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Story: "Airbus May Move Production To US..."  
User currently offlineWestWing From United States of America, joined Feb 2005, 2134 posts, RR: 7
Posted (6 years 9 months 3 weeks 1 day 4 hours ago) and read 9447 times:

Yes, it is one of those perfect attention grabbing headlines, not from the Weekly World News, but from the Guardian no less. The fine print is that if Airbus wins the USAF tanker contract then they may consider setting up a co-located production line for civilian aircraft in Mobile, AL because of the soaring Euro exchange rate. Good luck getting that one past the European Worker Unions.

[Edited 2007-12-03 22:02:45]


The best time to plant a tree is 40 years ago. The second best time is today.
29 replies: All unread, showing first 25:
 
User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 1, posted (6 years 9 months 3 weeks 1 day 4 hours ago) and read 9397 times:



Quoting WestWing (Thread starter):
Good luck getting that one past the European Worker Unions.

If European union bosses don't like having some jobs in Europe, then Airbus can set up all production outside Europe. There are many countries where people would be thankful to have jobs, rather than trying to suck the blood out of the goose that lays the golden eggs.


User currently offlineTrex8 From United States of America, joined Nov 2002, 4769 posts, RR: 14
Reply 2, posted (6 years 9 months 3 weeks 1 day 4 hours ago) and read 9319 times:
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a A332F line in the US if they win the KCX has been mentioned for quite a while even before the $ depreciation. MB and BMW have managed to start factories in the US with no major union recrimination, why not Airbus.

User currently offlineGBan From , joined Dec 1969, posts, RR:
Reply 3, posted (6 years 9 months 3 weeks 1 day 3 hours ago) and read 9238 times:



Quoting WestWing (Thread starter):
Good luck getting that one past the European Worker Unions.

The Unions won't have to say much as long as they don't close manufacturing sites in Europe.


User currently offlineLufthansa From Christmas Island, joined May 1999, 3213 posts, RR: 10
Reply 4, posted (6 years 9 months 3 weeks 1 day 3 hours ago) and read 9202 times:

Actually when you think about it, it would be a great way for Airbus to hedge its bets bothways.

Falling dollar = increased american production.
Rising dollar/falling euro (if that ever happens in a big way... could be a long time waiting) = Increased euro production.

Obviously they can't dublicate their operations, but it could work something like this. At times of week dollar/strong euro, push say 330 sales (assuming they set up a 330 line in the USA. prob make more sense to set up a narrowbody but their is a gov order to so that changes the equation). And vice versa when european production has the advantage. Also gives airbus managment more power to bargin with the unions, as They will have alternatives for future projects. I can see long term merit in this idea.

And it appears Russia wouldn't mind a bit of airbus action too... could be options there as well.


User currently offlineCloudyapple From Hong Kong, joined Jul 2005, 2454 posts, RR: 9
Reply 5, posted (6 years 9 months 3 weeks 1 day 3 hours ago) and read 9175 times:

They are NOT moving production to the US. They are CONSIDERING building a additional line OUTSIDE OF EUROPE. The US is only one of the choices.

The thread title is very misleading.



A310/A319/20/21/A332/3/A343/6/A388/B732/5/7/8/B742/S/4/B752/B763/B772/3/W/E145/J41/MD11/83/90
User currently offlineLTBEWR From United States of America, joined Jan 2004, 13115 posts, RR: 12
Reply 6, posted (6 years 9 months 3 weeks 1 day 3 hours ago) and read 9107 times:

Airbus will NEVER get the KCS tanker contract due to massive political pressure, even if Boeing is the only qualified company and at a higher price. Still, it would be worthwhile for Airbus to expand their USA facilities to refit and do major MX on used a/c and finish as to some components, like interiors, of new aircraft to lower production costs and get more contracts from customers in the Americas.

User currently offlineRevelation From United States of America, joined Feb 2005, 12561 posts, RR: 25
Reply 7, posted (6 years 9 months 3 weeks 17 hours ago) and read 8585 times:



Quoting Cloudyapple (Reply 5):
The thread title is very misleading.

I suppose it is, but don't blame the OP, that's the title the Guardian used.

Quoting WestWing (Thread starter):
Good luck getting that one past the European Worker Unions.

