Airbus targets ‘soaring’ output with new U.S. factory

Airbus Group SA opened its first jetliner factory on U.S. soil on Monday and does not anticipate taking a hit to aircraft orders from the economic slowdown in China, Chief Executive Tom Enders said.

The $600 million plant in Alabama will help Airbus meet plans to churn out 50 narrow body jets a month by 2017, up from 42 currently. Airbus is considering lifting that to 60 or more to meet a backlog of more than 5,400 planes.

Enders said he had no concern about a slowdown in demand, including from China’s recent economic weakness. If it came, Alabama would not be alone on the cutting block.

“We would always do that in a balanced way,” he said in an interview at a ribbon cutting ceremony. “There’s no political pressures or anything. But I have no reason that we are slowing down. Our challenge right now is to bring up production.”

China in June placed a landmark order for dozens of Airbus wide-body jets, a deal worth at least $11 billion at list prices that paves the way for a second European aircraft plant in the world’s fastest-growing aviation market.
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China also is a major buyer of narrow body Airbus aircraft, and Airbus has built a factory in China to produce those planes, similar to the one opened Monday in the United States to serve the North American market.

“Obviously we watch our markets with great interest,” Enders said. “But at this point I have no reason to believe that the Chinese market is breaking down or anything like that.”

Enders also said the Toulouse, France-based company is “happy with the current euro-dollar relationship” and has no plans to change its foreign-exchange hedging strategy.

Rival Boeing has indicated it is looking at building a facility in China to paint and finish its competing 737 narrow-body jets, and could announce it later this month when Chinese President Xi Jinping is due to visit Seattle.

In the interview, Enders said the U.S. plant, which employs 260, could help with military sales.

“This factory certainly has a lot of industrial credibility,” he said. “So should an opportunity arise on the military side some years from now (the factory and workforce) will certainly not hurt our credibility for a military project.”

Airbus said it sited the Mobile plant on 116 acres and has an additional 116 acres available nearby for expansion.

Airbus aims to make the U.S. factory its most cost efficient plant. But the bigger payoff is with burnishing its brand as a U.S. manufacturer. Monday’s ceremony included video clips praising Airbus from dozens of U.S. elected officials, airline heads and manufacturing companies.

“The relationship (with Airbus) is already extremely strong,” American Airlines Group chief, Doug Parker said in a clip.