First U.S. Airbus Factory Gives Wings to Mobile’s Economic Revival

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When the first convoy of airplane parts snaked through the streets on a sultry June day, it seemed as if Mardi Gras had come early to the Gulf Coast city of Mobile, Ala.

Drawn by the swinging brass horns of an approaching 10-piece jazz band, onlookers stepped out onto their front porches or drew up lawn chairs in the shade of the gnarled oaks along one of Mobile’s main thoroughfares. A dragon-shaped float bearing waving dignitaries and sequined musicians rolled past small houses, modest churches and weathered storefronts.

Trailing close behind was a column of flatbed trucks, laden with sections of fuselage, a pair of wings and the tail components of an A321 jet that had just made the three-week Atlantic crossing from an Airbus factory in Hamburg, Germany. They were on their way to a new Airbus assembly plant — the European aerospace company’s first civilian aircraft factory in the United States.

“I think Santa Claus has been here, and he’s left us an airplane,” Mobile’s mayor, William S. Stimpson, known as Sandy, said, beaming at the crowd.

The new plant, which formally opened on Monday, offers Airbus an opportunity to expand its customer base in the lucrative American market. In Mobile, Airbus will make the latest, most fuel-efficient planes.

It also provides the city a significant lift, representing a revival for a community that until the late 1960s owed much of its post-World War II growth to aviation.

The $600 million plant, which encompasses 116 acres on what had been Brookley Air Force Base, is the culmination of a courtship ritual, one of many playing out across the country as communities vie for attention and investment from foreign companies. Like many states and cities, Alabama and Mobile sweetened the deal for Airbus with generous tax breaks and other financial incentives.

Big manufacturers, in return, promise to create hundreds, if not thousands, of new jobs. For Mobile, a city of fewer than 200,000 people, the prospect of up to 4,000 jobs with Airbus and its suppliers over the coming years proved especially attractive. Unemployment in the area continues to hover at close to 8 percent, well above the national average.

Airbus’s foray into the United States forms part of a longer-term strategy.

The company roughly splits the global market for commercial airplanes with its Chicago-based competitor Boeing. But Airbus, which last year had almost 61 billion euros in revenue, or $69 billion in current dollars, still lags far behind its rival in the United States market. That is especially true for the popular single-aisle models like the Airbus A320 and the A321 that compete directly against the Boeing 737. Much in the way that Japanese automakers did a generation ago, Airbus hopes that by producing aircraft that are “made in America,” it will be able to gradually weaken Boeing’s home-field advantage.

A more recognizably American face also serves political goals, Airbus officials concede. At a time when austerity-minded governments in Europe are cutting military spending, Airbus, which also builds helicopters, fighter jets and other military aircraft, is looking to the United States and other governments as potential customers.

“We want to be a global actor in the global aerospace market,” Fabrice Brégier, the chief executive of Airbus, said from the company’s headquarters in Toulouse, France.

The Mobile plant “will bring a lot of visibility to the entire Airbus Group,” he continued, “not just in Alabama, but across the U.S.”

An Economic Bridesmaid

This summer, construction workers were still finishing the 200,000-square-foot final assembly hall in Mobile. But even so, inside, a new airplane was rapidly taking shape, built from the first boatload of components that had arrived with fanfare in June.

A few dozen mechanics and engineers in blue uniforms and work boots eased in and out of unfinished doors, installing multicolored bundles of copper wire or testing cockpit equipment. The muffled pulse and whine of power tools wafted through the windows of the still-hollow fuselage.

For now, the pace of production in Mobile remains slow compared with that of Airbus’s factories in Germany, France and China, which together produced more than 600 commercial airplanes last year. But even in low gear, the place is humming, echoing the site’s long-ago past as a United States Air Force base.

Matthew S. Metcalfe, 84, remembers when the military kept Mobile’s working class supplied with opportunities for skilled employment. At its wartime peak, Brookley had more than 17,000 workers, and for a generation it remained Mobile’s largest employer, providing as many as one in 10 jobs.

“Lots of people came from smaller towns and rural communities as far away as Arkansas to work here during the war,” said Mr. Metcalfe, a former chairman of the Mobile Airport Authority.

When Brookley shut down in 1969, Mobile was devastated. Along with the military employment, thousands of affiliated civilian jobs also vanished.

“It was traumatic to have that big a chunk of your economic engine taken out,” Mr. Metcalfe recalled.

