Airbus to Open Jetliner Plant in the U.S.
September 13 2015 - 8:50PM
Dow Jones News
Airbus Group SE on Monday will inaugurate its first jetliner
production facility in the U.S., as the European rival to Boeing
Co. seeks greater market share and lower production costs.
Airbus has invested around $600 million to build the facility in
Mobile, Ala., which will employ about 1,000 workers. Building
jetliners in Boeing's backyard is Airbus's highest-profile move yet
to bolster its presence in the U.S.
"We wanted to make the U.S. one of our industrial homes," Allan
McArtor, chairman and chief executive of Airbus's U.S. unit, said
in an interview.
Airbus already employs 1,400 workers in the U.S. for activities
ranging from building helicopters to providing flight training. The
company scaled back ambitious plans to secure Pentagon business
after several failures to win high-profile contracts, such as
producing aerial refueling planes for the U.S. Air Force.
The company, based in Toulouse, France, initially picked Mobile
for the refueling plane program, establishing a relationship that
moved to commercial aviation after it lost the military contract to
Boeing. Lower labor costs in Alabama and access to a port attracted
Airbus to the site, the company said.
The plane maker is betting that, like European auto makers,
whose U.S. plants helped spur sales, its jetliner business with
U.S. carriers will benefit from a domestic presence. That is key
for Airbus, particularly in the narrowbody market, where Mr.
McArtor said the U.S. is expected to be the single-largest market
over the next 20 years, with combined deliveries of up to 4,800
planes.
Airbus plans to deliver the first of the single-aisle planes to
be built in the U.S. to JetBlue Airways Corp. next spring. American
Airlines Group Inc. is the biggest operator of Airbus planes in the
U.S., and the carrier also has the largest backlog of planes to be
delivered.
The company traditionally builds its A320-type planes in
Hamburg, Germany, and Toulouse. It opened a site similar to the
Mobile final assembly line in Tianjin, China, in 2008. Around 40
expatriates from Europe are in Mobile to help train the local
workforce, though that number will be reduced.
The U.S. facility gives Airbus lower-cost production capacity
than in its home markets and potential leverage over its European
workforce, according to analysts. The move matches one made by
Boeing that has added jetliner production outside of its unionized
facilities in Washington state at a nonunionized plant in South
Carolina.
Mobile's production output will gradually rise to four
narrowbodies. Production could double with only modest investment,
Mr. McArtor said.
Airbus currently produces 42 single-aisle planes a month, with
plans to boost output to 50 aircraft starting in 2017. The plane
maker is considering boosting output to as many as 63 single-aisle
planes a month, with a decision expected before the end of the
year.
Fabrice Bré gier, who heads Airbus's plane-making business, has
said boosting output is a matter of when, not if. Airbus is
assessing whether suppliers can support higher output, with many
stretched by also having to satisfy Boeing's interest in building
more planes.
Mr. McArtor said recent global economic turmoil hasn't shaken
Airbus's confidence that demand for A320-type planes is robust.
"Demand for the single-aisle is not vulnerable at all. If anything,
it is getting more," he said.
The company is adjusting some of its production processes to
build planes in the U.S. Wings and major parts of the plane that
are built in Europe are being shipped to Mobile and then trucked
from the port to the factory. Other items, such as engines and
interior components that come from U.S. suppliers, will go directly
to the Alabama site to cut time and costs.
Airbus will first assemble current model A319, A320 and A321
jets—the backbone of its single-aisle product—in Mobile before
transitioning to the updated "neo" versions, for new engine
options, which offer lower fuel burn.
Though the Mobile facility currently is intended only to build
narrowbody jetliners, Mr. McArtor said there is ample space to
accommodate additional commercial jetliner or military work if the
need arose.
Write to Robert Wall at robert.wall@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 13, 2015 20:35 ET (00:35 GMT)
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