The unions aren't the target (at least the direct target) of this article, the "EU finance chiefs" are:

Quote:
Issuing a "wake-up call" to Europe, Louis Gallois, chief executive of EADS, Airbus's parent company, warned that the continent's "industrial substance" was leaving. "A part of the European aeronautical and space industry is threatened by the evolution of the dollar and I think this is a problem with a political dimension."

The rest of the article mentions:

  • Gallois's comments echo those of Tom Enders, Airbus chief executive, last month that the dollar's weakness was "life-threatening" for the plane maker.
  • Charles Edelstenne, head of the French plane maker Dassault, said he would relocate production overseas.
  • Gallois said that Airbus would have to take out more costs, including jobs, on top of the EUR 2bn savings and 10,000 job cuts because its Power8 restructuring plan is based on a $1.35 exchange rate.
  • Gallois said that Airbus would be forced to build aircraft components - doors, parts of the fuselage, wing elements - outside Europe over the coming decade


Some pretty strong statements there.



Inspiration, move me brightly!
User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 8, posted (6 years 9 months 3 weeks 17 hours ago) and read 8513 times:



Quoting Trex8 (Reply 2):
a A332F line in the US if they win the KCX has been mentioned for quite a while even before the $ depreciation. MB and BMW have managed to start factories in the US with no major union recrimination, why not Airbus.

But those factories were built in the US to sell to US customers buying in strong dollars utilizing parts from Europe. What happens when the parts production moves to the US and the plants are used increasingly to export out of the US?

Quoting Revelation (Reply 7):
Gallois said that Airbus would be forced to build aircraft components - doors, parts of the fuselage, wing elements - outside Europe over the coming decade

They have already been building components outside of Europe. But many of those deals have been offset type deals to win business primarily, like the door deal with HAL of India.

Quoting LTBEWR (Reply 6):
Airbus will NEVER get the KCS tanker contract due to massive political pressure, even if Boeing is the only qualified company and at a higher price. Still, it would be worthwhile for Airbus to expand their USA facilities to refit and do major MX on used a/c and finish as to some components, like interiors, of new aircraft to lower production costs and get more contracts from customers in the Americas.

If they spread the wealth beyond Alabama and Mississippi by transferring more parts production for commercial aircraft who knows.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineViasaMSY From United States of America, joined Dec 2004, 91 posts, RR: 0
Reply 9, posted (6 years 9 months 3 weeks 15 hours ago) and read 8204 times:

There is already a billboard outside Mobile AL on I-10 (Interstate 10) West that says something like:
"Mobile Future Home of the KCX"



Rebuild New Orleans!!!
User currently offlineEaa3 From United States of America, joined Sep 2007, 1015 posts, RR: 0
Reply 10, posted (6 years 9 months 3 weeks 15 hours ago) and read 7983 times:



Quoting Atmx2000 (Reply 8):

But those factories were built in the US to sell to US customers buying in strong dollars utilizing parts from Europe. What happens when the parts production moves to the US and the plants are used increasingly to export out of the US?

The point is that all the aircraft Airbus sells are priced in dollars so if Airbus can have more of the cost of building the aircraft in dollars then they are less vulnerable to fluctuations in the dollar/euro exchange rate. Having factories in the US allows them to do this.


User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 11, posted (6 years 9 months 3 weeks 12 hours ago) and read 6546 times:



Quoting Eaa3 (Reply 10):

The point is that all the aircraft Airbus sells are priced in dollars so if Airbus can have more of the cost of building the aircraft in dollars then they are less vulnerable to fluctuations in the dollar/euro exchange rate. Having factories in the US allows them to do this.


My response was regarding union complaints about shipping jobs overseas. When those BMW and MB plants were built they were more focussed on satisfying the US market. With the fall in the dollar, those plants become more attractive for producing cars intended for the world market, given profits from the US market will be less once converted into Euros if prices are held steady to maintain marketshare. Higher profits can be possibly be had in the global market.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineTrex8 From United States of America, joined Nov 2002, 4769 posts, RR: 14
Reply 12, posted (6 years 9 months 3 weeks 12 hours ago) and read 6312 times:
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Quoting Atmx2000 (Reply 8):
But those factories were built in the US to sell to US customers buying in strong dollars utilizing parts from Europe. What happens when the parts production moves to the US and the plants are used increasingly to export out of the US?

