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First Airbus Plant Opens in US
World Economy

First Airbus Plant Opens in US

Europe’s leading jetmaker, Airbus, has inaugurated its first production facility in the United States. The move is a direct affront to its American rival Boeing as the France-based company snatches up more market share.

For many workers in Mobile, Alabama, industrial action is something done by Europeans, DW reported.

In fact, there are hardly ever walkouts or protests by unruly employees. That’s because there are hardly any unions.

The state also has one of the lowest minimum wages in the country–$7.25, or €6.41, per hour.

Overall, for companies looking to unburden themselves from the high cost of unionized labor in Europe, the conservative, southern state drives a pretty hard bargain, one that has resounded with at least one major airplane maker across the Atlantic.

In 2012, Airbus announced it would spend $600 million to build a new assembly plant for its most popular line of aircraft–the single-aisle A319, A320 and A321 jets. The company, which is based in Toulouse, France, said it expects 5,000 new orders to come in from North America within the next 20 years.

The new plant will help boost Airbus’ market share in the US because the company eventually plans to employ some 1,000 local workers. That “Made in USA” stamp is important to many American buyers.

Proof of that came three years ago, when the French jetmaker still had only a 20% share of the US market. Since stating its intention to build a plant in Alabama, that share has doubled.

 Assembly Facility

The new plant will serve as an assembly facility. The airplane parts will be manufactured at Airbus’ other European locations in Hamburg, Germany, and Toulouse and shipped across the Atlantic.

Any additional logistics costs would be counterbalanced by the lower cost of labor in the US, the company said. Airbus’ presence in the US would also diversify the company’s currency exposure, which could be beneficial if the euro gets stronger again.

 Beats Boeing

Airbus won a $1.33-billion deal on Tuesday to supply air refueling tankers to South Korea. The A330 MRTT allows aircraft to take off with more weapons.

The A330 MRTT–a military derivative of the A330-200 airliner–was selected over Boeing’s KC-46A, the military procurement agency in Seoul said, because of its price and performance as well as the amount of personnel and cargo it can carry.

South Korea will buy four of the Airbus aircraft, for a total of 1.488 trillion won ($1.33 billion). The country joins Australia, Britain, the UAE, Saudi Arabia and Singapore in adopting Airbus’ air-to-air refueling and transport aircraft.

 

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