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Airbus to build 1st U.S. assembly plant in Alabama

On Monday, Alabama Gov. Robert Bentley, seated at right, and Airbus CEO Fabrice Bregier sign an agreement for Airbus to put its first U.S. assembly plant in Mobile.

Associated Press

On Monday, Alabama Gov. Robert Bentley, seated at right, and Airbus CEO Fabrice Bregier sign an agreement for Airbus to put its first U.S. assembly plant in Mobile.

MOBILE, Ala. — In the battle to dominate the global aviation industry, European aerospace giant Airbus announced its first assembly plant in the United States on Monday, a symbolic and significant step in the competition with archrival Boeing.

The French-based company said the Alabama plant is expected to cost $600 million to build and will employ 1,000 people when it reaches full production, likely to be four planes a month by 2017.

"We are going to create great jobs and generate growth right here," Airbus CEO Fabrice Bregier said at the convention center in Mobile, where many of the 2,000 people in attendance waved American flags as music played in the background.

"We know in aerospace, when we create one job, there are about four related jobs, so we could bring as many as 5,000," Bregier said. "The management to the blue collars will be 100 percent American."

Boeing already has a big presence in Alabama, employing 2,700 people in defense and rocket operations.

While Airbus had parts plants in the United States before, a full-fledged planemaking factory is a more significant presence and could help it boost its share of U.S. commercial and defense contracts.

The Airbus plant advances the company's strategy of expanding production outside its home base. The company, jointly run by French and German management and with plants in several European countries, wants to expand in China and India, as well as the United States.

Airbus and Boeing have had a long-running international trade dispute. Each also has been critical of subsidies received by the other.

Airbus plans to manufacture the A320, a widely used plane flown by Delta Air Lines, US Airways and others. The 150-seat plane is generally used on short- and medium-haul flights, and Airbus makes more of them than any of its other planes. They retail for $88 million, although discounts are common for big customers.

"It is truly a great day in the history of Alabama," Gov. Robert Bentley said. "It is the result of a lot of hard work and cooperation. This day will shape the future of the region for years to come."

Mobile is already home to several aerospace companies, and much of the business is based at the 1,650-acre Brookley Aeroplex, where the new plant will be based. The aeroplex was an Air Force base until its closure in 1969.

While Airbus looks to boost production of its A320, Boeing is ramping up production of its 737, which competes directly with the A320. Both companies are putting new, more fuel-efficient engines on the planes, hoping to extend their appeal as airlines try to cut fuel costs. Airbus made its new-engine decision earlier than Boeing and got a big jump on orders. The United States is a growing market for Airbus. American Airlines ordered 260 A320s last year, and US Airways is buying them as well. However, Delta went with Boeing 737s in a 100-jet order in August.

Manufacturing contraction

U.S. manufacturing shrank in June for the first time in nearly three years, a troubling sign that the economy is faltering. The Institute for Supply Management, a trade group of purchasing managers, said Monday that its index of manufacturing activity fell to 49.7. That's down from 53.5 in May and the lowest reading since July 2009, one month after the recession officially ended. Readings below 50 indicate contraction.

Airbus to build 1st U.S. assembly plant in Alabama 07/02/12 [Last modified: Monday, July 2, 2012 9:23pm]
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