By Brendan Sobie in Singapore

Japan’s Kawasaki Heavy Industries (KHI) says it plans to transfer some of its production of E-190 wings to Embraer to make room for a big boost in Boeing 787 fuselage production. 

The company “has reached a basic agreement related to the commercial conditions with respect to partial transfer of its scope of work of manufacturing E-190 type aircraft to Embraer”, KHI says.

The Japanese manufacturer says it was having trouble meeting requests to increase production for several components it supplies to original equipment manufacturers and the decision to reduce its workload on the E-190 was made after a “reassessment of our corporate resources”.

KHI is predominately a Boeing supplier and manufactures the fuselage for both the fast-selling 787 and the 777. It supplies Embraer with the wing for all members of the E-170/E-190 family of large regional jets.

Embraer plans to increase E-190/E-195 production to five or six aircraft per month later this year and eight aircraft per month by mid-2007 (Flight International, 18-24 April 2006). Industry sources say KHI cannot meet this ramp up because it is now committed to manufacturing more than 100 787 fuselage barrels in the first two years of the new programme and is expected to be informed later this year of a further production increase. The sources say KHI has to stop manufacturing some parts of the E-190 wing or stop being an exclusive supplier in the programme.

KHI declines to say which specific E-190 wing parts it plans to stop producing or if the partial transfer of E-190 production will result in transferring its Brazilian factory to Embraer. KHI subsidiary Kawasaki Aeronautica do Brasil opened a 5,400m2 (58,000ft2) factory at Embraer’s main complex in 2003, where it assembles E-190 wings using parts shipped from Japan.

KHI says it is “still talking with Embraer on the programme review” and that it will incur a one-time loss of ¥15.8 billion ($140 million) to cover the cost of the partial transfer of E-190 production to Embraer, which declines to comment.

Source: Flight International