Over the next two decades, Mobile struggled to regain its footing as many of the bigger private-sector employers, including textile and paper manufacturers, either shut down or moved their operations overseas. And as in much of the Deep South, Alabama’s appeal to outside investors suffered from the stigma of a history of racial violence.

Things began to change in 1993, when James E. Folsom Jr., Alabama’s lieutenant governor, became governor after his predecessor was convicted of an ethics violation. While Mr. Folsom served for less than two years, many Alabamians credit him with helping transform the state’s image with big business.

Days after being sworn in, Mr. Folsom ordered the removal of the Confederate battle flag from the dome of the State Capitol in Montgomery. (Confederate flags that flew at a memorial on the Capitol grounds were removed only this year.)

Next came an aggressive campaign by the state to lure new investments with generous tax breaks and other incentives. Within months, Alabama had secured a major manufacturing plant from Mercedes-Benz, the German luxury automaker, in Vance, near Tuscaloosa. The deal, which involved $300 million in inducements, was soon followed by others with foreign automakers, including Honda and Hyundai. Toyota set up an engine factory.

Other manufacturers also made their way to Alabama, including military contractors like Lockheed Martin and Northrop Grumman, as well as Boeing and other aerospace companies. But they clustered up north, particularly near Huntsville, the home of the NASA Marshall Space Flight Center and where, in the 1950s and 1960s, Wernher von Braun helped design the rockets that took astronauts to the moon.

While Mobile secured foreign investments in a naval shipyard and a steel plant, efforts to attract a big manufacturer to the Brookley site foundered.

In 1993, Mobile made the short list to build the McDonnell Douglas MD-12, a wide-body passenger jet that was ultimately abandoned because of a lack of demand. A decade later, Boeing considered assembling its 787 Dreamliner there before deciding to keep production in Washington State. And Indonesian Aerospace, a state-owned manufacturer of twin-engine turboprops and helicopters, developed plans for a production facility that never materialized.

Mobile “was always kind of like the bridesmaid,” said Jo Bonner, a Republican who represented Mobile in Congress from 2003 to 2013, “always coming up short of getting that ring.”

Destination: America

Airbus had eyed the potential in Mobile for years. The city’s deepwater port could accommodate ships carrying large structural parts from Europe. Freight trains run nearby, and the Brookley site, which is equipped with two long runways, is already home to a handful of smaller aviation maintenance companies and parts suppliers.

The site was appealing for another important reason: It was on American soil.

The Airbus Group had been looking for ways to break Boeing’s stronghold in the United States. Locating part of its global production in Mobile would create a natural hedge against exchange-rate swings between the euro and the dollar and reduce some of the cost of transporting the $16.5 billion in components that Airbus buys from American aerospace suppliers each year. Labor costs were also substantially lower compared with Europe. While Alabama had more unionized employees than other states in the South, it still had a so-called right-to-work law, which prevents private-sector unions from requiring workers to pay union dues.

Airbus also wanted to crack the American military market, the world’s largest. Military, space and security activities worldwide generate just 18 percent of the Airbus Group’s revenue, compared with 34 percent at Boeing. A major American government contract would help the company reduce its dependence on commercial jets.

To get big military deals, however, Airbus would need sway with officials in Washington, where large American contractors rank among the most powerful business lobbying groups.

Airbus, and Mobile, know the difficulty of pulling that off.

In 2008, the company, in conjunction with Northrop Grumman, won a $35 billion contract to build 179 new tankers, based on Airbus’s A330 wide-body jet, for the Air Force. The tankers were to be made in Mobile, where Airbus’s parent company — then known as EADS — already had a small office with fewer than 100 engineers and aerospace designers.

But Boeing protested, arguing that its proposal had been unfairly judged as more costly. The competition for the tanker deal was reopened.

That day sticks with Will Fusaiotti, who lives in Mobile. “You just had the feeling that Mobile deserved to get this,” he said.

Mr. Fusaiotti is the owner of Foosackly’s, a chain of chicken finger restaurants. He had no particular passion for airplanes. But when he saw the news of the Pentagon’s reconsideration, he felt his community had been cheated. He sent an employee to put up a defiant message on the marquee sign at one of his restaurants. “We would like to offer Boeing a finger.”

Within hours, commuters started posting photos of the sign on Facebook. A local advertising company offered Foosackly’s free space for the slogan on a billboard along Interstate 65. Orders for hundreds of T-shirts and bumper stickers followed.

