Boeing confirmed earlier reports that three Japanese companies will play a significantly larger role in manufacturing the fuel-efficient jet than in earlier Boeing models and will handle the complicated wing production, previously done almost entirely in-house.
The Japanese companies - Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Fuji Heavy Industries - will provide about 35 percent of the 7E7. Currently, Boeing's Japanese partners build about 21 percent of the Boeing 777 airframe, and 15 percent of the 767.
Chicago-based Boeing has said the new midsize fuel-efficient airplane will be assembled in the United States, but has not announced where. Boeing currently builds three widebody jet models at its Everett factory.
The 7E7 program headquarters and development and design-integration center will be in Everett, Boeing said, and will support thousands of jobs, in engineering and program administration.
Union leaders applauded that piece of news, but said they were concerned over the amount of airplane production work that will be handled overseas, and outside of Washington. In the past two years, Boeing has cut about 24,000 jobs in Washington state, where all but one of its commercial jets are built.
"Obviously, it's disappointing that more work is going out of this country, and especially out of our state," said Mark Blondin, president of Machinists Union District 751.
Basing the 7E7 program in Everett does not necessarily give Everett or the state of Washington a leg-up in Boeing's ongoing nationwide search for a final-assembly factory site, said Mike Bair, senior vice president for the Boeing 7E7 program. States including Washington have been offering Boeing tax packages and other incentives in hopes of landing the plant, which would employ between 800 to 1,200 people.
The company is expected to announce the winning site by the end of the year or early 2004.
Because the jet will be built from much larger pieces than past planes, there is not as big a need for engineers to be nearby for the fine-tuning, Bair said.
Boeing, through its divisions in Frederickson, Wash.; Tulsa, Okla.; Wichita, Kan.; and other locations, will manufacture about 35 percent of the aircraft, including the vertical fin, flight deck and forward fuselage.
Two other suppliers, Alenia Aeronautica of Italy and Vought Aircraft Industries of Dallas, will build much of the rest of the plane's body.
Although Boeing will still determine the shape, size and other requirements for the wing, the Japanese companies will share much of the responsibility for designing the wing and determining how it goes together, Bair said.
In current jet models, Boeing handles most of the design and pieces together the wing. However, with the 7E7, the entire wing potentially could be assembled in Japan and shipped directly to the final assembly site, said Lori Gunter, a Boeing spokeswoman.
Boeing wants to focus on its strengths - putting complex systems together - rather than the more detailed work that could be done by others, Bair said, and shifting the wing-design responsibilities to the supplier is a logical move.
"I think it's more an emotional decision more than a historical decision," Bair said. "(Wings) do provide lift, but figuring out what the wings look like, figuring out how to put them on the airplane, understanding whether that's something that our customers will buy ... that's the magic that The Boeing Co. brings to this process."
Others consider the move troubling, saying a company that always considered its designers and engineers the best in the world will be giving valuable trade secrets to outsiders.
Just a couple of years ago, Boeing identified wing design as among its biggest strengths, said Bill Dugovich, a spokesman for the Society for Professional Engineering Employees in Aerospace, Boeing's engineering and technical workers union.
"Suddenly it's more valuable for us to think about putting things together than maintaining proprietary knowledge that really affects the long-term success of the company? ... (Bair) is saying Boeing's value is putting things together - sounds a lot like a middleman to me," Dugovich said.
The work allocations are not surprising, but do show how Boeing is relying on partners - and their governments - to help shoulder the heft 7E7 development costs, said Richard Aboulafia, an aerospace analyst with the Teal Group in Alexandria, Va.
The Japanese government has long provided financial subsidies for its companies, and the assumption is that it will assist the three Japanese companies for development costs, Aboulafia said. In addition, Boeing is weighing incentives on the state level as it continues its site-selection process, he said.
"Boeing seems to have decided if you can't beat 'em, join 'em," he said, referring to Boeing's complaints over the subsidies that competitor Airbus receives from the French government.
Boeing is expected to decide next month whether to offer the jet for sale to airlines and search for a launch customer. Bair said he does not anticipate that giving the Japanese companies work will ensure that country's airlines will sign up to buy the 7E7.
"If we don't have the right product for them ... the fact that we are building parts in Japan won't make them buy the wrong airplane."
A decision on who will supply the engines for the aircraft is expected by the middle of next year, Boeing said.
Shares of Boeing closed down Thursday 5 cents a share to $39.35 on the New York Stock Exchange.