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Airbus to open factory on rival Boeing's U.S. turf
July 2, 2012 / 4:50 PM / 5 years ago

Airbus to open factory on rival Boeing's U.S. turf

MOBILE, Alabama (Reuters) - European planemaker Airbus confirmed on Monday it plans to open its first assembly plant in the United States, marking an aggressive foray into the world’s busiest aviation market and the home turf of rival Boeing Co (BA.N).

A general view shows the the new Airbus A380-800 "Berlin" aircraft during the naming ceremony at Tegel airport in Berlin, May 22, 2012. REUTERS/Fabrizio Bensch/Files

EADS EAD.PA unit Airbus, the world’s largest commercial jetmaker, said the Mobile, Alabama, plant would build up to 50 A320-family jets annually within two years of its 2016 opening and create 1,000 jobs.

It will be the second Airbus plant outside Europe that manufactures its most popular jet, after China.

“The town is right, the talent is right and the time is right,” Airbus Chief Executive Fabrice Bregier told a crowd of about 1,000 industry executives and local dignitaries assembled for the announcement. Reuters reported on Airbus’ plans last week.

Analysts said the move could reshape the U.S. aerospace industry and boost manufacturing on the U.S. Gulf Coast. But Boeing said the move should not distract attention from controversial European subsidies received by Airbus.

The rivals are involved in the largest-ever dispute at the World Trade Organization, accusing each other of billions of dollars in illegal aircraft subsidies.

For a graphic on Airbus and Boeing's factory footprints, click link.reuters.com/reg29s

American Airlines AAMRQ.PK CEO Tom Horton, JetBlue Airways Corp (JBLU.O) CEO Dave Barger and Goodrich Corp GR.N CEO Marshall Larsen were on hand at the Mobile convention center for the announcement, arriving to the strains of the rock group Steve Miller Band’s 1977 hit “Jet Airliner” and rocker Tom Petty’s song “Learning to Fly.”

BOOST FOR GULF COAST

Local economic development officials said the new plant would be a shot in the arm for the Gulf Coast, as big manufacturing operations like Airbus tend to lure suppliers and additional jobs. State officials had been lobbying Airbus for years.

“It’s like giving birth to a baby -- after seven years of labor,” former Alabama Governor Bob Riley said.

The region in the southeastern United States is still recovering from the devastation caused by Hurricane Katrina in 2005.

“Something like this just gives us new marketing opportunities, new opportunities to talk to a lot of different aerospace companies,” said Neal Wade, chairman of the Aerospace Alliance, an association of government and business leaders from the states of Louisiana, Mississippi, Alabama and Florida. “You immediately put yourself into a different category.”

Airbus suppliers welcomed its move.

“It makes all the sense in the world for Airbus to be here,” said David Hess, president of United Technologies Corp’s (UTX.N) Pratt & Whitney unit. “We’re glad they are here.”

Manufacturing has been a relative bright spot for a U.S. economy still struggling to recover from a 2007-2009 recession. However, data on Monday showed manufacturing activity unexpectedly contracted in June, the first dip in three years.

JOINING THE ONSHORERS

In building a U.S. factory, Airbus will follow a broader trend in the manufacturing sector -- producing goods closer to where they are used. While the Mobile operation is an overseas excursion for the European company, it comes as many U.S. companies are bringing manufacturing back home after finding that the low wages they had found overseas came with bigger-than-expected costs for logistics, quality control and other expenses.

“As globalization matures, companies have a better understanding of the total costs of full life cycle production and the U.S. offers a number of advantages,” said Jack McDougle, senior vice president at the U.S. Council on Competitiveness and a former Commerce Department official.

He cited the emergence of abundant natural gas, intellectual property protection, quality control, shorter lead times, access to a big, sophisticated market, high productivity, and “world-class” research and development.

Companies such as General Electric Co (GE.N) and Fortune Brands Home & Security Inc (FBHS.N) have already returned manufacturing to the United States.

Boeing has also embraced the trend after suffering through years of delays in the launch of its 787 Dreamliner aircraft after handing off much of the manufacturing responsibility for the aircraft to outside suppliers.

“We, lemming-like, over the last 15 years extended our supply chains a little too far globally in the name of low cost,” Boeing CEO Jim McNerney said at a Washington summit on manufacturing held in February. “We lost control in some cases over quality and service when we did that.”

Additional reporting by Tim Hepher in Paris and Jed Horowitz in New York; writing by Scott Malone in Boston; editing by Maureen Bavdek and Jeffrey Benkoe

Our Standards:The Thomson Reuters Trust Principles.
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