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Mitsubishi Heavy targets procurement costs for delayed jet

Conglomerate puts supplier negotiations under Kobe's wing, seeking lower prices

Development costs have soared for the Mitsubishi Regional Jet, whose ETA for clients has been delayed five times.

TOKYO -- Mitsubishi Heavy Industries looks to consolidate the procurement of parts for its much-delayed passenger jet, as the Japanese manufacturer works to deflate the project's ballooning development costs.

The Mitsubishi Regional Jet's development and production are distributed among regional offices, centered on the company's Nagoya Aerospace Systems Works in Aichi Prefecture. Different offices were contracting with suppliers separately, but Mitsubishi Heavy will assign procurement to a new civil aviation procurement center at the conglomerate's Kobe shipyard.

The Nagoya office holds yearslong relationships with many component makers tied to aviation, which "made it difficult to be cost-conscious with suppliers," said a source affiliated with Mitsubishi Heavy.

The Kobe shipyard works primarily in nuclear power and defense, but is taking off in aviation as well. Besides leading production of the MRJ's main wing components, the site also is expected to produce parts for Boeing's 777X jet under development.

Mitsubishi Heavy will re-evaluate its agreements with each supplier, aiming to spur price competition. The group also will draw from suppliers in a wider range of locations, having typically dealt only with companies around Nagoya and elsewhere in the Tokai region. The manufacturer aims to tap businesses in western Japan and the Kyushu island region.

The MRJ's delivery has been delayed five times, and with development costs swelling, Mitsubishi Aircraft -- the unit handling the jet -- is falling into negative net worth. Clients have been impacted, with airline operator ANA Holdings leasing Boeing craft to compensate for the delay. Mitsubishi Heavy President Shunichi Miyanaga recently took the reins on the MRJ project, and he brought in Hisakazu Mizutani as the new chief for Mitsubishi Aircraft on April 1.

The company now has four prototype jets in the U.S. ready for testing. Plans now call for delivering the passenger jet by mid-2020.

The Japanese aircraft maker will boost the number of foreigners working on development to between 300 and 400 in the U.S. and Japan, many of them Boeing veterans, Mizutani said. He cited "establishing a global work style" as a "major theme" of the project, saying foreign experts needed to be given more responsibilities to raise capability overall.

(Nikkei)

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