Long before Airbus began seeking a site for its entry in the U.S. marketplace, Allan McArtor had an eye on Mobile’s Brookley Field.

As administrator of the Federal Aviation Administration under President Ronald Reagan, between 1987 and 1989, McArtor superintended the decision to put federal money into improvements at the former Air Force Base.

A few years later, back at the helm of Federal Express, McArtor arranged to bring the company’s planes to Singapore Technology’s new Mobile Aerospace Engineering facility.

So when he sat on the advisory team as EADS — the European Aeronautic Defence and Space Co., parent of Airbus — searched for a site to build a refueling tanker as it partnered with Northrop Grumman in pursuit of an enormous Air Force contract, “I knew a lot about Brookley and what its potential was, ” he says. And he was pleased as the site made cut after cut in the selection process until it was finally selected.

The tanker project — first won and then lost to Boeing Co. in a hotly contested rebid process — is history now, but the relationship between Airbus and Mobile is stronger than ever.

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“This is our industrial home, ” says McArtor, since 2001 the chairman of Airbus Americas Inc.

The European company announced last summer that it would build its first U.S. assembly line in Mobile at the facility now called Brookley Aeroplex — to build single-aisle commercial jets in its most popular A320 neo class. Production begins in 2015, with the first plane rolling out in 2016 — a $600 million investment promising 1, 000 direct jobs.

In addition to the assembly line that’s now under construction and an engineering facility that’s been in Mobile since 2007, Airbus has an additional engineering site in Wichita, Kan.; a pilot training facility in Miami, Fla., and headquarters, spares center and other offices in the Virginia suburbs of Washington, D.C.

But look for any additional industrial work in Alabama.

“When we have additional activities, we’ll put them at Brookley, as long as we have space” — and the company has about twice the space required for current plans.

Whether new activity is military or commercial, “we wouldn’t start another site selection, ” he says, describing the company’s commitment to Mobile as “100 percent.”

“When you stop and think about the commerce that’s created around an industrial project like aircraft manufacturing and assembly, it’s tremendously significant, ” says McArtor, noting that only a handful of U.S. cities have aircraft plants — the Seattle area; Wichita, Kan.; Charleston, S.C., and now Mobile.

“There’s something glamorous and exciting about flying, ” says Bill Sisson, head of the Mobile Airport Authority, including Brookley. “It captures the imagination of so many people. There are very few places in the world where large aircraft are assembled, ” he says. “To be one of those places is extraordinary.”

Airbus Americas Inc. Chairman Allan McArtor says the international aircraft company chose a U.S. assembly line and Mobile because “we want to be closer to our customers.”

Photo by Nicholas Griner

Wide impact zone — the next Mercedes?
It’s easy to understand why the folks in Mobile think the Airbus deal is extraordinary, but how far will the impact extend?

“There is no limit, ” says McArtor. “We’ve had suppliers in the Ohio Valley, on the West Coast.”

But from a practical standpoint, “to support an assembly plant, the rule of thumb is about a day’s drive by road or rail.” That includes the entire upper Gulf Coast, all of Alabama, even Atlanta.

At 250 miles, Birmingham is in the midst of the expected impact zone, but will the effects actually reach that far?

“Any time you have a development of the magnitude of Airbus, it’ll have a direct or indirect impact beyond the local area, ” says Brian Hilson, president and CEO of the Birmingham Business Alliance. “We’re mindful and hopeful and hope to see a direct spinoff, but if not, we’ll benefit another way.”

A Birmingham firm – Hoar Program Management — is at work, superintending construction of the multi-building site in Mobile. One of the first firms Hoar selected to join the project team was another Birmingham-based firm, Brasfield & Gorrie.

Steel suppliers are likely to find business, an opportunity for Birmingham’s O’Neal Steel and U.S. Steel operations, says Hilson, and Kaiser Aircraft has a 1.2 million-square-foot hangar that could provide “a unique and very significant opportunity for companies that need hangar space.”

Other newcomer suppliers, while more likely to pick Mobile, may not want to be quite so close, he says. Just as the state has seen with auto suppliers, companies “want to be physically close enough to serve their customers, but not so close that they’re competing in other ways — like for labor.”

