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Japan Co. Signs $8.6b Boeing Deal

Japan Co. Signs $8.6b Boeing Deal
Japan Co. Signs $8.6b Boeing Deal

Japan’s Toray Industries said it will be the sole supplier of carbon fiber for Boeing Co’s 777X passenger jet in addition to the 787 Dreamliner and expects orders to exceed $8.6 billion for both planes.

The new supply contract, which will extend Toray’s current one with Boeing for more than 10 years, sent shares in the Japanese company surging 4 percent to a seven-year high, Reuters reported.

The contract will help cement the key role Japanese companies already play in Boeing’s commercial aircraft business. Boeing estimates that around 22,000 engineers in Japan, or 40 percent of the nation’s aerospace workforce, already work on its jets.

Boeing has already said that Japanese companies, including Mitsubishi Heavy Industries and Kawasaki Heavy Industries, will build one-fifth of the 777X.

Toray is spending 100 billion yen ($865 million) on a carbon fiber plant in South Carolina. It said on Monday that it expects 60 billion yen of that investment to be completed in the next three years.

After difficulties managing its extended 787 global supply chain, which caused delays in the program, Boeing decided to take a more conventional approach to building the 777X. The plane will have a metal fuselage, unlike the all-carbon-fiber Dreamliner.

The first 777X is due to be delivered in 2020 and the plane has so far garnered some 300 orders and commitments. It is expected to be 12 percent more fuel efficient than the current 777, which was introduced in 1995 and has become one of Boeing’s most popular and reliable wide-body planes.

Toray’s shares ended at 842.1 yen. At one point, the stock rose as high as 857.4 yen, the highest level since January 2008.

Financialtribune.com