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7E7 Suppliers Make Short List

23 June 2003

Fuji Heavy Industries, Kawasaki Heavy Industries and Mitsubishi Heavy Industries, which have participated in development of both the 767 and 777 jets, made the shortened list of candidates to manufacture substantial portions of the 7E7 airframe along with Dallas-based Vought Aircraft Industries and Alenia Aeronautica of Italy.

Boeing made the announcement at the Paris Air Show. The 7E7 is Boeing's proposed next-generation jetliner, envisioned to be more fuel-efficient and cheaper to maintain than today's planes. Late this year or early in 2004, Boeing's directors are expected to make the multibillion-dollar decision of whether to finance the new model. The company will select a final assembly location from among nearly 20 competing states.

On the 777, they supply about 20 percent of the airframe, including fuselage panels and doors, the wing center section, the wing-to-body fairing and the wing inspar ribs. Vought builds panels for the Boeing 747 fuselage in Hawthorne, Calif. In Stuart, Fla., it produces doors for various Boeing jets and the center wing section and components for the 767.

Alenia makes the 717's entire fuselage; fuselage panels for the 757; the vertical stabilizer and control surfaces for the 767; and the nose cone on the 777. It has expertise in composites and supplies a 12-meter long outboard flap made from carbon fiber for the 777. Though Boeing is its major customer, Alenia also partners with Airbus and will make the center section of the fuselage for the forthcoming A380 superjumbo jet. The suppliers that made the cut may be offered equity stakes in the project.

In a signal of the magnitude of the partnership arrangements being discussed, Boeing Commercial Airplanes Chief Executive Alan Mulally said he wouldn't rule out forming a separate company to build the new jet. Boeing outsources about 65 percent of the manufacturing of its current jets, but that percentage looks set to rise steeply. ""Excluding the engine, Boeing is looking to have 70 to 80 percent of the new plane built by other companies,"" Alenia CEO Giorgio Zappa told reporters in Paris.

A final decision on suppliers and the work each will do is not likely before the end of the year.

""We are not at a point where we can say specifically what parts or what percentage of the airplane will be awarded to any company,"" said Mike Bair, senior vice president of the 7E7 program.

Boeing confirmed that one internal company site — Wichita, Kansas. — will be a candidate for major subassembly work on a par with the five outside suppliers. Boeing would say only that other internal company units were not out of consideration.

The other internal sites in contention are Boeing Winnipeg in Canada; Hawker de Havilland in Australia; and the Frederickson wing-fabrication plant near Tacoma. The latter makes aluminum wings and wing components as well as composite tail components for existing Boeing jets.

Wichita makes the nose and cockpit for every Boeing jet except the 717 and likely wants that part of the 7E7. To help secure work on the planned 7E7, the Kansas Legislature recently approved a $500 million loan to Boeing Wichita, with interest payments coming out of state income taxes to workers on the program. Over a 20-year repayment period, this arrangement would save Boeing an estimated $200 million.

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