Europe's Airbus to build planes in US

2nd July 2012, Comments 0 comments

European planemaker Airbus unveiled plans to open a factory on Boeing's home turf Monday, a gambit that would see the firm roll out its first US-built plane by 2016.

"The time is right for Airbus to expand in America," said Fabrice Bregier, Airbus president and chief executive.

The new assembly plant, to be built in the southern Gulf Coast port city of Mobile, Alabama, could more than double Airbus's market share in the huge market, the company said.

Airbus estimates 4,600 new single-aisle aircraft will be needed in the United States over the next 20 years.

John Leahy, the company's chief operating officer and top salesman, said that Airbus currently holds about 20 percent of the narrow-body US market.

"By becoming a US citizen we can increase that market share to perhaps the world target 50 percent that we've been able to enjoy in other parts of the world. I think it can be done in the next few years," Leahy said at a news conference.

Leahy said the strategic decision helps to level the playing field with Boeing, particularly in the view of customers' perceptions.

"Now becoming a US manufacturer -- and that's the way it's going to be perceived -- ... can only help us just the way BMW, Mercedes, Toyota moving into manufacturing in the US helped them sell more cars in the US," he said.

The move extends the Toulouse, France-based company global production network, which includes assembly lines in Hamburg, Germany, and Tianjin, China.

Boeing, by contrast, only builds aircraft in the United States, near Seattle, Washington state, and in Charleston, South Carolina.

Airbus, a subsidiary of the European Aeronautic Defence and Space Company, said construction of the Mobile plant would begin in the summer of 2013.

Assembly of the A320 family aircraft was planned to start in 2015, with first deliveries set for 2016.

The plant is expected to produce between 40 and 50 aircraft per year by 2018, the company said.

Airbus said the new assembly plant and related activities should create up to 1,000 "high-skilled jobs" in the United States.

Financial details of the investment were not immediately available from Airbus.

The announcement caps a seven-year courtship between Alabama officials and EADS over locating a major industrial facility in the state.

In 2005, EADS, which already has an engineering site in Mobile, had proposed building a $600 million assembly line for its larger A330 aircraft as part of a bid for a $35 billion US Air Force contract for aerial fueling tankers.

But that deal was ultimately awarded to Boeing last year, amid a seven-year-old trade dispute between the United States and the European Union over alleged illegal subsidies to the two rivals.

In the tit-for-tat parallel cases wending their way through the World Trade Organization's dispute process, the Geneva-based body has found that both Airbus and Boeing had received WTO-inconsistent subsidies.

On the commercial battleground, Airbus gained an early advantage over Boeing by deciding in December 2010 to put new engines in its best-selling A320 that it claims will consume 15 percent less fuel than previous models.

The first of the new A320 Neo aircraft should be rolling off the European assembly line in 2015, two years before Boeing's rival aircraft, the 737 MAX.

Both Airbus and Boeing have big order books. With current production facilities, they need years to satisfy demand.

The director of strategy at EADS, Marwan Lahoud, in explaining the US move, said: "In any case, we have to increase the rate of production."

By locating some production in the United States, Airbus will avoid much of the foreign-exchange risk because aircraft are sold on the international market in dollars but current costs for Airbus are mostly in Europe.

Airbus says it is not switching jobs from Europe to the United States, arguing that the assembly of an aircraft represents about five percent of the value of the finished plane. The rest is in the form of contracts with suppliers and sub-contractors.

© 2012 AFP

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