I remember a dinner I enjoyed with jack Utley, the Director of Countertrade & Offset for McDonnell Douglas, back in the fall of 1986. We were in Las Vegas for an American Countertrade Association’s Annual Convention, where I had been invited to speak. At the evening meal Jack wanted to talk baseball with me, and I wanted to talk to him about his many years in the countertrade business.

It was a most interesting conversation. And what stood out that night (for me) was his bold prediction that, someday, China would be competing with McDonnell Douglas in the manufacturing of jet aircraft. Quite a statement given the situation back some 22 years ago.

McDonnell had just entered into an offset agreement with China due to the efforts of a Chinese-American McDonnell Douglas employee, Gareth C.C. Chang President of McDonnell Douglas-China. He had spent over six years negotiating the contract, which was awarded in March 1986.

The strategy was to commit McDonnell to teach the Chinese to build planes. The contract was worth $1 billion, and the project duration was 12 years. The aircraft to be built were 30 to 45 jetliners, fuel-efficient twin-engine MD-82s. The contract provided for 30% offset, $300 million in aircraft to be exported from China on a best efforts basis.

Landing gear doors were to be made in China, and Chinese engineers participated in designing new generation McDonnell Douglas aircraft. One of the toughest conditions of the contract was subcontracting components to the Shanhai Aviation International Corporation. The SAIC, with 6,500 employees, had been producing electric fans, dry cleaning machines and buses.

With the McDonnell Douglas contract, SAIC produced aviation products exclusively. (McDonnell took 42 of its managers to China and brought 1,200 Chinese technicians to Long Beach, California for training.

On Sunday, May 11, Jack Utley’s prediction that China would one day manufacturer airline carriers was announced. For more on this story see:
JETS

BarterNews.com has an extensive countertrade section with scores of countertrade articles:
CT

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