The strongly sourced reports that Airbus will set up a final assembly line for its new engine option or A320 NEO line in Mobile, Alabama will test the prejudices of labor organisations and xenophobes in both America and Europe.
But this is, like similar initiatives by Boeing, and the Airbus A320 assembly facility that opened at Tianjin, China, in 2009, not quite what many headlines are likely to claim it is in terms of jobs or technology transfers.
This is because the words ‘final assembly‘ tend to be ignored. The more A320s or any other Airbus designs get finally assembled outside Europe, the more of the components have to be built in Europe, where most of the value, and work, resides.
The argument, often made in the past by various aerospace companies, is that the sending of components to places of external final assembly adds far more to the industrial economy of the place of origin than it does to the outside facility.
This is because it grows or satisfies the demand for the finished product more than could ever be achieved in the country of origin, where in terms of A320s and their Boeing 737 competitors, demand is well and truly in excess of supply.
Neither Airbus or Boeing can build single aisle passengers jets fast enough for the emerging demand from Asia, China in particular, and increasingly, in Africa and the ‘other’ Americas.
This ultimately puts Airbus and Boeing at risk from the rise of new airliner enterprises, with fitful signs of this from COMAC (China) as well as Bombardier (Canada) and Embraer (Brazil) and less well defined entities in Russia, India and Israel which, like the western world giants, look to military as well as civil opportunities.
Airbus and Boeing are acutely aware of this, although sometimes their plans go wrong, as proved to be the case with outsourcing the design function, and in fact the capital raising function, through risk and reward sharing deals with partners in the 787 Dreamliner project and the wing of the 747-8, neither of which are likely to be ever, ever, attempted the same way in future designs. Ever. Did I say ‘ever.’
The main differences between the Airbus and Boeing practices with outsourcing today involve exposures to risk. The Airbus approach is to build as much of the finished product in Europe and where a commercial advantage presents itself, assemble them abroad. The Boeing approach, so far, has been to build as much of the final product aboard as possible, especially if it can raise capital through risk/reward sharing, and then bring it all together in the US.
This globalisation of the aerospace industry, by differing routes, involves ‘anomalous’ arrangements that don’t fit easily into the somewhat simple minded Boeing v Airbus fan boy arguments. The engines on 737s are made by a French-American monopoly supplier, and every composite rear pressure bulkhead on a 787 is made in Augsberg, Germany, by a subsidiary of EADS, the owner of Airbus, using technology developed by Airbus. The American component of Airbus A380s has at times been quoted at around 40% by value, depending on engine and avionics supplier choice, and the Asia component of Dreamliners put at close to that, although distrust of glib claims of such magnitude by either airliner maker is strongly advised, since the variables of currency and material costs will pull the reality all over the shop over time.
As the AlabamaBus source stories point out, Airbus is likely to sell more A320NEOs to US carriers by having them physically put together and rolled out of factory hangar doors in the US of A.
But Boeing is just as likely to have such a success on its hands with a well timed 777-X series, already under study for entry into service before 2020, that there would have to be a good argument for a final assembly line for them in China, or a European port with similar logistics advantages to Mobile, as is possible near Marseille, or other locations with access to deep water and rail freight services.
Unthinkable? Not any more. Both Airbus and Boeing have to live in a world where their major customers are no longer in their own countries of origin.
They will lose their duopoly. What they are doing is managing that process to make it as slow as possible.