The European airplane manufacturer Airbus Group opened its first U.S. plant Monday in the Gulf Coast city of Mobile, Alabama, as part of its effort to be closer to American carriers and to snatch business from its main rival Boeing. The $600 million site will be a final assembly destination primarily for the A321, Airbus’s largest single-aisle jet.
State officials are heralding the European aerospace giant’s move to plant its manufacturing flag in the state as a major success, albeit a costly one.
Airbus’s decision to locate in Alabama came with promises from elected officials of more than $158 million in state and local investment, which includes tax breaks and a subsidy for the construction of the facility. The Mobile assembly line will be Airbus’ second manufacturing site outside of Europe, following one in Tianjin, China.
Critics of deals like the one Alabama offered to get Airbus say they are a poor use of taxpayer money, while others contend the subsidies have long-term economic benefits.
"You have to view it in the long term," Mobile County Commissioner Jerry Carl told the statewide online news site Al.com. "If you look at it from the short term, it just doesn't work.”
Airbus, which already maintains an engineering center in Mobile, says the first planes will roll out of the 116-acre Brookley Aeroplex site in 2016. Airbus’ decision to open up in Boeing’s home turf is part of its bigger push to grab as many of the 30,000 new commercial aircraft the world will need through 2033, according to Boeing.
Alabama state officials estimate that Airbus’s expanded presence in Mobile, a major Southern port city of about 200,000, will contribute about $409 million to the state’s $200 billion gross domestic product, will create 1,000 high-paying jobs by 2018 and will lure Airbus suppliers to the area as well.
The $158.5 million incentive package is among the largest given by states to attract major corporations to set up local operations. According to Good Jobs First, which tracks state government incentives, the Alabama-Airbus deal is the state’s seventh-largest taxpayer-funded incentive package.
Since 1993, Alabama has doled out nearly $3.6 billion in subsidies in deals worth more than $50 million apiece. Boeing, which is by far the largest recipient of state subsidies nationwide, received a $150 million from Alabama for rocket production in the city of Decatur.
Global automakers Honda, Daimler (maker of Mercedes Benz) and Hyundai have received a combined $630.6 million in state and local government subsidies to open up car factories in the state.