Airbus plans Monday to unveil an investment of roughly $600 million to build and equip a new assembly line in Alabama, marking the European plane maker’s first major manufacturing facility on the home turf of U.S. rival Boeing Co., BA +3.66% according to a person familiar with the talks.
The unit of European Aeronautic Defence & Space Co. EAD.FR +4.45% expects to announce at 10 a.m. local time in Mobile, Ala., that it will assemble planes from its A320 family of single-aisle models there starting in 2015, this person said. The new factory will ramp-up to delivering four planes monthly in 2017, this person said. It is expected to employ roughly 1000 people and create several times as many jobs at local and foreign suppliers, this person said.
EADS recently approved the investment, according to two people familiar with the decision. Airbus hopes it will help sell planes in the U.S., which is the world’s largest market for jet airliners and has one of the world’s oldest fleets. Several major U.S. airlines are now replacing their aging planes, but many more jetliners will be needed to modernize and expand carriers’ operations. Airbus now builds A320-family planes in France, Germany and China.
Alabama Gov. Robert Bentley and other state officials are expected to attend the event, according to the people familiar with the plan. Alabama is contributing to the new operation a range of benefits, including job training and tax advantages, one of the people familiar with the plan said.
Boeing has attacked Airbus’s plan as harmful to American jobs. Boeing and the U.S. have accused Airbus and EADS of receiving illegal subsidies from European governments, and the World Trade Organization over recent years has supported some of those charges. But Airbus and European politicians argue that any subsidies to Airbus are offset by illegal subsidies that Boeing has gotten. The WTO has ruled that Boeing received illegal subsidies, although they are quite different from those Airbus received.
The decision by Airbus to build planes in the U.S. could put major American suppliers to it and Boeing in a bind. Companies including General Electric Co. GE +3.07% and United Technologies Corp. UTX +4.04% provide key components to both plane makers and strive for neutrality. Rising tensions between the two giants in the U.S. could complicate that, although opportunities for new business are likely to attract a wide range of suppliers.
Each job in an airplane assembly plant creates at least 10 more jobs in the global supply chain, say aerospace industry officials.
Courtesy of the Wall Street Journal