The new plant will build A320 passenger jets, which compete head-to-head with Boeing's 737.
MOBILE, Ala.—European aerospace giant Airbus will build its first airplane factory in the U.S. in a bid to better compete against archrival Boeing.
Projected to start up in 2015, the $600-million factory in Mobile, Ala. will employ up to 1,000 people when it reaches full production in 2017.
Alabama offered the company $158 million in incentives such as road improvements and worker training.
Airbus hopes the plant will lower costs and improve its chances of winning business from the U.S. military. Last year, Boeing beat out Airbus’ parent for a major Air Force contract.
The new plant will build A320 passenger jets, which compete head-to-head with Boeing’s 737. These are widely-used planes generally flown on regional trips carrying less than 150 passengers.
North America is the biggest single market for that type of plane, Airbus executives said, and they want more of it. Boeing has an advantage, with Southwest and Alaska Airlines buying only 737s. Current A320 customers include US Airways and Frontier Airlines. American Airlines handed Airbus a victory when it ordered 260 of the planes last year.
Airbus, based in Toulouse, France, cranks out more than 400 of those jets a year, more than any of its other planes.
Labour costs are likely to be lower in Alabama, where union organizing is more difficult than in Europe or in other U.S. states.
Building in the U.S. helps Airbus cut foreign-exchange costs, as well. Most A320s are built in Europe, so costs are in Euros but, because most aviation lending happens in dollars, the planes are sold in dollars.
Alabama has been pursuing Airbus for several years, as it threw its weight behind the EADS effort to build the Air Force tanker.
Airbus parent European Aeronautic Defence and Space Co. planned to build a new U.S. Air Force refuelling tanker in Alabama, but lost the bid to Boeing last year.
Unemployment in the state is 7.4 per cent, so the Airbus announcement was welcome news.
Mobile is already home to several aerospace companies, including ST Aerospace Mobile, Goodrich Aerospace and Star Aviation, and much of the business is based at the 1,650-acre Brookley Aeroplex, where the new plant will be based. The aeroplex was an Air Force base until it closed in 1969.
Airbus plans to eventually make four planes per month in Alabama and is speeding up worldwide A320 production to 42 per month.
Airbus said sections of the plane will be built at its other factories and shipped to the port in Mobile, where they will be trucked to the new assembly line. The line itself will be a carbon copy of other Airbus lines, reducing startup expenses, the company said.
Airbus currently employs about 1,000 people in the U.S., including about 230 in Mobile who design and install seats and cabin equipment for its big planes.
Associated Press writers Phillip Rawls in Montgomery, Angela Charlton in Paris and Joshua Freed in Minneapolis contributed to this report.