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Boeing Talks With Japan Jet Makers

December 26, 2001

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TOKYO (AP) _ Two of Japan’s biggest aircraft makers, Mitsubishi Heavy Industries Ltd. and Kawasaki Heavy Industries Ltd., are in talks with Boeing Co. on a deal to assemble passenger jet bodies in Japan.

Under the deal, the Japanese heavy machinery makers would assemble main cabin sections which are currently assembled in the United States. It’s not clear when a contract would be signed, a Kawasaki spokesman said.

Mitsubishi and Kawasaki currently build body parts for Boeing’s 777 and 767 jetliners. Mitsubishi manufactures rear parts, while Kawasaki Heavy makes front and middle parts.

An assembly contract would provide a big revenue boost to the Japanese companies. Due to a steep fall in the number of passengers after the Sept. 11 terrorist attacks in the U.S., the companies had been expecting a drop in orders from Boeing.

Since then, Boeing has said it will try to cut costs by outsourcing more production.

The Nihon Keizai financial daily reported Wednesday that the possible deal will raise annual aircraft-related revenue for the heavy machinery makers to around 70 billion to 80 billion yen ($534 million to $611 million) from the current 60 billion to 70 billion yen ($458 million to $534 million).

Boeing’s partnership with the Japanese goes back nearly five decades.

Earlier this month, Boeing vice president John Roundhill visited Tokyo to discuss plans with Japanese partners about Boeing’s planned Sonic Cruiser, a plane envisioned as flying faster and at higher altitudes than current airliners.

Japan is also a critical aircraft market for Chicago-based Boeing. Boeing fills about 85 percent all aircraft orders from Japanese carriers. Recently European rival Airbus Industrie has begun an aggressive push to expand its business in Japan.

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