Boeing Frontiers
July 2003
Volume 02, Issue 03
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Cover Story

a golden age

Large Calligrphy BannerFifty years. Depending on one's perspective, it's either a long time or just a blink on the grand stage of history.

The world has changed immensely over the past half century—think the advent of human spaceflight and supersonic air travel, the fall of the Soviet Union and the Berlin Wall. But one thing has remained constant: the close, enduring partnership between Boeing and Japan.

For sure, there have been sales of hundreds of commercial airplanes and military aircraft. Many strategic alliances have been signed. Japanese companies that started out as suppliers have transformed into Boeing partners on the commercial, defense and space sides of the business. Japan continues to be the largest single-country non-U.S. market for Boeing airplanes, and the country's aviation industry will play a key developmental and production role in the e-enabled 7E7, an airplane that will incorporate advanced systems technology and production breakthroughs leading to superior design, efficiency and support.

But at the end of the day, what stands are the friendships between the American and Japanese aerospace professionals who helped define "Working Together." Between leaders from Boeing business units and Japanese industry and government who share a common vision and values.

So while this golden anniversary celebrates the Japan and Boeing joint heritage over the past 50 years, it also focuses forward, looking ahead to a bright future.

"Long-term commitment in Asia means everything," said Boeing Japan President Robert "Skipp" Orr. "This is just a milepost on a long, long road." Back on Feb. 17, 1953, the company incorporated the Boeing International Corp. office in Japan. Boeing leaders were visionaries, really, ahead of their time in realizing the strategic importance that Japan would eventually play on the world stage. Back in the early '50s, few knew that Japan would grow into the second-largest global economy. That it would rank among the top countries in defense spending. Or that its technological edge would make it a giant on the world stage. But half a century ago, Boeing committed to an investment in Japan's aerospace industry—one that's paid immense dividends to both sides over the decades. And relationships are the thread that connects the years.

It's not just business—it's personal

Golden anniversary conference focuses on leadership

As part of a celebration of the 50th anniversary of the Japan-Boeing business relationship, Boeing in late May sponsored a "Boeing Leadership Summit" in Tokyo.

Entitled "Security and Economic Challenges in a Time of Dramatic Global Change," the one-day summit brought together leaders and opinion makers in the business, political and security fields from both sides of the Pacific to discuss how leadership would shape the future of both Japan and the world. The event also was a forum to explore opportunities for mutual collaboration and success across borders and cultures.

Boeing Chairman and CEO Phil Condit hosted the event.

"Strong and successful relationships come from a shared commitment, vision and leadership," he said. "Boeing's long-standing, 'working together' relationship with the people of Japan is very much at the root of our half-century of success in Japan and with its aerospace industry." Other attendees included

  • Howard H. Baker, Jr., U.S. ambassador to Japan
  • Yoshinori Imai, director general, International Planning and Broadcast Dept., NHK
  • Masahiro Akiyama, former administrative vice minister, Japan Defense Agency
  • Yukie Kudo, author and journalist
  • Thomas S. Foley, former U.S. ambassador to Japan
  • Yoshiyuki Kasai, president, Central Japan Railway Co. (JR Tokai)
  • Robert A. Feldman, chief economist, Morgan Stanley Japan
  • Masamoto Yashiro, chairman and CEO, Shinsei Bank

The program attracted an audience of more than 200 Boeing stakeholders.

"If you look at the way we do business in the West, it's very transaction-oriented," said Larry Dickenson, Boeing Commercial Airplanes senior vice president of Sales, whose involvement with Japan spans nearly two decades. "In the process, you may or not develop a relationship. But it's always the transaction that starts or creates it.

"In the East, it's very hard to do business if you don't have that foundational relationship between both sides. In the East, the relationship drives the transaction."

That's why after all these decades, it's no coincidence that Boeing enjoys an 87 percent market share in Japan's commercial aviation market. The country is the largest customer of Boeing twin-aisle airplanes, with JAL Group the largest 747 customer and All Nippon Airways the largest outside the United States for the 767. And the country's major carriers make up the largest international customer of the 777, an airplane that helped Boeing define the "Working Together" concept.

But the relationship isn't just one between a seller and buyers. Japan also plays a major role on the supply side, with more than 85 of its companies program partners, subcontractors and suppliers to Boeing Commercial Airplanes.

