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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

July 3, 2012 at 9:30 AM

Airbus rolls tide in Alabama

Southerners, to generalize, like to tout their superior patriotism compared with socialist, gay-loving, abortion-giving places such as Seattle. But economic development definitely doesn’t stop at the water’s edge. So order some Freedom Fries and welcome Airbus to the Cradle of the Confederacy. Boeing will soon have a rival on American soil making A 320s, the competitor to the 737. Yes, parent EADS wants a foothold for “Made in the USA” defense work backed by a powerful state delegation, and the dollar is a more favorable currency. But Job 1 is to win Boeing customers.

Analyst Scott Hamilton at Leeham Cos. wrote on his blog that “in many respects, Airbus has mouse-trapped Boeing — and there is very little the company can do about it.”

Both companies have big backlogs. According to Hamilton, “with a two year lead by Airbus with the NEO EIS over the Boeing MAX, Airbus’ decision to open a Mobile (final assembly line) gives the company the ability to initially open four slots a month from 2016 and the potential to boost this to eight a month. This gives Airbus a major opening to offer the NEO to 737 and 757 operators who need fuel-savings airplanes long before Boeing can hope to offer them.”

Mobile will hardly become an aerospace cluster to rival the Puget Sound region anytime soon, but the move shows the competition never stops. And while Alabama may tout cheap labor and antipathy to unions, it also is kicking in $158 million in incentives (so much for the “free market” — and “anti-business” Washington gave Boeing $3.2 billion in incentives to land the 787). Alabama lacks the deep aerospace bones and talent magnet of the Seattle area. But don’t forget it also has Huntsville, which the hated federal gub’ment turned into a major defense and space center after World War II, seeded by Wernher von Braun and other former Nazi rocket scientists.

So just because Southerners talk slow doesn’t mean they think slow. I await the commenters who want to outlaw unions here and lower Washington wages to Alabama levels. But that’s not constructive. Even as Southern states accumulate economic coups, the well-being of their populations suffers in many areas. Airbus uses union factories quite effectively in Europe. But, who knows, maybe the race to the Somalia-like bottom is inevitable. In the meantime, we need to focus on leveraging our strengths, not cutting higher education and hope Boeing keeps its act together.

And Don’t Miss: For Mexicans, it was the economy, stupid || NY Times

Today’s Econ Haiku:

Google “major loss”

Ooops, I should have said “Bing” it

Microsoft, GM?

Comments | More in Aerospace/Boeing, Airlines


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