Most manufacturing companies that serve customers globally ensure that they have manufacturing plants in various parts of the world. The manufacturing plants in foreign locations improve the efficiency of the company’s services in these locations. Manufacturing companies may use the manufacturing plants in foreign locations to counter competition in these locations (Miltenburg, 2005).
Airbus attempts to use this strategy to conquer the lucrative American civil aviation market. The company intends to set up a manufacturing plant in Alabama. Alabama is the home of Boeing, Airbus’ main rival. The plant in Alabama would help in catering for large orders from American customers.
Alabama is the first US site of Airbus. The company has three plants worldwide. Airbus has two plants in Europe and one plant in Asia. The European plants are in Toulouse, France, and Hamburg, Germany. The Asian plant is in Tianjin, China. The American plant will cost approximately $600 million. Upon completion, the plant would create 1,000 jobs. In addition, the plant will create 3,200 jobs during the construction phase (Kaczmarski, 2012).
Airbus intends to use the Alabama plant to build relationships with American clients. By setting up a plant in Alabama, Airbus will increase competition in the civil aviation industry. Boeing will no longer be the only civil aviation manufacturer that has plants in the US. This would reduce the competitive edge of Boeing in the American market (Petrescu & Petrescu, 2012). Therefore, the Alabama plant is critical to Airbus’ success in the American civil aviation industry.
Airbus’ plant in Alabama will help in consolidating Alabama’s position as the aerospace production hub. The state of Alabama also hosts manufacturing plants of other multinational corporations. Vance is the site of the first Daimler plant outside Germany that manufactures Mercedes-Benz cars. Daimler intends to invest $2 billion in the expansion of the plant in Vance (Kaczmarski, 2012).
The Airbus plant in Mobile and the expansion of the Daimler plant in Vance would help in improving the economy of Alabama. According to the Governor of Alabama, the state strives to move away from low-end manufacturing to the manufacture of airplanes, rockets, and ships. Manufacture of airplanes, rockets, and ships would improve the economy of Alabama significantly (Kaczmarski, 2012).
Alabama has several environmental factors that attract manufacturing plants to the state. The Alabama Industrial Development Training program is one of the factors that attract manufacturing plants to the state. The program helps in providing quality workforce to Alabama’s new and existing industries (Tollefson, Garrett & Ingram, 1999).
Therefore, the abundance of highly trained employees creates a good environment for the success of manufacturing plants. The state of Alabama also has a right-to-work law. This law abolishes union security agreements. The law reduces the power of unions. In some instances, the activities of powerful unions may jeopardize the operations of a company (Holley, Jennings & Wolters, 2011).
In addition, Alabama provides various incentives to attract aerospace companies. The ‘Aviation Amendment’ grants tax exemptions to aerospace companies. Only ten other states provide a similar incentive to aerospace companies. These factors help in improving the business environment of Alabama (Kaczmarski, 2012).
Setting a plant in Alabama would improve the competitiveness of Airbus. The company would use the plant to serve large orders of American customers. The Alabama plant would enable Airbus to benefit from the favorable business environment of the state. The plant is critical in Airbus’ effort to counter the market dominance of Boeing.
References
Holley, W.H., Jennings, K.M. & Wolters, R.S. (2011). The labor relations process. Mason, OH: Cengage Learning.
Kaczmarski, M. (2012). Regions: Americas – US – Airbus rolls into Alabama. Foreign Direct Investment, Aug/Sep, 1-2.
Miltenburg, J. (2005). Manufacturing strategy: How to formulate and implement a winning plan. New York: Productivity Press.
Petrescu, F.I. Petrescu, R.V. (2012). New aircraft ii. Norderstedt: Books on Demand.
Tollefson, Garrett, R.L. & Ingram, W.G. (1999). Fifty state systems of community colleges: Mission governance, funding and accountability. Johnson City, TN: The Overmountain Press.