Friday, June 29, 2012

Airbus plans to build a factory in Alabama

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.

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.

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. 

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AirbusPlans Factory in Alabama [ABC News]