In the article “Airbus New Push: Made in America” the authors explain the issue at hand is Airbus's decision to build a non unionized assembly plant in the home turf of chief rival Boeing.
In an attempt to control costs and gain
market share, Airbus will leverage the tax breaks, job training and
infrastructure improvements provided by state officials. “Airbus official
said the state offered a package of incentives valued at more than $100 million
for the plant in Mobil”. These benefits along with reduced currency
fluctuations will help Airbus increase its market share in the US.
It is important because the political
nature of some industries such as aircraft manufacturing can cause even the
best plans to be derailed. By providing jobs and investment to the residents of
Alabama, Airbus is hoping to win over the local population, thus diffusing any
political opposition to its sales in America. In addition to this, by assembling
in America, this will help with currency fluctuations as jetliners are sold in
Dollars but mostly manufactured with costs in Euros. With the state
offered incentives packages, valued over $100 million USD, the investment will
come in under the initial $600 million USD price tag.
The
implications are that more foreign companies will follow Airbus's lead and
start manufacturing or assembling in the US. By doing so, they can cut
their costs as the work will be done by non unionized workers and currency
fluctuations will be minimized.
More
importantly, the employment and economic benefits from these jobs will reduce
the political pushback that foreign companies may experience.
Reference:
Michaels,
Daniel, Jon Ostrower and David Pearson. "Airbus's New Push: Made in the
U.S.A." Wall Street Journal Jul 03 2012: A.1. The Wall Street
Journal. PROQUESTMS. 8 July 2012 .
This sounds like a great deal for Airbus and to the people that will benefit from the jobs that they will be providing. It will almost certainly help the state of Alabama financially as well.
ReplyDeleteIt would be nice to see more companies follow Airbus's lead in developing industries here in the U.S. Also, competition is always good for business.
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