Japans Toray Industries Inc said it agreed to become the sole supplier of carbon fiber for Boeings 777X passenger jet in addition to the 787 Dreamliner.
The world’s largest carbon fiber maker said the new supply contract will extend the existing one with more that 10 years, with expected material orders for both planes to exceed $8.6 billion. The companies first signed in 2006 and with the renewal, the contract is expected to end in 2021.
The body of the 787 Dreamliner is made by around 50% out of carbon fiber, while the new wide-body 777X will have the material only in its wings and it will scale for around 25% of its whole weight.
Toray said it will build a $865 million carbon-fiber plant in South Carolina to meet increased demand, with more than half of the investment to be completed over the next tree years. The company also said the renewed contract will be of great benefit and projected a doubled annual revenue.
Boeings chief technology officer, John Tracy said the deal would “allow Toray to move beyond developing materials and handing them off to us” and move the companys focus “to transform those materials in a very efficient, cost-competitive way”.
Boeing also said Japanese suppliers, including Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Fuji Heavy Industries will account for around one-fifth of the materials needed for the 777X.
The Chicago-based plane manufacturer estimated that close to 22 000 Japanese engineers or 40% of the countrys aerospace workforce already work on its jets. The company also said it would spend $36 billion for goods and services in Japan by the end of 2020.
Akihiro Nikkaku, Torays president said: “We will carry out joint development that will cut across the traditional boundary between materials maker and aircraft maker.”
The first 777X aircraft is expected to be delivered in 2020, since its announcement the plane has collected around 300 orders. The 777X model is estimated to be 12% more fuel efficient than its predecessor. The 777 model was introduced back in 1995 and has become one of Boeings most popular and reliable wide-body planes.
Toray Industries Inc jumped 4.14% on Monday and closed at JPY 842.10 in Tokyo, marking a one-year increase of 26.63%. The company is valued at JPY 1.32 trillion. According to the Financial Times, the 16 analysts offering 12-month price targets for Toray Industries Inc have a median target of JPY 800.00, with a high estimate of JPY 910.00 and a low estimate of JPY 690.00.
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