"A lot of now-senior people in Japanese industry have spent time at Boeing," said Boeing Chairman and CEO Phil Condit. These include Kichisaburo Nomura, the current All Nippon Airways chairman. Building relationships "involves working hard; it involves doing things together, whether it's playing golf or singing karaoke, which I have done. The relationship has breadth and depth."

Commercial ties help build others

Even though 1953 was the year that Boeing made its first official footprint in Japan, one of the heritage companies that comprise Boeing had already begun business dealings in the country before this date, according to Pacific Partners: 50 Years of Boeing in Japan, a new book by Robert Neff that celebrates 50 years of the Boeing-Japan relationship.

Douglas Aircraft Company, for example, had sold DC-2 and DC-3 airplanes to Japan prior to World War II and granted Japan production rights for these. And in the early 1950s, Douglas began selling four-engine propeller airliners to what was then Japan Air Lines. But Douglas didn't deal with the Japanese from the commercial side only. The U.S. government signed agreements with Kawasaki Heavy Industries and Showa Aircraft to repair and overhaul some of its military aircraft—a venture in which Douglas was involved.

And throughout the 1950s, heritage companies including North American Aviation, its then–newly created Rocketdyne unit, and Hughes Aircraft also played key roles in the development of Japan's defense, space and satellite industries.

Decades later—thanks in part to the commercial airplane ties that the company had built and nurtured earlier—Boeing enjoys strong partnerships with the Japan Defense Agency and the National Space Development Agency of Japan.

Boeing's involvement with Japanese fighter aircraft dates back to 1971, when McDonnell Douglas delivered two F-4E Phantom fighters to the Japan Air Self Defense Force. Ten years later, Japan received the first non- U.S. deliveries of the F-15 Eagle under the "Peace Eagle" program. Since then, about 200 F-15J/DJ Eagles have been built through a licensing arrangement with Mitsubishi Heavy Industries, which has worked with Boeing to upgrade these fighters for the 21st century.

But the military involvement doesn't stop there. Again working in partnership with Japanese industry, Boeing—through a license with Kawasaki Heavy Industries—has equipped Japan's air defense forces with about 60 CH-47 Chinook helicopters since 1984. The Japan Maritime Self Defense Force owns the world's second-largest inventory of Harpoon missiles. And in August 2001, the Japan Ground Self Defense Force chose the Boeing-built AH-64D Apache Longbow to replace its aging anti-tank helicopter fleet.

"Because of the consolidation of military industries in the United States, the relationship [between] Boeing's Integrated Defense Systems and Japan will be strong further into the future," said Yoshitomo Aoki, a leading Japanese aviation commentator, author and journalist. "Of course, the tight cooperation with BCA will help."

Charged today with maintaining and growing the overall Boeing footprint in Japan is Skipp Orr, who's lived in Japan for 18 years. One of the first Boeing country and regional executives appointed, he reports to Tom Pickering, senior vice president, International Relations.

"Not only do Orr's language skills and country knowledge superbly equip him to do Boeing business in Japan," said Pickering, "but his appointment is recognition that Japan is important to Boeing."

Besides recognizing the importance of celebrating Boeing's 50 years in Japan, Orr has "played a major role in building, for example, bonds with the Japanese defense community, with the Japanese space community, and parliament and government," Pickering said. Orr's contacts from his previous government relations positions at Motorola-Japan—and from his days as a doctoral student at Tokyo University—helped lead to Boeing's recent memberships in two key Japanese think tanks and the influential business associations Keidanren (Japan Federation of Economic Organizations) and Keizai Doyukai (Japan Association of Corporate Executives).

"Our commitment to Japan is demonstrated by the fact that we're going to get better, we're going to get stronger," Orr said.

A lifelong learning experience

Over the decades, the Boeing-Japan partnership has been one of constant learning. Initially, it was Boeing and its heritage companies sharing their manufacturing know-how with their Japanese counterparts. But eventually, after helping the Japanese launch their own aerospace industry, the teacher became the student as Boeing transformed itself and advanced technologically, thanks in part to knowledge shared by its Japanese partners.

Phil Condit can attest to this, as he earned a doctorate in engineering from the Science University of Tokyo in 1997. This was the result of eight years' work.

"The education was dominantly in the culture, and I learned how important relationships are, how important time and patience are," Condit said. According to Neff's book, Condit was the first non-Japanese student to earn a Ph.D. through the program. "It was clearly a process that could not be hurried. It was incredibly important to [all parties] that it be a real degree, that it not be an honorary degree."

