe787“Dreamliner”(formerlycalledthe7E7),foreigncontentmightrunasahighas70%(PritchardandMacPherson2004).Notsurprisingly,thispossibilityhasalarmedseverallaborunionsacrosstheU.S.,includingtheSocietyofProfessionalEngineeringEmployeesinAerospaceandtheInternationalAssociationofMachinists(Sorscher2004).AlthoughAirbusalsoemploysoffsetagreementstosecureinternationalorders,AirbusdiffersfromBoeinginthattheformermoretypicallyoperateswith“indirectoffsets”(e.g.,grantinglandingrightstomajorEUairportssuchasHeathroworGatwick).Inaddition,Airbustendstosubcontractinternationallyonanarms-lengthbasis(build-to-print)—rarelyallocatingfulldesignresponsibilitiestoforeignsubcontractors(MacPhersonandPritchard2003).Contrastthiswiththe787program,inwhichBoeingexpectsforeignpartnerstodesign,develop,build,anddeliverofthelaunchprocessforthe787,3JapanesecompaniesareshasneverhatJapanhasincrementallyacquiredproductioncompetenceforawiderangeofairframecomponentsviayearsofindustrialoffsetsfromBoeing(Pritchard2001),thetransferofwingmanufacturingandassemblyexpertisetoJapanesecompanieseffectivelygivesJapan“totalproductioncompetence”asalreadyannouncedthatitwantstoproducecommercialaircraft(PritchardandMacPherson2004).Infact,Mitsubishiannouncedin2002thatitwasconductingajointfeasibilitystudywithBoeingfora30-seatregionaljetwhichwouldreceive$206millioninfinancialsupportfromtheJapanesegovernment(SeattlePost-Intelligencer2002).ThisdecisionwaschangedinApril2005,whenMitsubishiannouncedthat50billionyen($463million)wasbeingsoughttodeveloparegionaljetwith70–regard,Japan’sfirstairlinerwilllikelybeanall-compositeregionaljetbasedonavarietyofnewtechnologies—acompetitortoCanada’sBombardierandBrazil’pertsbelievethatthenextgenerationoftheenormouslysuccessfulBoeing737willbeanall-compositeairframeproducedtotallyinJapan(Hayward

JLaborRes(2007)28:552–5665552005).Clearly,JapanisnolongercontenllknownthatlaborcostacecompaniessuchasBoeingorLockheed-Martin(Pritchard2002).Consequently,recoursetoJapanesesuppliersisunliked,Japan’scompetitiveadvantageliesinitsabilitytoquicklydeveloplarge-scaleautoclavestocureandfabricatethe787’ducesBoeing’sneedtoinvestiide,however,isthatBoeingcouldhavebeeninapositiontoproduceacompositewingihatthistechnologyiswidelyexpectedtobecomestate-of-the-artfortheproductionofalllargepassengerjetsfromnowon,ically,Japanwillsoonestablishitselfsaidthis,thereisnothingnewaboutJapan’sdesiretobecomeakeyplayerintheaerospacesector(Samuels1994).In1954,forexample,theUnitedStatesgrantedlicensestoJapanfortheproductionofF-86andT-33militaryaircraft—dbyacomplexmixofpoliticalexpediency,logisticalneed,andcommercialself-interest,acetechnologyhavebeentransferredtoJapansincetheearly1950s(Samuels1994).In1959,ontograntproductionlicensestoJapanforthesupersonicF-104StarfighterarguablypositionedseveralJaicallyspeaking,then,thereisnothingintrinsicallynewaboutBoeing’sevolv’sCommercialAircraftIndustryNationalProjectTheJapaneseAircraftDevelopmentCorporation2005(JADC)isaconsortiumofJapaneseindustrialnpartnersareMitsubishiHeavyIndustries(40%),KawasakiHeavyIndustries(30%),FujiHeavyIndustries(20%),Nippi(5%),andShinMaywaIndustries(5%).JADCisresponsibleforthecoordinationofJapaneseaerospacecompaniesininternationalprojectspromotedbytheMinistryofEconomy,TradeandIndustry(METI).AnimportantnationalgoalforMETIandJapan’scorporatesectorhasbeentherevitalizationofthedomesticaeronauticsindustry,anindustrynowbeingaidedbyaMETI-financedfoundation—theInternationalAircraftDevelopmentFund(IADF).Thisnewfoundationhasofferedthethree-companyconsortium(Japan’saircraftmanufacturers)a$3billionlow-interestloantoensureJapan’sparticipationinthe787program(Sakai2004).ThegoalsofJADCaretosupportcivilaircraftproductionthroughappliedR&DandotherappropriatemeanssothataviableaeronauCisanonprofitfoundationestablishedtoenhanceJapan’saircraftindustrywiththeapprovalof

