Airbus to build planes in Alabama, challenging rival Boeing
ANDREA ROTHMAN
TOULOUSE, France – Airbus SAS plans to open a commercial-jet assembly line in Alabama, its first in the United States, to meet demand as North American airlines renew their fleets.
Airbus will use the site to assemble A320 single-aisle aircraft that compete with Boeing Co.’s 737, the Toulouse, France-based company said Monday. Construction on the venue in Mobile will start by the middle of next year, with deliveries from 2016, Airbus said.
The facility will give Airbus greater proximity to U.S. customers as it seeks to gain a larger slice of the single-aisle market, the most popular category in civil aviation. A final assembly line in Alabama will let Airbus cut labor costs and help match dollar revenues with dollar costs, and hand the company more marketing clout to appeal to national carriers.
“Why did Mercedes go to the U.S. to build? Why did BMW, why did Toyota? You become more American,” said Airbus Chief Operating Officer John Leahy in an interview from Airbus’s headquarters in Toulouse. “We’re spending $12 billion a year over there, 40 percent of our procurement comes out of the U.S. It was a natural next step to do a final assembly line,” said Leahy, a U.S. citizen who has headed Airbus’s sales for two decades.
The Mobile plant will produce 40 to 50 planes annually by 2018, Airbus said. Currently, Airbus is building 40 planes a month between its assembly plants in Toulouse, Hamburg and Tianjin, in China, and is ramping up production rates to 42 by year-end.
Leahy said the Mobile plant could help Airbus move to a rate of more than 50 single-aisle planes eventually.
Airbus Chief Executive Fabrice Bregier told reporters at a press conference in Mobile that for the time being there is no specific plan to move to a rate beyond 42 planes a month.
Today, Airbus has only a 20 percent share of the U.S. market for single-aisle planes, while the global split with Boeing is about equal in that category.
Leahy said Airbus’ goal is to have 60 percent of the world market for single-aisle planes within the next few years, with Boeing having 40 percent. Boeing will probably retain 60 percent of the wide-body market given the success of its 777 and 787 models, until Airbus gets its A350-1000 plane into service, Leahy said. The plane is scheduled to enter service in 2017.
A major portion of the supply chain for Airbus planes is already in the United States, including parts from companies including Spirit AeroSystems, United Technologies, Honeywell International and General Electric.
An assembly line with planes going directly to local customers would give Airbus, a unit of European Aeronautic Defence & Space Co., a visible presence and break Boeing’s monopoly of building large civil planes in North America.
A final assembly line is where the biggest portions of the plane, including the fuselage, the wing, the tail section, and engines, get assembled to create a plane. Airbus already has one such non-European line for single-aisle planes, in Tianjin.
The line carries out 5 percent of the total work in building a plane. The biggest and most technologically demanding parts of Airbus planes are designed and constructed in Europe.
The wings are built in Britain, the cockpits in France, the fuselage and parts of the wing in Germany, and the tail section in Spain. Engines are provided by companies including CFM International, a venture of GE and France’s Safran SA.
Building jets in Alabama will allow Airbus to take advantage of so-called right-to-work laws, which bar union membership as a requirement of employment.
That can hold down employers’ wage and benefit costs. Boeing chose nearby South Carolina, another right-to-work state, for a 787 Dreamliner plant in 2009, its first commercial-jet factory outside the Seattle-area manufacturing hub where the company was founded.
