When you are teaching global location analysis in Chapter 8, what better way to start a discussion than Airbus’ decision this week to open a new $600 million facility in Mobile, Alabama. The Wall Street Journal (July 3, 2012) reports that the European jet maker’s US facility will turn out 40- 50 A320 jetliners yearly by 2018, with about 1,000 full-time 
Even without the global politics of airline manufacturing, the economic incentives for Airbus to build more plants in France are difficult. With a headcount of 1,000, the new plant surpasses France’s various thresholds for taking on a welter of worker “protections” and the burden of union bureaucracies. But it’s worth noting that Airbus didn’t just pick the U.S. over France, Germany, or China. It chose Alabama over the rest of the U.S. Not least, it’s that Alabama is one of 23 right-to-work states, which means workers are free to decide if they want to join a union. That not only makes that labor market markedly freer than France, but also struggling states across the U.S.. Airbus, of course, isn’t the first foreign enterprise to notice Alabama. The state also hosts Mercedes, Toyota, and other auto production facilities.
Alabama is also offering Airbus over $100 million in tax breaks and other incentives such as job training and infrastructure improvements. Jets are sold worldwide in dollars and since Airbus’ planes are manufactured with most costs in Euros, US manufacturing will help hedge against currency gyrations. ( Here is a 3 minute WSJ video on the subject).
Discussion questions:
1. Why is Airbus starting production in the US?
2. How was Alabama able to lure the company?