556JLaborRes(2007)28:552–566theJapanesegovernmentandismanagedbythetopexecutivesofthefollowingJapanesecompanies:MitsubishiHeavyIndustries,Ltd.(MHI);FujiHeavyIndustriesLtd.(FHI);ShinMaywaIndustriesLtd.(SMI);JapanAircraftManufac-turingCo.,Ltd.(JAMCO);Ishikawajima-HarimaHeavyIndustriesCo.,Ltd.(IHI);JapanAirlinesCo.,Ltd.(JAL);AllNipponAirwaysCo.,Ltd.(ANA);andJapanAirSystemCo.,Ltd.(JAS).ftprogramthatentailedsubeinferredthattherewerefourmajorreasonsforcooperationbetweenBoeingandcompaniesinJapanatthistime,includingrisk-sharing,enhancedcapabilitiesthroughcooperation,participationindevelopmentandmarketentry,tprojectwastheinternationaljointdevelopmentoftheBoeing777,B777’sdevelopment,ishiHeavyIndustries,KawasakiHeavyIndustries,andFujiHeavyIndustriesaretakingpartinairframedevelopmentandproduction,sairframemanufacturers,some30JapanesecompanieshavealsobeeninvolvedinBoeing’2004,aneseheavyfirmsMitsubishi,Fuji,andKawasakiareslatedtobuild35%ofthe787aircraftstructure,whichwillincludethedesignandmanufacturingspecificationsin2003,TheJADCreceivedbudgetsforpre-developmentactivitythatsupportedsending140JapaneseengineerstoSeattlebeforethPickering,Boeing’sseniorvicepresidentforinternationalrelations,recentlystatedthat“Japandidlessthan10%ofthe(Boeing)767and20%ofthe777”(NihonKeizaiShimbun,April18,2004:2).From1978to1983,theJapanesegovernmentcoveredabouthalfofthecostsofdevelopingpartsbuiltbytheJapanesecompaniesfortheBoeing767(Belson2004).Inthe1990s,Japanesecompaniesspent104.5billionyen($942million)todeveloppartsfortheBoeing777,aidedbya60billionyenloanfromtheJapanesegovernment(Belson2004).Today,thesethreeJapanesefirmswillhavefullresponsibilityfortoolingtheirfactoriesforwingproduction.“intothehandsofapartner,”saidThomasPickering(Gibbs2004:3).Hefurtherstated,“Wesaid(Boeing)let’Theygettheadvantagesbuttheyalsocarrytheburden.”Table1OutsourcingtrendsforBoeingairframesAirapanJapanU.S.U.S.787JapanJapanJapan/taly/U.S.U.S.

JLaborRes(2007)28:552–566557BoeingfinalizeditscontractswithJapan’sfirst-tier/risk-sharingpartnersinMay2005(Table1).Thefirst-tiersupplierswillselect,contract,cialaviationhistory,the787programwillallowafirst-tiersupplerbase,sincethegovernmentofJapanwillbesubsidizingthe787programupto$3billion(PritchardandMacPherson2004).TheaerospaceinfrastructureofJapanwilllikelybedevelopedwithnewnaterviewwithBillLewandowski,VicePresidentoftheSupplierCouncilfortheAerospaceIndustriesAssociation,twoconcernswereraised:“ers(sigmathreegroup)wouldprobablybeonlyofferedtoquoteagainstJapanesesecond-andthird-tiersuppliers,and,ouldhavedifficultycommunicatingwiththeoverseasfirst-tiersuppliers”(Lewandowski2004).AsnapshotoftheevolutionofBoeing’soutsourcingstrategyisshowninTable1,whichtracksthegrowthofinternationalproduase767onwards,however,yimportantisthatBoeing’soutsourcingarrangementsoverthepast30yearshaveexpandedfromsimplestructurepartsonthe747tocomplexcenter-wingboxesforthe777(Boeing2005).BelowisalistingofmajorcomponentsubcontractstoJapanthatcoverssixofBoeing’scommercialaircraftprograms(717,737,747,757,767,and777):MHI(Mitsubishi)&&&&&&&&&&&&&&&&&&&InboardTEFlaps747-400InboardFlap737-600/-700/-800/-900PassengerEntryDoors777-200/-300FuselageSection46,47,48777-200BulkCargoDoor777-200,777-300PressureDomeBulkhead777-200EntryServiceDoors767FuselageSection46767DorsalFin767FuselageSection46,47777-300FHI(Fuji)Inboard/OutboardSpoilers747-400Inboard/OutboardAileron747-400Elevator737-600/-700/-800/-900WingStubSec11777-200WingBodyFairings777-200MainLandingGearDoors777-200BodyFairing,MainLandingGearDoors767,777-300WingStubSec11777-300OutboardTEFlap757-200/-300

