Japan's Toray Industries today said it will be the sole supplier of carbon fibre for Boeing's 777X passenger jet and the 787 Dreamliners, Reuters reported.
Toray expects to receive orders worth $8.6 billion, from Boeing which has recently received multi-billion dollar orders for the 737 Max, the 777X, and other variants. (See: Boeing in $56-bn deal to sell 150 777X planes to Emirates and Japanese firm books 80 Boeing 737 Max worth $8.5-bn)
The new supply contract, which would extend Toray's current contract with Boeing for over 10 years, sent shares in the Japanese company surging 4 per cent to a seven-year high.
The contract would help consolidate the role of Japanese companies in Boeing's commercial aircraft business. According to the company's projections around 22,000 engineers in Japan, or 40 per cent of the nation's aerospace workforce, already work on its jets.
Boeing had earlier said that Japanese companies, including Mitsubishi Heavy Industries and Kawasaki Heavy Industries, would build one-fifth of the 777X.
Toray would spend 100 billion yen ($865 million) on a carbon fibre plant in South Carolina. The company said today that it expected 60 billion yen of that investment to be completed in the next three years.
Boeing experienced considerably difficulties in managing its extended 787 global supply chain, which caused delays in the programme, and opted to take a more conventional approach to building the 777X. The plane would have a metal fuselage, unlike the all-carbon-fibre Dreamliner.
According to company spokesman Toshiki Matsumura who spoke over the phone, the agreement would be signed by the end of the year, Bloomberg reported. The contract was reported earlier today by the Japanese business newspaper Nikkei.
Toray, which already supplies composites for Boeing's 787 Dreamliner, would supply material for the wings of its wide-body 777X jet, according to a separate statement by Boeing.
The companies would also collaborate on the commercialisation of composites including improving their performance and lowering costs, Boeing added.
According to Boeing, it expected to purchase $36 billion in goods and services from Japan by the end of the decade. It said in June that it had retained Mitsubishi Heavy Industries Ltd and Kawasaki Heavy Industries Ltd, as part of a consortium of five Japanese firms that would provide parts for over a fifth of its 777X model.