Boeing hopeful of 777X deal, may build wings in Japan if rejected

TOKYO Mon Nov 11, 2013 9:34pm EST

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TOKYO (Reuters) - Boeing Co (BA.N) is hopeful its key machinist union will vote for a labor contract to secure production of the 777X in Washington State, but will look at alternatives, including building the wings in Japan if the deal is rejected, an executive said on Tuesday

"We are hopeful," John Tracy, the U.S. aircraft maker's chief technology officer, said during a press briefing in Tokyo with executives from suppliers including Mitsubishi Heavy (7011.T), Kawasaki Heavy (7012.T) and Fuji Heavy (7270.T). Japanese companies build 36 percent of the 787 Dreamliner including the wings.

"If not ratified we will consider all other alternatives," Tracy said, adding that included the possibility of taking production of the wings out of the United States to Japan.

In a bid to persuade Boeing to build its yet-to-be-launched 777X in Washington, the state legislature last week passed a measure to extend nearly $9 billion in tax breaks. However, key to the production decision will be a vote by the International Association of Machinists union on a deal that calls for lower healthcare benefits and a new retirement plan.

Its 31,000 members are due to vote on the proposed deal on Wednesday. At a meeting last week, union head Tom Wroblewski tore up the proposed contract.

Should his members agree to throw the deal out, Mitsubishi Heavy and other Japanese suppliers could stand to benefit. The carbon fiber 787 is the first Boeing aircraft that has its wings built outside the United States.

Doing so for the 777 would represent another major Boeing commitment in Japan and help secure thousands of aerospace jobs as the Japanese firms look to fend of competition from makers in Korea and China.

(Reporting by Tim Kelly; Editing by Richard Pullin and Stephen Coates)

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