More Growth for South Alabama

At last Brookley Field in Mobile is getting something worthwhile.

With the Thyssen-Krupp steel mill headed for the Mobile area, Mobile is soon going to be the hottest ticket in the southland. But there's more! This from German paper Spiegel Online:

According to a report in the Monday edition of the Munich daily Süddeutsche Zeitung, Airbus is looking into building a final assembly plant in Mobile, Alabama. The prerequisite for such a move, the paper reports, is a contract for 180 refueling aircraft the United States Air Force has tendered. Airbus is competing against Boeing for the sale, and a final decision won't be made until the beginning of next year. Airbus is targeting the relatively poor state of Alabama in an effort to win political support for its bid.

Were it to win the contract, Airbus would modify the passenger jet A330 to meet the US military's requirements. The factory would also be able to produce the civilian version of the plane, resulting in massive exchange-rate savings to Airbus. Because the plane-maker sells its products in dollars, a $0.10 change in the exchange rate cuts a €1 billion (nearly $1.5 billion) hole in the Airbus bottom line. Furthermore, the company's Power 8 savings program, announced earlier this year, is based on an exchange rate of $1.35 to the euro.

Recent drops in the dollar's value have led Airbus CEO Thomas Enders to warn that more savings measures may be on the way. On Monday, the euro climbed down further from last week's high of just under $1.50 and was trading at $1.466.

Full text of interview between David Gow of British newspaper The Guardian and representative of Marketplace business publication, David Krizer. This was published earlier this month:

Doug Krizner: European plane maker Airbus is reportedly considering a new factory in Alabama. A weak dollar and a soaring euro are the reasons why.

Let's bring in David Gow from London's Guardian newspaper. David, you describe this as the chief of Airbus issuing a wake-up call for Europe.

David Gow: Those were the words he used. He said that Europe has to wake up to the decline of the dollar and the impact that this has on European industry and manufacturing in particular. That it's going to force companies to outsource or relocate more and more of its production to the dollar zone.

Krizner: Now, is the relationship between the dollar and the euro a life-threatening situation for Airbus, do you think?

Gow: Yes. Because basically, every 10 cents fall in the value of the dollar costs Airbus 1 billion euros, which in American terms is the equivalent of $1.4-$1.5 billion.

Krizner: So you are reporting in your article for the Guardian that Airbus officials are confirming that they are considering a plan to set up this new factory in Alabama. What would they produce there?

Gow: First of all, they would produce, if they win the Pentagon contract for these air-to-air refueling planes, they would build them there. But at the same time, they could also build parts for planes which would be destined for the U.S. airlines.

Krizner: So I want to zero in here. What you're saying, then, is that this entire move toward Alabama is contingent upon Airbus winning the Pentagon contract, or not?

Gow: That's right. There's a huge -- it's one of the biggest lobbying campaigns in aerospace that the military in America you've seen for many, many a year. Supposedly, a decision will be taken early next year.

Krizner: David Gow is business report for The Guardian in London. We've been speaking to him this morning from Brussels. David, thanks so much.

Gow: OK, thank you!