Japanese manufacturers pick up cost of development Delays in the release of government loans are forcing Japanese manufacturers to cover mounting development costs for the Boeing 787 with their own funds and without a final contract from Boeing.

Japan's major aerospace manufacturers, represented by the Japan Aircraft Development Corporation (JADC), were selected in 2003 to build 35% of the 787. But monthly negotiations since then between Boeing, JADC, Fuji, Kawasaki and Mitsubishi have so far failed to yield a master programme contract.

Cost pressure from Boeing and disagreements over how much of Japan's workshare should be outsourced to other Asian countries have contributed to the delay, say industry sources. Meanwhile, the Japanese government has not finalised a loan scheme.

The trade dispute between the European Union and the USA over aircraft development subsidies is forcing the Japanese government to proceed with more caution, but the spat has no direct impact on talks between Boeing and the manufacturers, say industry sources.

Japan earlier rejected a request from the EU to participate in talks with the USA aimed at ending subsidies for large aircraft programmes. The government believes its loan scheme is not a subsidy. But industry sources say it could be several more months before loans are awarded by the Development Bank of Japan (DBJ) to JADC because the government is reluctant to finalise the 787 loan scheme until the EU-US dispute is resolved. They say the dispute and the potential involvement of the World Trade Organisation has become a serious issue in Japan and has made talks between the government and the manufacturers very sensitive.

For the Boeing 777, DBJ loans were used by the manufacturers to help cover development costs. JADC and the manufacturers are paying back these loans and interest payments that were initially covered by a fund established by the Japanese Ministry of Economy, Trade and Industry. A similar scheme is expected to be established for the 787.



Source: Flight International