The response from Boeing to rival Airbus when they announced they were moving forward with the A 380 was to upgrade the 747 to an 800 series. As of this month there were options on only thirty-two of the passenger version but seventy-six for the freighter configuration, almost making it a loss making venture for Boeing. It is interesting to note that some freighter operators, led by Cargolux, are looking at ensuring any replacement aircraft are new rather than conversions. With possible cancelations on the passenger 747-800, it looks like the 747 will go the way of the MD 11. In the last five years of MD 11 production all aircraft delivered were freighters.

I started in the business about the same time as Pan Am started flying the 747 to New Zealand. I have always been in awe that such a huge machine could actually fly. It is sad that starting with the “new” JAL, a mega international carrier, that the 747 will slowly fade from the skies because most carriers will undoubtedly follow Air New Zealand’s choice of scrapping the redundant aircraft rather than find buyers. To think it was 747 which transformed the airline business to move passengers in “bulk” which in turn led to pricing that allowed working class families to enjoy overseas travel at Greyhound bus prices.

The grandest example of the success of Keiretsu how the Japanese auto and electronic industries have been able is less than forty years to grow and withstand competition to globally dominate these sectors. When say the old General Motors needed some funding, it would have to go to market and depending upon its credit rating, it would pay market or higher than market interest rates. By comparison, Mazda’s CEO, part of the Sumitomo keiretsu, would make a phone call to the CEO of Sumitomo and “Bob’s your uncle”, funding was immediately in place with a below market rate. With such low cost of money large Japanese corporations with such huge protective shields around them literally became too big to fail. At the turn of this century, with the rapid ascension of China as a source of cheap supply the lives of keiretsu companies began to change.

Firstly with Nissan, the keiretsu company bank was Mitsubishi and they elected to stop funding which resulted in the company in 1999 being saved by Renault who bought 40% of the company and literally took over the management. Soon after, some major banks were restructured and several disappeared, being absorbed into better capitalized competitors. With deflation taking root over the last ten years, the days when the good “old boys” could get together and sort out any problems with their keiretsu brethren, started to become numbered. Ever since the rapid rise in fuel prices, Japan Air Lines has been on the brink and until last week, it was thought that with its keiretsu support, bankruptcy would never be an option. To the surprise of the Japanese public and even the outside world, not even the government was interested in bailing JAL out so a company once considered “too big to fail” called in the liquidators.

It was the keiretsu philosophy which created Japan’s bubble economy and when that bubble burst nearly twenty years ago, it has taken all this time for Japan to enter the reality of the real world. China’s bubble is about to burst, but instead of private enterprise propping up the economy as was the case with Japan, the communist Chinese government can print as much money as it wants, but when it happens there, unlike Japan’s soft landing of sorts, “it is all over, Rover”, for the Chinese!