Airbus to Invest $600 Million in New U.S. Plant in Alabama

Updated July 2, 2012, 12:25 p.m. ET.

Airbus to Invest $600 Million in New U.S. Plant .

By DANIEL MICHAELS
Airbus unveiled plans to invest roughly $600 million to build and equip a new assembly line in Alabama, marking the European plane maker's first major manufacturing facility on Boeing Co.'s home turf.

Airbus plans 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. Dow Jones's Steve McGrath reports. Photo: Reuters
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The unit of European Aeronautic Defence & Space Co. said Monday in Mobile, Ala., that it will assemble planes from its A320 family of single-aisle models at a new facility in the city starting in 2015, with deliveries starting a year later. Airbus projected that the facility will produce between 40 and 50 aircraft a year by 2018.

The short-to-midrange aircraft are the workhorses of low-cost airlines. Airbus makes more of the 150-seat plane than any of its other models. The A320 has a list price of $88 million, although discounts are common for big customers.

The new factory at the Brookley Aeroplex is expected to employ roughly 1,000 people and create several times as many jobs at local and foreign suppliers, the company said.

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.

"The U.S. is the largest single-aisle aircraft market in the world—with a projected need for 4,600 aircraft over the next 20 years—and this assembly line brings us closer to our customers," Airbus Chief Executive Fabrice Bregier said in prepared statement.

The Southern traditionally is unfriendly to unions, which likely will mean lower labor costs compared with the company's factories in France and Germany.

In Europe, Airbus unions have expressed concern about European jobs lost to the U.S., a particularly thorny issue in France as new President François Hollande tries to reinvigorate manufacturing at home.

"This is a real game changer for Mobile County and the whole region," County Commission President Connie Hudson said in a prepared statement. "Mobile joins very select company as one of just a few communities in the world capable of manufacturing high-tech, large commercial aircraft."

Alabama is contributing to the new operation a range of benefits, including job training and tax advantages, a person 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 accusations. But Airbus and European politicians have said that any subsidies to Airbus were offset by illegal subsidies received by Boeing. The WTO has ruled that Boeing received illegal subsidies, although they were different from those Airbus received.

The decision by Airbus to build planes in the U.S. could put major American suppliers to the European company and Boeing in a bind. Companies including General Electric Co. and United Technologies Corp. provide key components to both plane makers and strive for neutrality. Rising tensions between the two aerospace companies 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, according to industry executives.

Airbus already has an engineering center in Mobile and an Airbus operation in Alabama that supports the U.S. Coast Guard aircraft. Airbus also operates facilities in Kansas, Virginia and Florida.

Airbus' headquarters for the Americas are located in Herndon, Va. Combined Airbus's U.S. facilities currently employ more than 1,000 people.

EADS manufactures helicopters at facilities in Mississippi and Texas, and its Cassidian Communications unit has a plant in California.

Airbus to Invest $600 Million in U.S. - WSJ.com