558JLaborRes(2007)28:552–566KHI(Kawasaki)&&&&&&&&&&&&&&&OutboardTEFlaps747-400WingRibs737-600/-700/-800/-900Large/SmallCargoDoor777-200,777-300FuselageSec43,45777-200KeelBeam777-200,777-300InsparRibs777-200EntryServiceDoors767FuselageSection43,45767InsparRibs767FuselageSection43,44,45777-300Section48PressureDomeBulkhead777-300ShinMaywaIndustriesElevators717ElevatorTabs717HorizontalStabilizer717Pylon717Boeing’sGrowingDependencyonJapanJapan’stechnologicalleadershipincompositesisonereasonthatBoeingproposestoallocate35%gace,MITProfessorofAeronauticsandAstronauticsandEngineeringSystems,inaninterviewstated“theUnitedStateslagsbehindJapan,SpainandRussiainaircraftcompositetechnology”(Lagace2004).Boeing’rbusintroducingmajortechnologicaladvancesoverarelativelyshortcorporatelifetime,ast,whenBoeingwastheworld’sleaderincommercialaircraftmanufacturing,itrestedonpositionintheindustryanddidnotinvestheavilyinR&iffcompetitionfromAirbus,notablyoverthelast5years,Boei787isjustsuchaproduct,butitcomesatacost(discussedlater).ArelatedcauseforconcernisthatBoeinghasbeentrailingAirbusformanyyearswithregardtoR&Dspendingandcapitalinvestment(Figs.1and2).In2003,forexample,Airbusallocated9.5%ofitstotalrevenuestowardR&D,comparedto3.5%ameyear,Boeingallocatedonly0.97%ofitstotalrevenuestocapitalinvestment,comparedto9.1%ghthesepercentageswillnodoubtincreaseastheA380and787programsunfold,thefactthatBoeinghasunderinvestedforsolongsuggeststhatthe“catch-up”clinedismantlesourtechnologicalandmanufacturingcommunitiesfromwithin,erodingthenetworkofbusinessrelationships,expertise,andcorporateauthoritydevelopedoverdecades(Sorscher2004).

JLaborRes(2007)28:552–566559108% of

revenue6423R&DCapitalFig.1InvestmentbyAirbus.(Source:AnnualReports)Boeingisategicgoalof“lowtechnologicalriskandlowfinancialexposure”makespartneringwithJADC’mple,Boeingrecentlyawardeda12-yearcontractworth$3billiontotheJapanesefirmTorayforthecarbon-fibercompositematerialtobeusedonthe787aircraft(Gates2004).developmentsreflectacontinuationoftheconcernsthatwerediscussedina1994monograph“High-StakesAviation”rviewedCharlesWessner,DirectorofTechnologyandInnovation,NationalAcademySciences,r’sprincipalconcernisthatthe787wingtechnologyandlartyinterests(Wessner2004).Perhapsironically,someoftheadvancedcompositetechnologiesandrelatedprocessesdevelopedbyBoeingandMcDonnellDouglasunder1989–1997NASAR&Dfunding(the$354millionCompositeWingDevelopmentProgram),aswellassome$54millioninNASAfundingfortheCompositeFuselage(1989–1996)alongwithfundingundertheAdvancedSubsonicProgram(1993–1998),t,logydevelopmentwilllikelysoonupgradethemanufacturingandmaterials-handlingcapabilitiesofforeigncompanies.3.532.52% of

revenue1.510.50R&DCapital2Fig.2InvestmentbyBoeing.(Source:AnnualReports)