IIRC the US lines are the only production lines for the M class for MB and the X5 and Z4 for BMW so a fair part of the production must be exported and the reason to put the lines in the US was not just that the US may be the largest market but lower cost non union labor.


User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 13, posted (6 years 9 months 3 weeks 12 hours ago) and read 6277 times:

Quoting Atmx2000 (Reply 11):
When those BMW and MB plants were built they were more focussed on satisfying the US market.

BW has an article out that says that Volkswagons considering setting up a plant in the U.S., or another in Mexico.
http://www.businessweek.com/globalbi...lbiz_europe+index+page_top+stories

Quote:
The euro's seemingly inexorable drive toward the $1.50 mark may have slowed down for now, but companies in Europe seem to have sped up their search for strategies in dealing with the newly weak dollar. European jet-maker Airbus and auto manufacturer Volkswagen both have decided on a solution: The two companies are actively looking into building factories in the United States.

IMO, running on about an Airbus assembly plant in the Mobile as a quid-pro-quo for the tanker will just make them look foolish when economic conditions force them to do it for real --even if/when they lose to the KC-767 (no, I will not re-hash my arguments on the zillion USAF tanker threads from Mil-Av!). This could have been communicated privately and they could have spared themselves the potential embarrassment. Unfortunately, this gambit is a little late coming to the table. It either makes economic sense to manufacture here, or it doesn't. All the "we could" or "maybe's" in the world aren't enough to overcome the political opposition in the U.S. congress to this "French" tanker (that is the way EADS' detractors are painting it!)--regardless of what the USAF actually wants. Last time I checked, the USAF does NOT appropriate funds for the neat toys they want to buy. Also, I referenced a Reuters article on the latest tanker thread in Mil-Av in which the Secretary of the Air Force said no split purchase. Advantage Boeing on this one.

[Edited 2007-12-04 14:51:41]


"When all is said and done, more will be said than done".
User currently offlineStitch From United States of America, joined Jul 2005, 30993 posts, RR: 86
Reply 14, posted (6 years 9 months 3 weeks 11 hours ago) and read 6117 times:
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One group of analysts feel that Northup-Grumman might become the second US commercial airline manufacturer, building not just the A330 but also the A320RS for Airbus in Mobile.

User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 15, posted (6 years 9 months 3 weeks 11 hours ago) and read 6073 times:



Quoting Stitch (Reply 14):
One group of analysts feel that Northup-Grumman might become the second US commercial airline manufacturer, building not just the A330 but also the A320RS for Airbus in Mobile.

IMO, that would be a great thing for EADS and whoever they partner with. If it makes sense to source in the U.S., do it! Don't make it conditional on something in which they face long odds.

Since you mention the A320RS...I started a thread awhile back that proposed a Boeing and Lockheed-Martin joint venture for the 737RS. It was universally dismissed as not in Boeing's interest, or Lockheed Martin isn't interested in commercial aircraft anymore. What about an Airbus-LockMart JV?



"When all is said and done, more will be said than done".
User currently offlineWsp From Germany, joined May 2007, 458 posts, RR: 0
Reply 16, posted (6 years 9 months 3 weeks 11 hours ago) and read 5983 times:

The low USD problem is only a temporary issue unless the US population is willing to lower its living standards over the long term, which I doubt. The Asian exporters that sell in USD are already starting to raise prices because the money they are being paid is loosing in value quickly vis-a-vis raw materials and non-US imports. Imported goods and goods that have a large raw material and energy cost component will become more expensive on the domestic US market and will as a result raise labor costs or lower living standards.

Overall I can't see the benefit of setting up shop in the US where labor costs merely seem low due to exchange rate magic when you can instead set up shop in developing economies where low labor costs are structural.


User currently offlineDougloid From , joined Dec 1969, posts, RR:
Reply 17, posted (6 years 9 months 3 weeks 11 hours ago) and read 5930 times:



Quoting Wsp (Reply 16):
Overall I can't see the benefit of setting up shop in the US where labor costs merely seem low due to exchange rate magic when you can instead set up shop in developing economies where low labor costs are structural.

