Insight: Oohlalabama! Airbus finally goes American

Mon Jul 2, 2012 4:12am EDT
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By Kelli Dugan, Karen Jacobs and Tim Hepher

MOBILE, Alabama (Reuters) - Airbus is about to get a Green Card.

Plans to build a $600 million plant in Mobile, Alabama to produce A320 passenger planes will give Europe's jet maker a strategic foothold on U.S. soil while breathing life into American manufacturing.

By retracing the footsteps of French settlers who founded Mobile as the first capital of then French Louisiana in 1702, the Toulouse-based company hopes to strike directly at rival Boeing on its home turf and create a springboard for future bids to win U.S. aircraft and defense deals. Monday's expected announcement is the fruit of several years of efforts by parent EADS, Europe's largest aerospace group, to acquire an American identity.

It is a reversal of fortune for Alabama's oldest city and its only port, coming only 16 months after Airbus lost a bitterly fought $35 billion contest against Boeing to build U.S. Air Force tankers that would have been put together in Mobile, and almost seven years after the city was among the places ravaged by Hurricane Katrina.

"It is a long-term strategic move, and anything that allows Airbus to make planes cheaper means they sell them cheaper ... putting more pressure on Boeing," said Alex Hamilton, managing director with EarlyBirdCapital, a boutique investment bank.

The new plans, which include the creation of a plant that will generate up to 1,000 jobs, are seen by some experts as one early sign of a possible renaissance in U.S. manufacturing, which has been in decline for many years.

But by placing the plant in the southeast with its lower wage rates and laws that are less friendly to labor unions, Airbus' plan may not sit well with the unions who have traditionally ruled U.S. airplane manufacturing, and particularly at Boeing's main hub in Seattle. They had already fiercely opposed Boeing's move to set up a plant in South Carolina, saying it was retaliating against the unionized workers in Seattle.

And back home, Airbus is also playing with fire as its own unions weighed in on Sunday, calling for guarantees over European jobs. Indeed, once the U.S. plant is built, Airbus may have more bargaining power with its workers in Europe.   Continued...

Employees install an engine for an A320 plane under construction at the final assembly line of Airbus factory in Tianjin municipality, June 13, 2012. REUTERS/Jason Lee