560JLaborRes(2007)28:552–566AnumberofrelatedconcernswererecentlyvoicedbyStanSorscheroftheSocietyofProfessionalEngineeringEmployeesinAerospacewho,inane-mailtotheauthors,statedthat“Myprimaryworrult,toolittlevalueisplacedonstrategicfactorsbasedonhumancapital—communication,coordinationandinteractionthatoccurinintegrateddesignandmanufacturingcommunities.”Sorscherthenstatedthat“Relianceonglobalsuppliernetworksmaybewellsuitedtocommodityitemsorconsumergoods,butitisill-suitedtoaerospaceproducts”(Sorscher2005).Hispoint,inessence,isthatoutsourcingcomplexsystemsultimatelyimpliesanerosionofdomestictechnologic’sNewStrategiesfortheBoeing787Thetechnologyandprocessimprovementsrequiredforthe787gofarbeyondrawmaterialrequirements(composites).Boeing’spartnersinJapanwillbebuildingcompositestructuresthatarestuffedwithsub-systemsthatarealreadycertified,illbeminimumworkcontentforthelessthan1,nomicimpactfortheJapaneseaircraftindustrywillincludemajormultipliereffects,withthethreeJapanese“heavies”eadofsubcontractsfortheJapaneseaesnotincludetheestimated60second-tierJapaneseengine,equipment,andmaterialsuppliers,othe777,entarticle,EamonnFingleton(2005:5)wasquestioningBoeing’sjudgmenherassertedthat“wing-makingisoneofthemostadvancedsub-sectorsofoneoftheworld’smostadvancedmanufacturingindustries”(p.6).Boeingrespondedtothiscriticismbystatingthat“whenitcametimetobuildthe787wings,Boeingdidn’thavethemachinesandtoolstobuildthewingboxoutofthecarbon-fibercompositesthatwillmakethemajorityofthewing”(Corliss2005:2).TheflawinBoeing’sargumentisthatJapanhadneitherthemachinesnorthetools,theJapanesecompaniesareonlynowspendinghundredsofmillionsofdollarsoncompositeautomatictape-layeringmachines,computer-numerically-controlled(CNC)tooling,andadvancedauinforcesexistingfearsthatBoeingwillnotinvestinitsfstheJapanesearebuildingnewfacilitiestoproducethe787wingandairframe,BoeingissimplyreorganizingspaceinsideitsexistingEverettfacilitytomakeroomforthe3-day787finalassemblyactivity.

JLaborRes(2007)28:552–566561Japan’s787FundingandWTOIssuesTheJapanesegovernment’sfundingpackageforthe787hasbeendviousJapanesefundingschemesfortheBoeing767and777aircraftprogramswouldberuledillegalundertoday’s1994WTOAgreementonSubsidiesandCountervailingMeasures(SCMAgreement).WeestimatethatJapanesepublicsupportforthe787developmentprogramwillbe$1.588billion,whichislikelytobesplit30%non-repayablegrantsand70%inrepayableloans(PritchardandMacPherson2004).TheJapanesegovernment-fundingschemeisprobablybeingdelayedbecauseoftheintroductionofacompulsorypaymentprogram(royalty)pershipsetdeliveredfromfirstproductiondeliveryinsteadofpreviousschemesthatallowedtheprogramtomakeaprofitbeforemakinganypayments(typicallythedeliveryofthefive-hundredthshipsetona2,000-unitproductionrun).ThisproposedchangewouldnotallowtheJADCcompaniestimetompaniesmighthavetoforgotheJapanesegovernment-fundingschemeandobtainbankloans,whichwouldavertapossibleWTOcomplaintfromtheEUandmayberequiredtomeetthetheJADCelecttotaketheJapanesegovernmentfundingschemeandtheEU–USfailtoagreeonarevisedframeworkforthe1992EU–USaircraftagreement,theprobalingcouldhaveshort-andlong-termramificationsforJapan’hortterm,theEU/,theJapanesegovernmentcouldhaltanyfuturepaymenttotheJADCwhichwoulddelaythe787firstdeliverybyatleastayearwhiletheJapanese“heavies”searchthefinancialcommunityfor$3billiontosupportthe787program(Table2).Second,the787WTOcasecouldtakeupto4yearstogetresolved,duringwhichtimetheJapanesegovernmentmightcontinuetofundthe787programanddegertermramificationswouldbethatadelayed787programbyanEU/WTOfilingcouldcause787risk-sharingpartne2Japan’s787investmentsCompaniesMHIFHIKHIIHIShinMaywaToraySecondtiersuppliersTotalinvestment(millions)Source:PritchardandMacPherson(2004).ComponentsWingandenginesAirframeAirframeandenginesEnginesAirframeCompositematerialEquipmentandsystemsInvestment$900$400$650$350$150$250$300$3,000

