Congratulations to James B. Stewart on a superb New York Times article yesterday on Boeing. As he has pointed out, fully 35 percent of the airframe of the 787, the troubled, if superbly advanced, new Boeing jetliner, is being made in Japan. This reflects a highly organized, subsidy-drenched effort by the Japanese industrial system to succeed the United States as the world leader in aerospace. All in all, 70 percent of the 787 is being manufactured outside the United States, up from less than 2 percent for the 747 in the late 1960s. A reasonable guess — if one that Stewart stops short of suggesting — is that Boeing is going the way of Zenith, Xerox XRX -1.7%, General Motors, and other erstwhile American industrial titans that have had their clocks cleaned in East Asia.
For 99 percent of the New York Times’s readers Stewart’s report was new news but actually most of his information has been in the public domain for nearly a decade. If you doubt this, click here for “Boeing, Boeing,….Gone,” an article I wrote in 2005. My article actually went further than Stewart’s in that it pointed out that, as part of the deal, Boeing transferred its priceless wing and wingbox secrets — its crown jewels — to Japan. The deal was concluded by an already compromised and subsequently disgraced Boeing CEO Harry Stonecipher. It was approved by the George W. Bush administration.
All this does not diminish Stewart’s achievement: New York-based and a long way from the action, he has done a Pulitzer-level job in disinterring troubling facts that officials and executives on both sides of the Pacific have worked hard to bury. He has also confounded a pattern of self-censorship among Tokyo-based foreign correspondents. Although informed Tokyo-based economic observers have understood all along that Boeing’s deal with Japan was a Faustian bargain, they have also understood that it was unhelpful for their careers to say so (Tokyo has never been a free-speech zone, least of all in recent times when it has become so easy for Japan’s authoritarian bureaucrats to marginalize “troublemakers”). Tokyo-based foreign correspondents have instead promoted approved themes, notably the myth that Japan has become the basket case of the industrial world. This theme, which I debunked in an article in the New York Times Sunday Review last year, helps the Tokyo authorities fend off American pressure for the opening of Japan’s still closed markets and keeps hot money out of the yen.
Back to Boeing. It subsumes almost all the then independent companies that put Neil Armstrong on the moon in 1969. It is the last remnant of an American manufacturing base that once powered the most successful exporting nation in history. How come Boeing’s hollowing out has taken so long to reach the New York Times? Welcome to the information age. It is an age in which information moves at the speed of light — except when it doesn’t.
Eamonn Fingleton is the author of In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, Is the Key to Future Prosperity (Boston: Houghton Mifflin, 1999).