Pensacola, Fla., 60 miles east along I-10, is a serious player. U.S. Rep. Jeff Miller from Florida’s first district — the Panhandle — was among speakers at the groundbreaking festivities.

Pensacola Chamber of Commerce President and CEO Jim Hizer is certain that the first impact for Pensacola residents will be jobs. “Clearly, some of the Airbus employees are going to live in Florida and Mississippi, ” he says.

More than that, he says, the Gulf Coast has a developing reputation as an aviation hub, “a center for activity in the aviation world. Having Airbus make their commitment to Mobile only enhances those efforts in our transformation into a world-class aviation hub or cluster.”

Pensacola will also feel the impact of suppliers, he says. “Our research indicates that as Airbus ramps up production over the next five to six years, more of their suppliers are going to have an interest in locating in northwest Florida, south Alabama or southern Mississippi. We have to position ourselves over the next two to three years to make sure we are ready to take advantage.”

That means more site development. “Florida has never really prioritized development of certified, shovel-ready sites to the same extent that Alabama and Mississippi have — that’s our highest priority. We would like to have 500 to 600 acres ready over the next five years.”

Hizer promotes his area’s workforce development advantages. Northwest Florida has retirees from the Naval Air Station at Pensacola and Eglin Air Force Base just to the east — hundreds of people retiring each year with the engineering, technical and mechanical skills that an aerospace cluster requires.

“No question” Airbus is big for northwest Florida, says Hizer. “Our economies are linked. Goods and services pass between these two markets every single day. When Mobile prospers, northwest Florida prospers.”

Who will come?
U.S. companies are Airbus’ biggest suppliers, company officials have said repeatedly. And some of those suppliers see no need to move. “It’s an assembly line, not a manufacturing plant, ” one current supplier said during an early spring conference in Mobile. His company is already supplying the aircraft maker from a location in the U.S. West, and he sees no likelihood they’ll move closer.

On the other hand, French Labinal’s Safran Engineering, was Johnny-on-the-spot, cutting the ribbon on its new Mobile headquarters at Brookley on the day of the Airbus groundbreaking.

Still others, European companies now supplying their European client from the same continent, may appear here, McArtor says. Some of those suppliers may wish to join their client in the “dollar zone.”

“This may be a tipping point for them, so they’re looking for sites and are just as attracted to the Sunbelt as Airbus, ” he says, looking for right-to-work states with skilled labor and a history of innovation.

Transformation at Home Base
Troy Wayman is fond of quoting Airbus’ McArtor saying that the impact will be so great “You won’t recognize the Gulf Coast in five years.”

Don’t expect things to change overnight, “but it’s coming, ” says Wayman, the director of economic development for the Mobile Area Chamber of Commerce. Mobile already has an aerospace presence, he says, with ST Aerospace and it’s 1, 500 employees, Continental Motors, Star Aviation and more companies across the Bay. “But to have an OEM plane maker here is going to significantly change the game.”

And he’s seen the way Airbus can change a game. He recalls his first trip to the Farnsborough Air Show in 2008, while he still worked for the Montgomery chamber. No one paid particular attention to the Alabama delegation. But at the 2009 Paris Air Show, after Airbus’ recommitment to the Coast, the Alabama contingent was swamped with potential contacts.

“Airbus is the Mercedes of the next generation, ” says Wayman.

And while some skeptics poke at the project, saying it’s “only an assembly line, ” Wayman acknowledges that the distinction is real but perhaps not terribly important. Airbus spent $13 billion with U.S. suppliers in 2012 and is committed to growing that number, he says, and he suspects that the more Airbus is supplied by companies operating in the U.S., the more likely that one day some of the manufacturing will happen in the U.S.

And while suppliers don’t have to be physically close to their customers, he still expects an influx. Aerospace companies face more regulation and more certification requirements than most other industries, so companies tend to cluster up.

Wayman joined the Chamber not long before the military tanker rebid. Rebounding from that disappointment, work on the business case for Airbus to build commercial jets began almost immediately, he says.

Sisson too can see — at least now — the upside of losing the tanker competition. “A military tanker would have been wonderful, but there are ups and downs with government contracts.”

