2 Japanese Firms Seek New Boeing Contracts

Kawasaki Heavy Industries Ltd. and Mitsubishi Heavy Industries Ltd., Japan’s two biggest aircraft makers, are negotiating for assembly contracts from Boeing Co. as falling travel demand threatens aerospace sales.

“We are talking about beginning assembly work, although an agreement hasn’t been reached yet,” Kawasaki spokeswoman Yuko Ogino said. “For Boeing, assembly in Japan would be cheaper and for us it would mean more work,” said Hiroyuki Okada, her counterpart at Mitsubishi.

The Sept. 11 terrorist attacks exacerbated a slowdown in global air travel as passenger concern about safety increased. That has forced Boeing and rival Airbus to scale back production plans, triggering cuts in orders for suppliers, including Kawasaki and Mitsubishi.

The two Japanese firms are hoping to compensate for any lost orders by increasing the range of work they provide Boeing. One incentive for Boeing is that closer cooperation with Japanese partners may head off overtures by Airbus, which is wooing the companies with offers of supply contracts on its proposed 550-seat A380 jetliners.

Kawasaki and Mitsubishi could sign a contract with Boeing as early next year to assemble the fuselage of the 767 jetliner, the Nihon Keizai newspaper reported. The two companies and Fuji Heavy Industries Ltd. were partners with the Chicago-based jet maker in the development of the 767 and 777 jetliners, paying about a fifth of the project costs.

They continue to build panels for the fuselage of the two planes and supply parts for the 747.

Over the past few years, Boeing has explored the idea of having the Japanese suppliers build more of the 767s.

“Boeing last week sent 60-day layoff notices to 1,737 workers, mostly in the Seattle area where its commercial aircraft operations are based, as part of a plan to cut its work force by 30,000 jobs as aircraft production shrinks.

The move sparked a complaint from Boeing’s largest union, the International Assn. of Machinists, which said work that should have remained in-house was sent to contractors in violation of a labor agreement.

Shares of Boeing rose 18 cents to close at $38.60 on the New York Stock Exchange.