Airline
industry insiders have revealed that Airbus is planning to build a plant in
Mobile, Alabama. This will be the company’s first assembly line in the United
States, the home ground of its competitor Boeing.
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| Airbus's Crown Jewel: A380 |
The
plant is expected to come at a cost of several hundred million dollars and will
be able produce dozens of A320 Airplanes in a year. Analysts have predicted that
the plant will take at least three years to be fully operational. The details
of the plans are still being kept a secret and will be revealed sometime next
week.
The
planes will rival Boeing’s famous 737 and will have a substantially lower price
tag for its US customers. Boeing, on the other hand, is a market leader in the
United States and enjoys 80% share in the local single-aisle airline industry,
although globally, both of the companies are evenly matched.
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The
continent of North America is the center stage of global single-aisle airplane
market. As mentioned above, Boeing is currently the dominant player here. With
the new and first assembly line in United States, Airbus seeks to completely
change the market dynamics.
Fabrice
Brégier, the Chief Executive of Airbus has said recently said in an interview
that its Alabama plans are a “part of a stream of ideas in our international
development.”
In
its home territory, Europe, Airbus has to deal with labour unions. With its new
investment, the company will seek to reduce its labor cost, as it will enjoy
the non-unionized environment. Its North American workers will not get the same
compensation package as that of their colleagues working in the European
factories. The lower price tag will come at the cost of lower wages.
Airbus
might face some resistance from European leaders who are openly opposed to the
idea of their companies building manufacturing plants elsewhere, thereby
causing a flight of capital and jobs. The President of France, François
Hollande has already warned that firms might face monetary penalties, such as
increase in taxes or decrease in subsidies, if they move jobs from France.
Your comments and feedback are always appreciated
Half Bridge Business News
Relevant Links:
Relevant Links:
AirbusIs Said to Plan a Factory in Alabama [The New York Times]
AirbusPlans Factory in Alabama [ABC News]
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