Airbus will build a $600 million manufacturing facility in Mobile, Alabama, starting next year. Airbus CEO Fabrice Bregier said labor flexibility afforded by Alabama, a right-to-work state, helped drive the plan.
Workers are not forced to join unions in Alabama. Last year President Barack Obama and his administration blocked Boeing Co. from moving its Dreamliner jet production facilities to South Carolina, which pleased his union supporters and angered many in South Carolina. Boeing planned to open a second plant and maintain its presence in Washington state before the Obama administration sued Boeing.
Airbus plans to start assembling A320 passenger jets in Alabama starting in 2015, a decision that will strain trade relations on both sides of the Atlantic while creating many jobs in the U.S.
The new Airbus assembly line in Alabama will be the European plane maker's only major manufacturing facility in the U.S., home to rival big-jet manufacturer Boeing Co.
Currently, the European Aeronautic Defence & Space Co. already produces around 40 of the short-to-midrange jets each month in France, Germany and China. Airbus officials outlined the plan Monday at an event in Mobile attended by U.S. suppliers, airlines and politicians.
The company claims the move would create 1,000 jobs at its Brookley Aeroplex in Mobile, essentially doubling the company's U.S. workforce. A production plant creates many more jobs in supply industries, according to Airbus. Parts will be shipped from the Airbus facility in Hamburg, Germany.
Bregier made the announcement with Alabama Governor Robert Bentley by his side Monday.
"The reaction [of workers] to my knowledge is globally very positive," Mr. Bregier said, who added that Alabama’s right-to-work law that allows companies to operate freely without union interference weighed heavy in the decision.
But Chicago-based Boeing Co. maintains that the move doesn’t offset the damage to American employment from the expansion of Airbus. Airbus is heavily subsidized by European government while Boeing must negotiate union labor contracts and does not receive taxpayer subsidies in order to remain competitive. Ongoing probes by the World Trade Organization over such government subsidies have dragged on for years.
"We go where the talent is," Airbus Chief Executive Fabrice Bregier said in Mobile as local politicians welcoming the $600 million investment.
Bregier didn't respond when asked about the shift of employment to the U.S. from Europe. Meanwhile, European unions have complained about production moving overseas, according to French media reports.
About 40-percent of the average cost of producing Airbus planes comes from U.S. suppliers. A senior Airbus executive said labor accounts for only 5% of the cost of an aircraft.
Airbus received incentives from local and state government for a training center and to install infrastructure for the plant.
On a webcast, Mr. Bregier stated that Airbus hopes to increase to 50% of the U.S. market in five to 10 years, the same amount of the passenger/cargo jet market it hopes to secure globally. The company's current U.S. market share is around 20 percent.