eyes on the U.S.

How Airbus Plans To Cash In On Its Alabama Gamble

The European airplane giant has just opened its first U.S. assembly plant in Mobile, Alabama. Airbus is banking on lower labor costs and an aging American aircraft fleet.

The inauguration of Airbus plant in Mobile on Sep. 14.
The inauguration of Airbus plant in Mobile on Sep. 14.
Bruno Trévidic

PARIS â€" Was it wise to invest $600 million to build an A320 assembly plant just to be able to win a few more orders in what used to be the exclusive territory of its chief rival, Boeing?

Fabrice Brégier, the CEO of Airbus, has no doubt. Sure, there was the attraction of both lower employee benefit costs and lower tax rates in Alabama than in Europe, as well as the advantages to increased production in dollars to guard against currency fluctuations.

But most of all, it’s the unique prospects of the American market that convinced Airbus to set up shop in Mobile, Alabama. “The social costs didn’t come into consideration,” the Airbus CEO says. “Otherwise, we would have gone to Mexico.”

Even if air traffic increases by only 2% in North America, the region will still remain the world’s most important aeronautics market for a long time to come. According to the latest study by Airbus, U.S. companies, which have the oldest fleet in the world after those in Africa, will need 5,880 new aircrafts over the next 20 years, including 4,730 single aisle aircraft, for a total value of $751 billion.

Yet, still today, Airbus’ market share in North America is only 20%, against 50% globally. If, as the European aircraft manufacturer hopes, making planes in the U.S. allows it to gain so much as 10 market share points over 20 years, the $600 million invested in Mobile will easily pay for itself.

The outstanding question remains: will the “Made in America” feature of the Airbus output make the difference? Airbus notes that since the announcement of the project in 2012, it has won bids on 40% of American orders.

Still, nothing proves that these results are linked to the Alabama project. Delta Airlines, the geographically-closest to Alabama, did indeed order 30 A321s from Airbus, but also about 100 B737s from Boeing. United also preferred the Boeing 737. As for Airbus’ biggest order â€" 260 A320s from American Airlines â€"it came before the Mobile announcement.

Lunch still included

But what seems certain is the fact that making planes in the U.S., under the same conditions as its rival Boeing, can’t do any harm. These basic economics also appear clear to Boeing, which has just announced that it will open its first industrial site in China, to produce the interior fittings of its 737.

Despite the additional price of transporting parts, the Mobile plant, will eventually be as competitive as the large plant in Toulouse, France, which CEO Brégier says comes thanks most of all to the difference in staff costs.

In the event of a drop off in activity, Airbus will have an adjustment variable that offers endlessly fewer constraints than those faced in European industrial policy. Despite efforts by IAM, the major industrial union, to establish itself there, there are still no unions in Mobile and labor protections are still far fewer. The employer doesn’t even have to pay for employees’ lunch breaks.

Airbus hasn’t gone that far, but it is clear that the aircraft manufacturer will be far less reluctant to hire new workers in Alabama than it would be in France or Germany.

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A Mother In Spain Denied Child Custody Because She Lives In Rural Area

A court in Spain usurps custody of the one-year-old boy living with his mother in the "deep" part of the Galicia region, forced to instead live with his father in the southern city of Marbella, which the judge says is "cosmopolitan" with good schools and medical care. Women's rights groups have taken up the mother's case.

A child in Galician countryside

Laure Gautherin

A Spanish court has ordered the withdrawal of a mother's custody of her one-year-old boy because she is living in the countryside in northwestern Spain, where the judge says the child won't have "opportunities for the proper development of his personality."

The case, reported Monday in La Voz de Galicia, has sparked outrage from a women's rights association but has also set off reactions from politicians of different stripes across the province of Galicia, defending the values of rural life.

Judge María Belén Ureña Carazo, of the family court of Marbella, a city on the southern coast of 141,000 people, has ordered the toddler to stay with father who lives in the city rather than with his mother because she was living in "deep Galicia" where the child would lack opportunities to "grow up in a happy environment."

Front page of La Voz de Galicia - October 25, 2021

Front page of La Voz de Galicia - Monday 25 October, 2021

La Voz de Galicia

Better in a "cosmopolitan" city?

The judge said Marbella, where the father lives, was a "cosmopolitan city" with "a good hospital" as well as "all kinds of schools" and thus provided a better environment for the child to thrive.

The mother has submitted a formal complaint to the General Council of the Judiciary that the family court magistrate had acted with "absolute contempt," her lawyer told La Voz de Galicia.

The mother quickly accumulated support from local politicians and civic organizations. The Clara Campoamor association described the judge's arguments as offensive, intolerable and typical of "an ignorant person who has not traveled much."

The Xunta de Galicia, the regional government, has addressed the case, saying that any place in Galicia meets the conditions to educate a minor. The Socialist party politician Pablo Arangüena tweeted that "it would not hurt part of the judiciary to spend a summer in Galicia."

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