Instead Mobile is now involved in assembly of one of the world’s “hottest selling” aircraft, says Sisson, who was the Chamber’s economic development leader during the first tanker bid cycle, then became head of the Mobile Airport Authority and will head back as president of the Chamber later this summer.

“Brookley lends itself to this kind of thing, ” says Sisson, enumerating the great qualities of the site — a deep water port, five Class 1 railroads with a hub at the port, north-south and east-west interstates intersecting just a couple of miles away, and a 9, 600-foot runway.

How big is 9, 600 feet?  “Capable of landing any aircraft, ” says Sisson. There are pictures in the lobby of the space shuttle landing at Brookley in 1984, on its way to be barged to the World Exposition in New Orleans.

The city, county and airport authority have already started projects to spiff up the site with landscaping, hardscaping, road improvements and amenities like Wi-Fi, fiber optics, LED lighting and security cameras. The goal, he says, is to take the hard industrial edge off the look of the Aeroplex and convert it to the softer look of a college campus — and to complete the project in two years.

So far, only Safran Engineering — part of the French company Labinal, with a history of supplying Airbus — has moved to the Mobile site. But he says he’s certain there are more to come. He says those prospects will work through the state, the Chamber, the Aeroplex or private brokers, and sometimes “incognito, just looking around, ” which is why he thinks it’s critical for the city to be constantly on its game.

Airbus’ Global Strategy
Business is good for Airbus these days, with orders rolling in from around the globe. But back orders are both the good news and the bad news for a company like Airbus, says McArtor. Its best-selling plane, the single-aisle commercial jet A320 family, and especially the A320 neo with its fuel-efficient engine, have a backlog or orders stretching nearly eight years.

While the company says, “Wow, that’s terrific, ” customers retort, “I’ve got to wait eight years?” So the company had to find a solution to produce more of the planes — hence the facility in Mobile.

“We can increase production as long as the supply chain can keep up, ” he says.

In the meantime, various customers may trade and jostle for higher placement on the delivery list, but orders – once placed — “rarely go away, ” he says.

The future looks bright, in an industry where demand doubles every 15 years or so.  But there are potential pitfalls — airports that don’t modernize, traffic control that’s overloaded, pilot or mechanic shortages, notes McArtor. “Those could truncate growth; then we can’t sell the $4 trillion worth of airplanes over the next 20 years. So we have to be mindful of the rest of the industry, but right now there’s a very healthy demand.”

For the time being, Airbus is in a sort of “duopoly” with rival Boeing Co., he says: “As long as we both build competitive airplanes, we will likely split the market 50-50.” While he expects ups and downs in the actual split, he believes it’s good for the industry if the two firms are relatively balanced. “If one of us fell to say 30 percent, it would wreck the economics of the marketplace, because one of us would have to underprice to win back market share. We like to brag about who has sold the most and it gives you some market prestige — and Airbus has been on the winning end more times than not over the last 10 years — but in truth, a 50-50 split of the market is great.”

There’s no guarantee that the duopoly will continue, he says. Canada, Brazil and especially China appear poised to enter the market. “But for now it’s pretty stable.”

And for now, the U.S. and Alabama are the place to be. While the Pacific Rim and other regions are growing their share of the market, says McArtor, the United States remains the biggest single market for aircraft.

“We want to be closer to our customers, ” says McArtor, “and we hope to increase our market share.”

Progress Report #1

Ground was broken April 8 for a 53-acre development at Brookley for a $600 million plant to build 40 to 50 planes a year. The main assembly line is slated to open for business in 2015, with the first aircraft ready for delivery in 2016 and full production in 2017.

The first building, the powerhouse, is slated for completion in 2014, followed by the logistics building, the main gate and transshipment hangar, the gauging hangar, flightline and delivery area in early 2015, with all infrastructure in place by the end of 2015.

Already, significant work is in progress, says Mike Lanier, president of Hoar Program Management — the Birmingham firm that is superintending the project.  A number of contracts have already been let and several more packages will be this summer, he says.

Mobile’s Hosea O. Weaver and Sons is on site doing grading and preliminary utility work, Brasfield & Gorrie is preparing for piling, and Covenant Steel is doing the engineering and preliminary steel work for the building structure and envelope, with early work underway at its Dothan facilities.

Nedra Bloom is the copy editor of Business Alabama

text by Nedra Bloom

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