562JLaborRes(2007)28:552–566OnatraditionalBoeingaircraftlaunch,theprogramschedulewouldhavekeysuppliersandcriticalpathequipmentcontractedwithinthefirst90days,butthe787didnot10-monthdelayinalllikelihoodreflectedproblematicprogramfundingalongwithincompleteagreeontractingtheJapanesefirst-tierairframepartnersinthefirsthalfof2005,Boeinghdwiththefactthatthisisaverycomplexexerciseininternationalsystems-integration,tationsAnemergingthemeintherecentliteratureisthatnewwestern-producedlargecommercialaircraftwillbemadeofcomposites,whereasthetraditionalmetalwingandtubeaircraft(lessthan100seats)willincreasinglybeproducedintheemergingregions(triad)ofRussia,China,andIndia(Hayward2005;MacPhersonandPritchard2003;NiosiandZhegu2005).WithBoeingtransferringthekeytechnologiesofthewingandthedevelopmentoflargecompositeairframestructurestoJapan,theJapanesewillishiHeavyIndustriescertainlyhasaclearvisiononwheretiMaezawa,ExecutiveDirectorofMHI,saidthatthe“7E7isacornerstoneforJapantobecomeastandaloneaircraftmanufacturerinproducinga30to50seateraircraftinafewyears”(NihonKeizaiShimbun,April18,2004:2).Atfirst,themostprobablemodelwillbeanall-compositeregionaljet(athreattoBombardierandEmbraer),,withthetechnologyandinnovationsbeingdevelopedoverseas,erbaseandthenation’sfutureengineeringcapability?etensofthousandsoflayoffsfromBoeinginthepast5years,therearefewyoungworkerstopassthetechnologicalaultisathreattothetechnicalandeconomicsecurityoftheWest,ingtheretentionofaircraft-relatedtechnologicalexpertiseinsidetheUnitedStates,anintervieweefromMIT(PaulLagace)notedthat:“youcan’texpectaprivatecorporationtoholdthisresponsibility,anationalpolicyshouldbedeveloped”(Lagace2004).Asimilarconcernforlong-termtechnologyandinnovationretentionwasvoicedbyMarkTuttle,ProfessorofMechanicalEngineeringattheUniversityofWashingtoninaMarch2004interview(Tuttle2004).JacquesTournut,DirectoroftheAerospaceProgramattheToulouseBusinessSchool,inaMarch2004interview,evenquestionedthecommercialwisdomoftransferringthecriticalwingdesignandmanufacturingtechnologyforthe787outsidethecompany’scontroltoarisk-sharingpartner(Tournut2004).Boeing’sfamilyofregionalandlargepassengerjetsisrapidlyaging,with4ofthe6commercialproductlinesprojectedtocloseoverthenextfewyears(717,757,

