Mobile: Newcomer to trendsetter


Mobile is the newest center for jetliner assembly, but now it’s on the threshold of
becoming the only hub where jetliners from two companies are built....

David Tortorano
April 2018

If everything goes as planned and Mobile becomes the site where Bombardier
CSeries jetliners are assembled, the Alabama city will have a unique claim: It will be
the only place in the nation building jetliners for two companies.

The two planes, one built by Airbus the other by Bombardier, are in the popular
single-aisle market segment, ensuring workers at the two assembly lines will have
work for years to come.

This good fortune for Mobile started developing in 2015, when Airbus and
Bombardier first began discussions, according to officials from the two companies.

“Finally, in 2017, all the stars aligned,” said Alain Bellemare, president and CEO of
Canada’s Bombardier. The result was the stunning announcement in October 2017
between the two jet makers: Mobile would become the home of a second assembly
line, this one for Bombardier.

The transaction, where Airbus gets a majority stake in the Bombardier CSeries
jetliners, is not expected to be finalized until the second half of this year.

“When we conceived this partnership with Bombardier, there was no question in our
mind that the final assembly of the CSeries aircraft would occur in Mobile,” said Allan
McArtor, chairman of Airbus Americas. “This is our industrial home; this is where we’
ve come to grow.”

It could be argued that the genesis of all this goes back even further. Airbus and
Boeing have been battling for 15 years now over government subsidies. Both sides
filed cases with the World Trade Organization; Boeing and the U.S. in 2004 and
Airbus and the European Union nine months later. Each accuses the other of taking
subsidies.

Boeing, which cites government funding for Airbus, has been on the winning end of
its case. Airbus, which cites incentives provided to Boeing, has been winning its case.
Both have appealed rulings against them, and rulings on those appeals won’t be
made until later this year and into next year.

If each side ultimately wins its case, the next steps will be negotiations or the
imposition of tariffs.

But as those cases made their way in court, a new front opened up when Boeing set
its sights on the Bombardier CSeries, an all-new jet designed from the ground up that
required a huge investment to develop.

Boeing in its complaint said it was forced to discount its 737 to compete with
Bombardier. It said Bombardier used government subsidies to dump the CSeries
during the 2016 sale of 75 jets at “absurdly low” prices to Atlanta-based Delta Air
Lines.

That was followed by the U.S. Commerce Department recommending slapping a
nearly 300 percent duty on the sale of the 110- to 130-seat CSeries jets for five
years.

But before the U.S. International Trade Commission ruled on the complaint, Airbus
and Bombardier stunned the aviation world with the October 2017 announcement
that Airbus would get a majority share of the C Series Aircraft Limited Partnership
(CSALP), the entity that manufactures and sells the CSeries.

Under the arrangement, the planes would be built in Mobile and Quebec. Airbus will
provide procurement, sales, marketing and customer support.

Building the jetliners in Alabama would make the planes no longer subject to import
taxes, according to the partners. But Boeing disagreed.

Days before the ITC was expected to rule, Rep. Bradley Byrne, R-Ala., and Sen.
Jerry Moran, R-Kan., wrote to the head of the commission to express support for
Bombardier in the trade dispute with Boeing.

“This trade enforcement action would ultimately serve no other purpose than to take
work away from U.S. suppliers and quash thousands of U.S. jobs, ultimately hurting
the greater U.S. aerospace industry,” wrote Byrne to ITC chair Rhonda K.
Schmidtlein.

Bombardier called the case self-serving after Boeing revealed on Dec. 21 that it was
discussing a “potential combination” with Brazil’s Embraer, which builds the E190-E2,
about the same size as the Bombardier CS100.

In late January 2018, a decision was announced by the ITC that surprised everyone.
The ITC in a unanimous 4-0 ruling sided with Bombardier, noting Bombardier’s prices
did not harm Boeing. The ruling allows the Canadian company to sell its newest jets
to U.S. airlines without heavy duties.

Speaking in Montreal, Airbus Chief Executive Tom Enders said the unexpected win
was a victory for “sober business” and the plans for Alabama would “go ahead full
throttle.”

In February, Airbus and Bombardier invited the local media to take a look at a
CSeries jetliner like the ones that will be built at the Mobile Aeroplex .

The CSeries will be assembled in a separate hangar to the north and parallel to the
hangar where Airbus is building A320 series jetliners. The plan is to eventually build
four CSeries jets per month in Mobile.

Like the Airbus operation, major sections will be shipped to Mobile from other
locations, chiefly from Europe. The engines are built by Pratt & Whitney, and the
podding work may be done by UTC in Foley, where A320 podding is done.

While a lot of details are still being worked out, Bombardier will use the Airbus
delivery center, which will be expanded.

“When you take the global reach of Airbus, the sales and marketing capabilities, the
product support, customer service and the supply chain leverage that Airbus has and
combine it with the technologically sophisticated C-Series airplane, it is a formidable
single-aisle portfolio,” said McArtor.

“It will give us a leg-up, quite frankly in dealing with not just U.S. carriers but airlines
around the world to be able to combine the capabilities on the lower end of the
spectrum, the 100-150 seat of the CSeries and the larger single-aisle product of the
A320 and A321. It gives us a significant competitive advantage,” he said.

While Bombardier did win the case against Boeing, it still makes sense to the
company to open up another assembly line. Building the CSeries in Mobile as well as
Quebec will allow Bombardier to meet the expected demand. Alain Bellemare,
president and CEO of Bombardier, said there will be a need for 6,000 of the CSeries
jetliners over the next 20 years.

Bellemare also pointed out that more than 50 percent of the plane's content is U.S.-
produced. Officials said they expect more suppliers might now commit to setting up
an operation in Mobile or the surrounding region with the arrival of Bombardier.

In addition to the 400 additional jobs brought by Bombardier, Airbus will add as many
as 200 jobs if it increases A320 production from four jets a month to six.

What’s happening in Mobile can’t help but grab the attention of nearby economic
development officials. In Pensacola, Fla., which has not yet landed any Airbus
supplier, Rick Byars, economic development chief for Gulf Power, said the increase
in production offers opportunities.

“I think Northwest Florida will continue to be very important as Airbus looks to bring
the CSeries Bombardier jet to Mobile for final assembly as well as when they build out
the A320 line and increase the monthly production.”

He said the expansions “creates a need for suppliers to be closer because the
volume become much greater … I believe our location is ideal to support that
investment.”

Byars thinks the expansions increases the chances large components made
overseas might be made here.

“What makes sense is a focus on large structures, large components that are
currently not produced here. I’m talking about wings, I’m talking about fuselages.
That would be ideal to source those here in Northwest Florida or the Southeast,
close to the Airbus and Bombardier final assembly line.”

Neither company sees the CSeries as competition for the current lineup of Airbus
single-aisle passenger jets. As officials put it, they are in different segments of the
market and airlines will buy planes in a size to fit a particular route.

---
Underwritten in part by:
Aerospace NEWSLETTER