Update: Airbus to open US jet production plant in a first
[ALABAMA] European jetmaker Airbus is taking its fight for a bigger market share to rival Boeing's backyard on Monday, as it inaugurates its first production plant in the United States.
The US$600 million facility in Mobile, Alabama, is due to eventually employ about 1,000 workers.
The move will also help Airbus cut costs. Alabama has one of the lowest minimum wages in the United States - US$7.25 per hour - and strikes are rare in the state. Employment benefits are about 30 per cent less expensive than in Europe.
"It's a historic day," said Airbus CEO Fabrice Bregier.
"Having an assembly line in the United States will increase our visibility." The inauguration ceremony, taking place three years after the project first kicked off, is set for 1500 GMT, with lawmakers and economic players from this former capital of colonial French Louisiana.
Three years ago, Airbus had a 20 per cent share of the US market, against 80 per cent for Boeing. Since announcing the Mobile plant, its market share has doubled to 40 per cent.
The company based just outside Toulouse, France estimates that it will get orders for 5,000 new planes in North America over the next 20 years.
Airbus is betting it will benefit from its US facility among American companies renewing their fleets.
By producing in the United States, for example, Airbus will be freed from the variations in euro to dollar exchange rate.
Based on the former Brookley Air Force Base where World War II planes were built, the Airbus facility is a 116-acre complex. The company has access to an additional 116 acres if it chooses to expand.
The Mobile plant will assemble single-aisle A319, A320 and A321 jets, its best-selling product first launched in 1988.
Starting in 2017, it will also assemble the A320 Neo, a new version with a more fuel-efficient motor.
Airbus hopes to produce four planes per month starting in 2018, or 40 to 50 per year. But the jetmaker says it can build eight per month.
Mr Bregier notes that plane assembly only accounts for about 10 percent of the price.
"Mobile does do three things for Airbus," said Richard Aboulafia of the Teal Group Corporation.
"It gives them a larger industrial presence, which could be useful in pursuing defense contracts. It puts pressure on trade unions back in Europe, because labour in Alabama costs less. And it diversifies their currency exposure, which could be useful if the euro gets strong again."
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