Europe's largest defense and aerospace company announced yesterday that it will build a manufacturing and engineering facility in Mobile, Ala., intensifying its campaign for a toehold in the U.S. defense market.
The move is the latest in a bold bid by Franco-German European Aeronautic Defence and Space Co. to position itself as an American company and grab U.S. military contracts. It thrusts the rivalry between Boeing Co. and Airbus SA, a unit of EADS, into the defense market after a fierce battle for supremacy in sales of commercial airliners.
Construction of the manufacturing facility hinges on Airbus unseating Boeing as the builder of Air Force tankers, which are aircraft that refuel planes in flight. Boeing lost the program last year after a procurement scandal that resulted in prison terms for two former company executives. The Pentagon is expected to announce a competition for the tankers later this year, which provides an opportunity for EADS to win the business.
Whatever the outcome of the tanker competition, EADS said it will build the engineering facility at Brookley Industrial Complex, which includes the Mobile Downtown Airport. EADS said the site will generate 150 jobs.
The arrival of EADS in Mobile was welcomed by Alabama's congressional delegation but viewed with skepticism by lawmakers representing states with large Boeing workforces.
Sen. Jeff Sessions (R-Ala.), a member of the Armed Services Committee, and Sen. Richard C. Shelby (R-Ala.), a member of the Appropriations Committee defense subcommittee, praised EADS's choice. Rep. Jo Bonner (R-Ala.) said that if Airbus wins the contract, the Air Force tanker will be made in the United States by people "who happen to speak with an accent, a southern accent."
EADS will face obstacles in Congress. A transatlantic trade battle has recently erupted over government aid to the two companies. U.S. officials have criticized European subsidies granted to Airbus. The Europeans claim that Boeing also receives subsidies, in the form of tax breaks.
The House version of the defense authorization includes a provision that would prevent Airbus from competing for the tanker deal because of the subsidy dispute.
EADS anticipates creating 1,000 jobs at the Mobile plant if it wins the tanker contract. The facility would only assemble the tankers and prepare them for military use, according to EADS. Manufacturing the entire plane would require a workforce of about 20,000, said Rep. Todd Tiahrt (R-Kan.).
"The bottom line is 20,000 jobs will be created somewhere either in America or in France; that is a hard sell in Washington, D.C.," Tiahrt said.
EADS created a North American unit in 2003 and has run advertisements depicting Americans, such as a man in a cowboy hat, above a statement reading, "I am EADS." Airbus has run full-page color ads in major newspapers and sponsored programs on National Public Radio to call attention to its $7 billion in annual spending in the United States, mostly through aviation vendors such as Honeywell International Inc., General Electric Co. and Goodrich Corp.
The EADS plant announcement comes after a competitive week at the Paris Air Show at Le Bourget, where Airbus and Boeing both announced new orders.
The tension of the subsidy dispute hung over the show, said John W. Douglass, president of the Aerospace Industries Association, which represents U.S. aircraft manufacturers. "None of us can see a good ending to a full-scale trade war," he said. "We're their biggest customer; they're our biggest customer."
During the show, Airbus trumpeted its new, 800-passenger, super jumbo aircraft, the A380, with multiple demonstration flights. The giant plane has come to symbolize Airbus's ambition after it surpassed Boeing in 2003 to become the world's largest commercial aircraft manufacturer. At last year's air show in Farnborough, England, Airbus announced a slew of orders for its new plane while Boeing reported no orders for its new 787 Dreamliner.
The situation has since seemed to reverse, as Boeing has picked up nearly 200 orders for the 787 in the past year -- some from traditional Airbus customers -- while Airbus's production schedule for the A380 has been set back.
In Paris, Airbus was expected to announce the launch of an aircraft to compete with Boeing's 787, a mid-size plane made of lightweight composite materials scheduled for delivery in 2008. But Airbus delayed a decision on that aircraft, called the A350, until the fall.
Airbus remains the world's largest aircraft manufacturer and has 1,535 backlog orders compared with Boeing's 1,225.
Henri Courpron, Airbus North America's president and chief executive officer, said yesterday that the launch of the A350 has been complicated by the trade dispute between the United States and Europe. U.S. officials said they intend to renew their case against Europe before the World Trade Organization, asserting that Airbus receives unfair "launch aid," or government subsidies to begin new aircraft programs. The European Union said it would also proceed with its complaint against the United States for the state subsidies and defense spending that amounts to subsides for Boeing. Settlement negotiations broke down last month.
"For all intents and purposes the A350 program is launched for Airbus," Courpron said. "A couple of technical questions with the program remain to be clarified with the board of EADS."
EADS North America chief executive Ralph D. Crosby Jr., right, announces that the company wants to build U.S. Air Force tanker planes in Mobile, Ala. Seated is Alabama Gov. Bob Riley.