The United States, Japan and the aerospace industry: from capture to competitor?1

Abstract

For all its success in other high-technology sectors, Japan has largely failed to develop a strong aerospace sector. Its leading firms do not market finished aircraft and, in stark contrast to other sectors, the aerospace industry features a trade deficit with the United States. Japanese firms seem trapped as suppliers of components and sub-assemblies, mainly for the US industry. The general explanation for this state of affairs is that the Japanese industry has been effectively ‘captured’ by the United States; Boeing in particular dominates the sector and has effectively locked the Japanese firms into a relationship where moving up the value chain is difficult. This relationship may be changing. Japan's government has placed renewed emphasis on developing Japan's aerospace sector, while matters are evolving at the corporate level too, with Boeing's relations with Japan revealing a steadily increasing work share for the Japanese industry. The rise of Asia as an important market, and technological change making aerospace more like other manufacturing industries, presents Japanese firms with new incentives and opportunities beyond the US relationship.