Europe's more expensiver every way you slice it. If you take one dollar and buy a standard basket of goods and services in the US, that same dollar's worth of value (tranlated into euros of course) will only get you 80 cents worth of goods and services.

So that's about a 20 per cent differential right there that's not going away.

When you get around that, our cost of labor is generally lower and we work harder for longer hours.

Airbus will build aircraft in this country when pigs fly. They simply won't do it, because politically speaking it goes against everything they stand for.


User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 18, posted (6 years 9 months 3 weeks 11 hours ago) and read 5846 times:

Quoting Dougloid (Reply 17):
Airbus will build aircraft in this country when pigs fly. They simply won't do it, because politically speaking it goes against everything they stand for.

This is probably the primary reason that the "we-will-build-it-there-if-you-buy-it" rings hollow. EADS would face extraordinary political opposition and possibly incite their (until now) fairly docile labor force if they seriously contemplated setting up production here. This could actually force their labor force into a response beyond the dreaded one day...ahem..."strike".

Nonetheless, they need to do something to offset the euro, not only against the dollar. Where to outsource that 50% of the A350? Russia? China? India? There's talk in the media today about 5% in Japan (in addition to last week's 5% in China) Clearly, EADS is not forecasting a lot of job growth in Western Europe.

[Edited 2007-12-04 15:42:01]


"When all is said and done, more will be said than done".
User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 19, posted (6 years 9 months 3 weeks 10 hours ago) and read 5690 times:



Quoting Wsp (Reply 16):
The low USD problem is only a temporary issue unless the US population is willing to lower its living standards over the long term, which I doubt. The Asian exporters that sell in USD are already starting to raise prices because the money they are being paid is loosing in value quickly vis-a-vis raw materials and non-US imports.

They will have to do that but many will lose marketshare in the process and see the reemergence of competition from US manufacturing that was squeezed financially by the strong dollar.

Quoting Wsp (Reply 16):
Imported goods and goods that have a large raw material and energy cost component will become more expensive on the domestic US market and will as a result raise labor costs or lower living standards.

This is unavoidable.

Quoting Wsp (Reply 16):
Overall I can't see the benefit of setting up shop in the US where labor costs merely seem low due to exchange rate magic when you can instead set up shop in developing economies where low labor costs are structural.

But are they? After all most Asian currencies are down compared to where they were in the early 90s. This has to do with trying to seek competitive advantage and trying to export their way out of poverty. Even at those old exchange rates, they had significantly lower labor costs, but they weren't that competitive. And one has to remember that setting up shop in a developing economy to try and export is harder when the profit margin is being squeezed due to currency exchange rate changes, high inflation stemming from rapid growth, and high transportation costs stemming from high fuel prices.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineDougloid From , joined Dec 1969, posts, RR:
Reply 20, posted (6 years 9 months 3 weeks 10 hours ago) and read 5418 times:



Quoting Atmx2000 (Reply 19):
They will have to do that but many will lose marketshare in the process and see the reemergence of competition from US manufacturing that was squeezed financially by the strong dollar.

Quoting Wsp (Reply 16):
Imported goods and goods that have a large raw material and energy cost component will become more expensive on the domestic US market and will as a result raise labor costs or lower living standards.

This is unavoidable.

Quoting Wsp (Reply 16):
Overall I can't see the benefit of setting up shop in the US where labor costs merely seem low due to exchange rate magic when you can instead set up shop in developing economies where low labor costs are structural.

But are they? After all most Asian currencies are down compared to where they were in the early 90s.

Look, if the people who run Airbus had a lick of sense, they'd have been doing what Honda, Toyota, Subaru, Hyundai, Kawasaki et al have been doing in the US the last 20 years, coining money.

But noooooooooo. So whose fault is it if they failed utterly in their assigned task of reading the tea leaves? Why, it's the fault of the hated yanqui dollar.


 crazy   crazy   crazy 


User currently offlineStitch From United States of America, joined Jul 2005, 30993 posts, RR: 86
Reply 21, posted (6 years 9 months 3 weeks 9 hours ago) and read 5164 times:
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Are all Airbus assembly and engineering workers unionized? Or are we just assuming they are because it's aerospace and/or Europe?

