EADS to Build U.S. Assembly Line for Airbus A320

The move into the heart of Boeing’s home market is part of a long-term strategy by Airbus aimed at doubling its share of the world’s largest market for 150-seat airplanes, which includes Boeing’s top-selling 737.

“This is the right move at the right time and in the right place for Airbus,” said Fabrice Brégier, the new chief executive of Airbus. “With this step, we will be the only genuine global player in the aerospace industry.”

The move follows about nine months of intense discussions within Airbus and its parent company, European Aeronautic Defense & Space, said several Airbus executives with knowledge of the project. The aerospace group is betting that U.S. airlines, many of which have large fleets of aging aircraft, will be enticed to consider an A320 that was made in America over the Boeing 737.

The plan calls for the construction of a plant capable of assembling 40 to 50 A320 jets a year by the end of 2017, according to these executives. Construction of the site — which will build aircraft from prefabricated sections built at Airbus factories in Germany and France — is set to begin next summer, with the first A320 assemblies beginning in 2015, Airbus said.

Within five years, Airbus expects to deliver four planes a month to U.S. airline customers, which currently represent around 15 percent of the company’s order backlog. Alabama officials said the state would provide Airbus with more than $100 million in tax breaks and other incentives to support the project. The A320 plant is expected to create roughly 1,000 new jobs, a figure that includes direct Airbus employees as well as jobs with suppliers. Airbus and EADS currently employ around 1,000 people in the United States, including 200 engineers at an existing technical center in Mobile.

The plan to expand in the United States follows the opening of Airbus’s first non-European assembly line in Tianjin, China, in 2008. That plant now produces 36 A320 planes a year for the Chinese market.

The expansion was being met with caution by labor unions representing Airbus’s 56,000 employees in Germany, France, Britain and Spain. Company managers briefed union leaders at Airbus’s two European assembly sites, in Hamburg and Toulouse, France, early Monday.

“We will be vigilant to make sure they are not robbing Europe to pay the United States,” Gilbert Plo, a delegate of the French union C.F.T.C. to the company’s central works council, told Reuters on Sunday.

During a news conference Monday in Mobile, Mr. Brégier said using workers in Alabama could eventually cost less, and give the company more labor flexibility, than operating factories in Europe. “But it is not the main reason,” he said. “We are used to operating in several countries, and we will be integrating Mobile into that. We do not intend to put these sites in competition with one another.”

European governments, meanwhile, gave their blessing to the U.S. expansion last week. The board of EADS — in which the French government controls a 15 percent stake — had voted unanimously in support of the decision, company executives said.

The sharp drop in air travel that followed the terrorist attacks of Sept. 11, 2001, set off a steep downturn — and several bankruptcies — in the industry that led many airlines to postpone investments to modernize their fleets. The U.S. fleet of single-aisle planes is one of the world’s oldest, with an average age of 13 years. That compares with an average age of eight years in Europe and six years in China.

After a meeting with Mr. Brégier on Friday, Peter Hintze, the parliamentary state secretary for aerospace at the German Ministry of Economics and Technology, said that establishing an industrial presence in the United States was “the right decision” for Airbus.

“I believe it will pay off for Germany,” he was quoted by German news media as saying, adding: “In the rivalry with Boeing, this is a genuine plus point for the Europeans.”

Boeing, for its part, has dismissed claims by Airbus and Alabama officials of the plant’s economic impact, arguing that the numbers of new jobs that will be created “pale in comparison to the thousands of U.S. jobs destroyed by illegal subsidies” Airbus has received from European governments over the past three decades.

The United States and the European Union are locked in a trade dispute before the World Trade Organization alleging illegal government support to their respective aircraft industries. The W.T.O. has found that both Airbus and Boeing have received illegal support; both sides have appealed the trade body’s findings.

North America is the world’s biggest market for single-aisle planes. Airbus has said it expects jets of this type to represent around 26 percent of the volume of new aircraft sales over the next 20 years. Airbus has forecast demand for 19,200 new jets of all types, worth $1.4 trillion, by 2030.

Globally, Airbus and Boeing split the single-aisle market fairly evenly; but in the United States, Airbus currently holds a market share of around 17 percent.

Mr. Brégier predicted that closer proximity to its U.S. airline customers would quickly translate into new aircraft orders. “If we have a stronger presence in America we can progressively target a 50 percent market share” within the next two decades, he said.

The agreement to build an assembly line in Mobile is the culmination of a seven-year on-again, off-again courtship between Alabama officials and EADS. Back in 2005, EADS proposed building an assembly line for its larger A330 as part of a bid for a $35 billion U.S. Air Force contract for aerial fueling tankers. It was awarded to Boeing last year.


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