Farnborough Air Show 2012

Special coverage from onsite at Farnborough 2012
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  • Globalization's New Twist: Offshoring to America
    Posted by Joe Anselmo 4:31 PM on Jun 29, 2012

    News that Airbus is close to announcing it will set up a final assembly plant for its A320 jet in Mobile, Ala., is reverberating across the aerospace industry barely a week before the kickoff of the Farnborough air show. The move would give the European airframer a manufacturing beachhead in rival Boeing's home market. And French labor unions can’t be pleased: Workers in southern, non-union U.S. states don’t expect 35-hour workweeks and eight weeks of vacation per year, and can be laid off more easily when hard times hit.

    An Airbus plant on U.S. soil would underscore the ongoing globalization of the aviation industry. Honda Motor Co. may be headquartered in Japan, but its new HondaJets are built in North Carolina. Brazil-based Embraer is now assembling Phenom 100 business jets in Melbourne, Fla., where it is also establishing a research center. Surprisingly, costs are about on par with Phenoms assembled in Brazil. The shutdown of the space shuttle program at the nearby Kennedy Space Center provides an ample pool of skilled workers.

    Across the Pacific Ocean, Embraer and partner Avic are planning to ramp-up production of Legacy 600 and 650 executive jets in Harbin, China, while Cessna and Avic are negotiating to assemble Citation Sovereigns at an assembly line in Chengdu and jointly develop a business jet that would be built in China and sold globally.

    Airbus has been assembling A320s in Tianjin for Chinese customers since 2008 and might ultimately begin producing A320NEOs there.

    Pundits often attribute such moves to greed: companies, under pressure from shareholders to bolster profits, cut well-paying jobs at home and send them abroad. But in aerospace, market access is often a far bigger objective.

    Airframers and their suppliers are setting up operations in China to establish a presence and cultivate relationships in a fast-growing and potentially gargantuan aviation market. It actually costs Airbus more money, for example, to assemble A320s in China than in Hamburg or Toulouse.

    Airbus has been contemplating a U.S. manufacturing site ever since it competed for the U.S. Air Force’s tanker contract. Having an assembly plant in Alabama would allow the company to offer U.S.-made jets to domestic airlines looking to upgrade their aging narrowbody fleets. It would also allow Airbus to establish an A320 maintenance base in the North American narrowbody market that is dominated by Boeing.

    So if Airbus does set up shop in the U.S., will Boeing respond by opening assembly plants in other nations? Probably not, at least anytime soon. Boeing’s globalization strategy has focused on establishing partnerships with foreign suppliers: the 787 sports wings and a forward fuselage from Japan, a center fuselage from Italy, and landing gear from France and the U.K. It may say “Made in the USA,” but the cutting-edge aircraft has fewer American components than the Airbus A380. That jet is made in Europe -- at least for now.

    Tags: fia12, tw99

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