It obviously looms large in Condit's life. His Science University diploma, written in Japanese, hangs framed over his computer at Boeing World Headquarters in Chicago. Just underneath is a framed calligraphy drawing, a gift from a Japanese colleague, which celebrates his graduation from the Tokyo school. The drawing uses symbols to represent the pronunciation of Condit's name in Japanese, with the collective symbols meaning "modern philosopher."

Condit—who led the team and pioneered management concepts that launched the wide body 777—built strong relationships with the Japanese through the airplane program's "Working Together" efforts in the 1990s. Before then—and since—the learning has gone both ways, he said. Witness Boeing's shift toward Lean Manufacturing and processes.

"A number of us went on study missions to Japan to look at their methods," he said. "They are clearly affecting what we are doing in this company. A lot of what we're doing at Boeing has roots in that country."

First 50 years just the beginning

It's no secret that Boeing's rival Airbus is attempting to muscle in on Boeing's commercial airplane dominance in Japan. In fact, the Toulouse, France–based company has publicly stated its intention to grab 50 percent of the country's commercial airplane orders by the year 2006. Airbus has established an office in Japan and is hoping to sell its super-jumbo A380 aircraft to JAL Group and All Nippon Airways. Over the past 30 years, Japan has been the biggest market for the 747, currently the world's largest airplane.

If imitation is the sincerest form of flattery, Skipp Orr said, then Airbus must think highly of Boeing's ongoing Japan strategies.

"They're trying to line up their relationships with the 'Heavies' (Fuji Heavy Industries, Kawasaki Heavy Industries, and Mitsubishi Heavy Industries) and line up relationships with suppliers," Orr said of the company's intent to "copy" Boeing's decades-long partnerships with these industry giants.

Aviation commentator Aoki believes that Japanese airlines' long-standing relationships with Boeing help the company maintain its edge in his country.

"JAL and ANA put very high trust in Boeing airliners," Aoki said, "and also there is a 'buy-Japanese' policy put on both the 767 and 777 (Japanese industries participate in both programs). So if they compare the same category of airliner and there is no big disadvantage in Boeing products, they have the tendency to select the Boeing products."

Boeing foiled Airbus efforts this spring when after an aggressive campaign, ANA announced its intention to buy up to 45 737s to replace its current fleet of single-aisle airplanes. But despite owning nearly 90 percent of the Japanese commercial airplane market, Boeing isn't content to rest on its past accomplishments.

"The Airbus situation is something we really have to keep our eyes on," Orr said. "They didn't win on the 737 deal, and that's a tribute to Larry Dickenson and his team."

Another source of concern for the Japanese in this age of global terrorism and threats from neighboring North Korea is defense—even though the country limits its military's role to self-defense. In April, Boeing, the Japan Defense Agency and trading company ITOCHU signed a contract for the first of four 767 Tanker Transport aircraft. The Japan Air Self-Defense Force began operating the 767 Airborne Warning and Control System in May 2000; the country's other defense forces also own Boeing-built systems and aircraft.

"There's no question there's a major rethinking of security issues in Japan right now," Orr said. "There's a rethinking of priorities as opposed to spending.

"They're not at a point where they're going to abandon Article 9," Orr said of the clause in the Japanese constitution that states in part that "the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes."

But today's ever-shifting geopolitical scene and changing defense needs "provide us an opportunity to help our Japanese friends to think about options. What we say—and we work closely with the U.S. government on this: 'These are the challenges, and these are the tools you can use to meet these challenges.' It's not heavy-handed."

The first Boeing Japan Leadership Summit—held in Tokyo in late May and organized by Orr—gave Boeing and Japanese government and industry leaders a forum to discuss the various challenges facing them in these changing times. And the challenges are many, from Japan's currently stagnant national economy to uncertainty in the Asia region.

But looking ahead, Orr sees Connexion by Boeing becoming a big success for JAL Group, which has signed a letter of intent to install the broadband service on at least 10 of its long-haul jets. And of course, there's the 7E7, a major "Working Together" partnership which Orr said the Japanese government is excited about.

Dickenson also is bullish on the future of the Boeing-Japan collaboration.

"I'm very confident that it will flourish and even grow to greater levels, not only with our airline partners, but with the government," he said. "It will continue to flourish unless it's neglected, which I can't imagine it will be.

"You can't take 50 years of history and working together and depose that overnight."

Contributing research and background: Michael J. Lombardi, Robert Neff, and Jay Spenser


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