Airbus (AIR: EURONEXT) broke ground for its new A220 manufacturing facility in Mobile, Alabama on Wednesday. The newest airliner in Airbus’ product line, the A220 is designed to revolutionize the market for 100-150 seat aircraft. Production is expected to begin in the third quarter of this year with deliveries to airlines commencing in 2020.
Reuters reported that Airbus will invest $300 million in the new facility, which will create 400 jobs. Its location in Mobile will be alongside Airbus’ current assembly line for the A320 commercial airliner. The plant already employs 700.
Airbus Mobile opened its final assembly plant at the Mobile Aeroplex, a combination of the city’s airport and manufacturing center, in 2015. Mobile’s status as a port city on the U.S. Gulf Coast is strategic for Airbus’ logistical operations. Maritime shipments including both large components (fuelselage, wings, and tail) and small parts are shipped from Hamburg to Mobile.
Airbus announced it has 500 orders already for the A220 and expects the new airplane to win a large portion of the 7,000 small-sized aircraft demand by major airlines over the next 20 years.
The aviation community is excited for the arrival of Airbus into the U.S. market. Delta Air Lines (DAL: NYSE) increased its orders for the A220 sixfold (from 15 to 90 aircraft), expecting to take first delivery in 2020. Other U.S. airlines that have ordered A220s include JetBlue (JBLU: NASDAQ), Moxy, and Republic Airways (RJET: NASDAQ).
The economic impact of the Airbus investment in Alabama has the potential to greatly benefit the region.
“Any time an aircraft manufacturer that size makes an investment in a community it creates a lot of jobs and opens the world to that community,” said Millie Hernandez-Becker, President of Skyqueen Enterprises, a New York-based aviation business development firm. “All of the ancillary businesses will be positively impacted by this. The FAA forecast states that aviation is a growth industry. It’s a positive thing for any community to have Airbus or Boeing.”
But not all industry participants are enthusiastic about the launch of the A220. Boeing (BA: NYSE) previously filed a complaint with the U.S. Department of Commerce against Bombardier (BBD: TSX) in regard to selling the C-Series (the original classification of the A220) in the U.S., citing tactics used by Bombardier. Some experts consider what Bombardier did as “dumping,” and they also cited the numerous subsidies provided to Bombardier by the Government of Canada. The complaint led the U.S. International Trade Commission (ITC) to levy a 300 percent tariff on the C-Series in 2017.
However, the ITC surprisingly changed course by voting to discard the tariff in January 2018, stating that Bombardier’s marketing of the C-Series did not diminish Boeing’s sales or revenue.
“The United States is one of the largest markets for us and this [Mobile] is our largest industrial base in the U.S. We have the skills and employees and it is the logical thing to do,” Airbus Americas CEO Jeff Knittel told Reuters.