I know they are at Boeing (for the most part), but as a percentage of the total workforce (and when adjusted for population), France has half the union workers the US does - about 7% vs. 15%.


User currently offlineSeafleet From United States of America, joined Aug 2005, 110 posts, RR: 0
Reply 22, posted (6 years 9 months 3 weeks 7 hours ago) and read 4313 times:

Ok let me say I am a Brit by birth and moved to the USA four years ago.
Why does the Guardian get all the credibility??
It is as politically motivated as any other UK newspaper but linked to a political minority [The Liberals].
I can see the political game here in that Airbus wants the USAF tanker deal and I hope they get it but I dont think they will purely because of politics.
I am not going to waste time arguing the merits of the 330 against the 767 it is a total waste of time because George W could not allow it as a matter of personal pride.
Why do I feel I can comment well I Pay US federal taxes so that entitles me IMO.
The USA would be foolish not to do the deal with Airbus if it meant some production came to the USA as it would make a change from Boeing and many other large US industries [the toy industry being a prime axample] who have shipped the production out of the USA.
What really worries me as a 61 year old is the reality of total loss of production of essential goods within the USA I saw it happen in the UK and it really isnt pretty.
I will finish by saying USA grab all the production jobs you can get instead of giving them away free to china and other far eastern countries because once they get control of most of the major industrial production of US consumed goods the USA economy will be cripled..
Roger


User currently offlineFlighty From United States of America, joined Apr 2007, 8542 posts, RR: 2
Reply 23, posted (6 years 9 months 3 weeks 6 hours ago) and read 4104 times:



Quoting Wsp (Reply 16):
Overall I can't see the benefit of setting up shop in the US where labor costs merely seem low due to exchange rate magic when you can instead set up shop in developing economies where low labor costs are structural

They're pegged to the US dollar, so it's hard to read that much into Chinese wages. Of course they will be low, but beyond that, they are kept artificially cheap by a low peg to the US Dollar.

The US's wages have declined mostly because they are denominated in a currency that had to decline. Aviation engineers and assembly workers should make about the same money in either Europe or the USA. Naturally, the Euro side wages will now fall, and the US's perhaps rise, until they are about equal again.

This can be accomplished by laying off workers in France (or not hiring any more), and hiring workers in the USA at a generous high wage. But why the South, some ask?

South Carolina (home of the BMW factory near GSP) is known as a state extremely harsh to unions (municipal unions cannot strike, and the state cannot collectively bargain with unions, under state law). Guess why these states are getting all the attention from European manufacturing firms? These are right-to-work states with no closed union shops. Ain't that a sight for sore European eyes! Benz, BMW, Airbus all love it.


User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 24, posted (6 years 9 months 3 weeks 3 hours ago) and read 3645 times:



Quoting Flighty (Reply 23):
The US's wages have declined mostly because they are denominated in a currency that had to decline. Aviation engineers and assembly workers should make about the same money in either Europe or the USA. Naturally, the Euro side wages will now fall, and the US's perhaps rise, until they are about equal again.

Does anyone have actual numbers to compare? Hard to get a comparison also when purchasing power is still higher in the US.

Quoting Flighty (Reply 23):
They're pegged to the US dollar, so it's hard to read that much into Chinese wages. Of course they will be low, but beyond that, they are kept artificially cheap by a low peg to the US Dollar.

The gains in productivity should have translated to an ascent of the Chinese currency well above where it was when they devalued the currency in 1994.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
25 Post contains images Worldrider : again, the USAF tanker "possible" contract for the evil Airbus is the biggest LIE in the industrie!!! although the exchange rate should stay a bit to
26 Revelation : The A380 does fly! That might be a bit harsh, but it does look like a pig on the ground. Looks much nicer in the air, and the -900 should look even b
27 MSYtristar : Well, that airfield in Mobile right off of I-10 has been used by Teledyne Aircraft Corporation for many years (now under a diff. name I think) for ai
28 Stitch : AL is also a Right-to-Work state, so that could help.
29 Wsp : I was comparing the US with developing economies. Not sure why you bring up a US-Europe comparison or how that relates to what I said. I doubt that.
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