Boeing won the second tanker competition three years later, and Airbus did not challenge it. But by early 2012, Airbus was back in Mobile with a new proposal: an assembly line for its two most popular commercial aircraft, the A320 and its larger cousin, the A321.

“It took us about a year and a half to really scrub the business case,” said Allan McArtor, chief executive of Airbus’s operations in North America. Airbus studied other locations but kept coming back to Alabama and Mobile, which together were prepared to provide $150 million in infrastructure investments, tax breaks, employee training costs and other incentives. By June 2012 it was decided. “This was the home we were looking for,” Mr. McArtor said.

Building Speed

Mobile is a low-slung town, affording Mayor Stimpson a panorama from his 10th-floor office. The view takes in the shipyard and the port as well as the gilded domes of the Cathedral Basilica of the Immaculate Conception, whose parish dates back to the early 1700s, when Mobile was the capital of French Louisiana. When the weather is clear, it is possible to make out the silhouette of Airbus’s new assembly hall.

“I think it has restored some confidence that maybe had ebbed after we lost the tanker contract,” Mr. Stimpson said of the Airbus plant.

It has also fed intense interest from job seekers. When the first 20 job openings were posted in early 2014, more than 8,000 people applied. In all, the plane maker has received more than 18,000 applications, many from retired military personnel with aerospace or manufacturing experience.

Tom Williams, Airbus’s chief operating officer, was stunned when he visited Mobile about a year ago and an airport taxi driver presented him with a copy of his brother’s résumé. “It was all a bit surreal,” Mr. Williams said.

Since then, Airbus has hired about 250 new employees in Mobile, who have spent up to nine months training in Europe.

Linda Taylor-Bethea, 33, a manufacturing engineer, said she had started taking French and German lessons to ease communications with colleagues on the other side of the Atlantic.

“I interact directly with the plants in Europe, where some people are still shy about speaking English,” she said.

The work being done in Mobile involves just the final assembly of aircraft sections that will continue to be built in Europe. While the contribution to the value of each aircraft is small, the jobs could one day have a significant impact on the local economy. Recently advertised salaries at the plant start at $27.50 an hour — 40 percent more than the average pay in Mobile.

The company aims to deliver its first American-made plane next spring, to JetBlue Airways, one of 16 Airbus expects to assemble in 2016. For now, all the planes to be produced in Mobile are destined for American customers — including Delta Air Lines, Spirit Airlines and Virgin America — that already have combined orders for more than 900 Airbus single-aisle jets valued at close to $100 billion.

Since Airbus announced that it would open the Mobile plant, its orders in the United States have been on the rise, said Mr. Brégier, the chief executive. Over the last three years, the company has won about 40 percent of the new jet purchases made by American carriers, and Mr. Brégier expects that figure to approach 50 percent by the end of the decade.

“ ‘Made in America’ is important,” said Michel Merluzeau, an aerospace analyst for Frost & Sullivan in Seattle.

By the end of 2017, Airbus expects to be assembling new planes in Mobile at a rate of four a month. Airbus says the Mobile line has enough capacity to double that pace, which would require hiring several hundred more workers.

That would fit in well with Airbus’s efforts to step up production worldwide. Since 2008, both Airbus and Boeing have experienced a boom in new jet sales. To shorten the backlogs, Airbus plans to speed global single-aisle production to 50 planes a month by 2017 from 42 now.

Higher production rates in Mobile could also prompt Airbus’s American subcontractors to relocate, bringing even more jobs to the area.

“For Mobile and for Alabama, economically there is more to be gained in terms of attracting the Airbus supply chain,” Mr. Merluzeau said.

Mr. Fusaiotti, the restaurateur, said he occasionally still sees the “finger” bumper stickers when he drives around town. Foosackly’s has since updated its advertising with billboards bearing a new slogan, “We’d like to offer Airbus a hand.”

A few months ago, Mr. Fusaiotti, who has some warehouse space near the Brookley site, said he got a call from a company that had won a contract to supply components to Airbus and wanted to take over his lease.

“I hadn’t really expected that,” he said. “I guess it’s opened a lot of people’s eyes to the possibilities.”

View the original article here.

Nicola Clark

Nicola Clark has reported on French business for The International Herald Tribune, now The International New York Times, since 2001, covering a number of industries, including aviation, banking and media. She received an Aerospace Journalist of the Year award in 2007 from the World Leadership Forum for her writing about the Airbus A380 crisis. After earning a masters degree in international affairs from Columbia University in New York in 1993, she worked for news agencies in New York, Tokyo, London and Paris covering financial markets.

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