First Airbus Plant In U.S. Will Bring 1,000 Jobs To Ala.

Jul 2, 2012
Originally published on July 2, 2012 4:43 pm
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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.


And I'm Melissa Block.

The European airplane maker Airbus announced today it will spend $600 million to build a new plant in Mobile, Alabama. It's the company's first major manufacturing facility in the U.S., and it'll employ about 1,000 workers when it's up and running. Airbus says it needs to be closer to the huge U.S. market, which is generally seen as Boeing's home turf. NPR's Yuki Noguchi has more.

YUKI NOGUCHI, BYLINE: Airbus CEO Fabrice Bregier stood at the microphones, dwarfed by huge screens behind him projecting a giant American flag. He stood beneath an arch constructed of red, white and blue balloons.

FABRICE BREGIER: We are very honored as Airbus to be part of a truly American celebration.

NOGUCHI: Airbus has reasons to drape itself in patriotism. It's trying to curry favor with its U.S. airline customers, many of whom are in the process of updating their old fleets. And, Bregier says, Airbus plans to churn out 40 to 50 of its popular single-aisle planes every year at this new facility. The Frenchman's pro-American message won lots of applause from the crowd of airline executives, parts makers and employees.

BREGIER: The town is right, the talent is right and the time is right.

NOGUCHI: A long lineup of politicians took the stage to congratulate themselves on bringing new jobs to an area hard hit by setbacks from recent manufacturing losses and from the Gulf Coast oil spill - among them, Alabama Senator Jeff Sessions.

SENATOR JEFF SESSIONS: And I like to think about it this way: We make this aircraft, we assemble it here, and send it all over the world and we collect money.


SESSIONS: And it's brought back to Mobile. And it's distributed out, spread around a little bit in our community. I think that's a win-win proposition for all of us.

NOGUCHI: One company not celebrating this $600 million investment: Boeing, Airbus' American archrival. This big investment in Boeing's home country is a kind of shot across the bow. Boeing responded by saying it doesn't matter how many U.S. jobs Airbus creates. It's also destroying them by competing unfairly. For years, the industry titans have fought, accusing each other of receiving illegal government subsidies.

But Richard Aboulafia, an analyst with the Teal Group, says today's announcement amounts to little more than a rhetorical skirmish.

RICHARD ABOULAFIA: I don't think it's a major threat to Boeing at all. And I don't think it's a major opportunity for Airbus, either.

NOGUCHI: Aboulafia says locating a plant in the U.S. does not give Airbus a competitive advantage because U.S. airlines don't actually buy planes based on where they're built.

ABOULAFIA: I think it's easy to overrate its significance. You know, these aren't cars. You don't want to be closer to the customer - there's no point to that. It's a global business. And there are no trade barriers either in the U.S. or in Europe.

NOGUCHI: He says the trend in airline manufacturing is to make lots of pieces of planes in different countries and then put them together. Aboulafia identifies two other main reasons for Airbus to make this move. One is to curry greater political favor to put Airbus in a better position to win more defense contracts. The other, he says, is to lower its labor costs by shifting more operations to Southern right-to-work states, something Boeing has also done.

Another airline analyst, Scott Hamilton, agrees labor is Airbus' main motivation to move. Right now, airplane makers are ramping up to meet high demand, but Hamilton worries that won't last.

SCOTT HAMILTON: There's going to be inevitably a down cycle. The European labor laws make it very difficult to lay off people. So the obvious question is, in the next down cycle, if you decide that you need to lay off people, where are they going to get laid off?

NOGUCHI: Construction on the new plant is set to begin next year, with aircraft assembly starting in three years. Yuki Noguchi, NPR News. Transcript provided by NPR, Copyright NPR.