Today the puzzle continued to come together through an interview with Wade Cornelius. He's Boeing's VP in charge of global strategy and the international marketplace. Cornelius comes from the McDonnell Douglas side of the merger, and has expertise going back with China for decades.
I told him about Mr. Jin's comments about China not being up to handling a Boeing final assembly line. He said Mr. Jin was being modest -- China has done final assembly in the past, and it could do it now if it made sense. The real question is, does it?
China right now can do all sorts of important aviation work, Cornelius said, and over the years he's been impressed with their ability to learn and develop. But aviation is highly infrastructure intensive -- you don't just spend a bunch of money and create another Renton, Everett or Wichita overnight. Even if you did, he asked, would it be cost-effective given the efficiency that already exists?
The same principle applies to another issue that gets bandied about -- whether China may someday decide to build its own counterpart to a Boeing or Airbus jet? China is certainly making a foray into regional jets with its new ARJ-21, but once again, does it make sense for China to build another large jet for the world market? If China did make such a jet, how would it sell it in a world competitively divided between the Boeing Union and the United States of Airbus? (My pithy descriptors, not his. But the point was key to the conversation.)
Japan is an example of how development could play out in China. Japan certainly has the quality of workforce to build a large commercial jet if it wanted to, but instead it's building 35 percent of the 787. It's what makes economic sense for Japan. Eventually, China could be a partner of similar significance. In the meantime, it's working its way up to global standards and taking on more international contracting where it can.
Cornelius, like his Airbus counterpart last week, maintained that increased sourcing to China can work out well for workers worldwide -- if increased China sourcing creates value that results in greater Chinese and global sales, making more work for everyone. Coming out of the interviews, it seemed reasonable to me to conclude that China is expected to be a growing player in creating large aircraft, but that U.S. workers (and French and German workers, for that matter) don't need to panic about massive job relocation to China -- not in the next few years at least. The Western edge in infrastructure and expertise is pretty formidable. That said, if Americans found competition with Japan for 787 work not to be much fun, neither will competing with China for projects down the road. The tectonic plates continue to shift.
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