Facing severe pressure from state-subsidized foreign competitors and the end of federal export financing, Boeing has decided to build its first offshore aircraft factory in the company’s 100-year history. The plant will be located in China, will be a joint venture with a Chinese entity, and will focus initially on installing interiors and doing exterior paint jobs for 737s used by Chinese carriers. Boeing needed to increase its industrial presence in China, because the country is expected to buy 6,300 commercial transports over the next 20 years and rival Airbus already has a plant there turning out A320s that compete with the 737. Over time, though, the company’s footprint in China will likely grow because Beijing is a generous provider of export financing for local producers, and the U.S. is now the sole major trading nation without an export credit agency. I have written a commentary for Forbes here.
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