JLaborRes(2007)28:552–566563767,and747).tquestionwhetherthe787istoolateinarrivingtosaveBoeing’uture,moreover,willBoeingandforeignpartnersbewillingtoinvestenormoussumsofmoneytokeepdevelopingnewaircraftmodels?ThisisillustratedbyastatementfromSirRichardEvans,theoutgoingchairmanofBAE,whoestimatedthatBoeingwouldneedtospendbetween$40to$50billionoverthenext10–15yearstomatchAirbusintermsofproductrange(Odell2004).Inlightofthescenariosandtrendsdiscussedabove,ofLaborStatistics(2004)hasaionedearlier,overallemploymentlevelsfortheperiod2002–2012areforecasttodecreaseby17.6%.Forspecificoccupations,eexamplesincludemachinists(−22%),machinetoolcuttingsetters(−24.2%),assemblersandfabricators(−24.7%),aerospaceengineers(−15.8%),mechanicalengineers(−21.5%),andindustrialengineers(−15.8%).ghsomeoftheseprojectedlosseswillsurelyarisefromincreasedprocessautomationorretirements,justastheyhaveinthepast,thegroweneralprsitiesandcollegesareincreasinglyoptingfornon-aerospacecareerpaths(MacPhersonandPritchard2003).Whocanblamethem?Boeingalonehascutmorethan27,rythatisrapidlyshrinking,downscaling,andmovingtowardsystems-integration?Fromanoccupationalperspective,moreover,thestructureofBoeing’scommercialaerospaceworkforceislikelytochangesignificantlyasthecompanyshiftsitscoreb,air-trafficcontrolsoftware,aircraftmaintenance,telecommunications,tterms,aircraftengineersandR&D-scientistsarelikelytogivewaytomechanics,accountants,thisshouldbetakentoimplythall,Boeingenjoystechnologicalandcommercialleadershipacrossvariousmilitaryandspacevehiclemarkets,aswent,instead,isthatsystemsintegrationonthecommercialsideofatednote,thereislittledoubtthatmasteryofthecomplexindustrialprocessesassociatedwithcompositewingdevelopmentwillsolidifyJapan’sposity,thegeographyofcommercialaircraftproductionatthegloballevesintegrationonaninternationalbasismakesitfeasibleforBoeingtostayinthecommercialaircraftbusinessforalongtime—ite,,AirCanada,AirIndia,deswellforthefinancialsuccessofthe787program,aswellasforBoeing’sassemblyworkersintheSeattlearea.

564JLaborRes(2007)28:552–566Nevertheless,quickfinancialrewardsfromthesystems-integrationapprmore,itisevidentthatsysterentBoeing/Airbusduopolymaysoongivewaytoatriopoly(addJapantothemix),largelyasaresultofBoeing’sindustrialoffsetandtechnologytransferrelationshipswithJapan’ghoutsourcingundersystems-integrationcancutunitcostsandreducerisk,thisstrateyandConclusionForBoeing,thelaunchofthe787programbasedonsystems-integrationmakesgoodsenseintermsofriskreduction,thecontainmentofdevelopmentcosts,theacquisitionofadvancedcomposites,financialadvantagesmustbebalancedagainstbroadereconomicandstrategicconcerns,erbase,thepossibilitythatJapanmighteventuallybecomeaglobalcompetitorwithitsownstandaloneaircraftprogramandalow-costAsiansuppliernetwork,andthefactthatast,Boeing’sforeignsubcontractorssuppliedrelativelysimplecomponents(bitsandpieces).Morerecently,thesesubcontractorshavebeenaskedtodesign,develop,,wingassemblies).Airbus,incontrast,keepsfinalwingassemblyworkalmost100%in-house(aswellasothercomplexsystems).Arguably,thefutureofBoeing’spresenceinthecommercialaircraftbusiness,aswellastheincomesecurityofitsdiminishingworkforce,nBoeing’ssystems-integrationmodel,onecouldenvisionwithin10yearsthatallofBoeing’scommercialaircraftproductionactivitycouldbedownsizedtoasinglesiteinEverett,sessmentisreinforcedbytherecentagreementtoselltheBoeingWichitacommercialdivisiontoOnexCorporation,heWichitasale,theonlymajorpartofthe787tobemadebyBoeingwillbethetailfin—cialaircraftindustrywasvibrantinthe1960s,withthreecommercialaircraftmanufacturers(Boeing,Douglas,andLockheed)einginthefinalthroesofdismantlingthisindustryonthemanufacturingside,onecouldforeseeonlyacoupleofthousandworkersintheEverettplantconductinga3-dayfinalassemblyprocessforthe787,the737replacement,andareconfigured77cialaviationhistory,anewaircraftlaunchhasbeenstructuredsothatforeignpartnershavefullcontroloversub-assemblydesign,manufacturing,sub-tiersupplierselectionand,ultimately,gtothefuture,Boeingwilllikelyexitthemanufacturingsideofthe

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