An ongoing trade dispute between two of the world’s largest aircraft manufacturers as well as the U.S. and the European Union could have drastic consequences to the economy in the Mobile area.
That’s why three local governments, the Mobile Area Chamber of Commerce and other stakeholders have put forth an effort to prevent the administration of President Donald J. Trump from slapping tariffs on European aircraft manufacturer Airbus, whose final assembly line in Mobile now employs more than 1,000 people and growing.
The office of U.S. Trade Representative Robert Lighthizer has threatened to add annual tariffs to $7.5 billion worth of EU goods, including aircraft components coming from overseas, after the World Trade Organization (WTO) ruled in October and affirmed in early December that Airbus received illegal subsidies from the EU to help it compete with U.S.-based Boeing.
“Today’s findings confirm that, despite losing in five previous WTO reports, Europe remains more focused on generating meritless litigation than it is in addressing the massive subsidies to Airbus that continue to harm the U.S. aerospace industry and its workers,” Lighthizer said in a December statement, following a WTO panel’s rejection of EU claims it had removed the subsidies. “The EU’s frivolous case proves that strong action is needed to convince the EU that its interests lie in eliminating these market-distorting subsidies now and in the future, so that our industries can compete on a level playing field.”
In the statement, Lighthizer’s office confirmed the WTO has been dealing with the question of subsidies to Airbus since as early as 2011. In May of that year, the panel found that the EU and four member states — Germany, France, the United Kingdom and Spain — had given some $18 billion in subsidized financing to Airbus and that it caused Boeing to lose sales of more than 300 aircraft as well as “significant market share.”
Mobile Area Chamber of Commerce CEO Bill Sisson said the organization remains concerned about the proposed tariffs and has sent a letter to Lighthizer’s office asking him to remove the tariffs on component parts to help save area jobs. Monday, Jan. 13 marked the end of a public comment period on implementation of the proposed tariffs. In the letter, the chamber stressed the impact to local jobs the tariffs would have and highlighted the fact Airbus has been a good corporate citizen in Mobile.
“They’ve helped lift a lot of families out of poverty … ,” Sisson said. “We don’t want to do anything to hurt that.”
Sisson noted the aircraft components had initially been added to a list for potential tariffs in October before being removed.
“We are optimistic and hopeful those will be taken off again,” he said. “We are very concerned about it because it will have an impact on our local economy.”
Sisson said he’s unaware of when a decision might be made by Lighthizer’s office, but he expects to hear relatively quickly.
In a statement, Gov. Kay Ivey’s office said she has been working with Trump on the issue.
“The governor and her administration have spoken with the Trump administration on the potential negative impacts these tariffs — and those affecting other Alabama companies — might have on our overall economy,” the statement read. “The administration knows full well that Governor Ivey is one of its biggest supporters, but is also a champion for Alabama’s businesses and industries. She looks forward to seeing Airbus reach future milestones at its U.S. manufacturing facility in Sweet Home Alabama.”
Congressional delegation reaction
The threat of additional tariffs on Airbus has garnered reaction from the area’s U.S. congressional delegation. Lagniappe reached out to Rep. Bradley Byrne, R-Montross, and Sen. Doug Jones, D-Mountain Brook.
Byrne previously celebrated in October when the Trump administration announced it would not levy tariffs on Airbus components traveling to the company’s Mobile facility. In a statement last week, Byrne’s office said he expects that previous decision to remain in place.
“Congressman Byrne continues to work closely with the Trump administration to advocate for the men and women who work at Airbus Mobile, and he expects the decision not to tariff parts and components to remain in place,” Byrne’s Communications Director Bradley Jaye wrote in an email message.
Jones said his office would continue to monitor the situation with the tariffs during a telephone-based, question and answer session with reporters last week. He added that Trump’s somewhat erratic moves on trade made it hard to determine whether or not the government would actually go through with the proposed additional fees.
“Airbus is an important part of the the economy down there in Mobile,” Jones said. “We don’t want anything to jeopardize that.”
In a Jan. 13 statement, Jones said he also sent a letter to Lighthizer’s office asking it not to impose the tariffs.
“I write today to urge the administration not to impose tariffs on imported civilian aircraft component parts from the EU that are critical to the manufacturing of thousands of aircraft right here in the United States,” Jones said in the statement. “As the administration considers public comments on this complicated case, I hope the exclusion will be maintained for aircraft components destined for the Mobile, Alabama, facility, the only Airbus operation in the Western Hemisphere. In today’s complex global economy, it is important to recognize that this decision impacts thousands of American employees.
“Moving forward with 100 percent tariffs on civilian aircraft components and assemblies without an exclusion for parts imported to Mobile will put thousands of jobs in South Alabama at risk,” he added.
Local government reaction
The Mobile City Council and the Mobile County Commission have both approved resolutions in support of Airbus and calling for no new tariffs on the manufacturer.
The City Council’s resolution was sponsored by Mayor Sandy Stimpson and councilors and only pertained to components being shipped from Europe to Mobile, Councilman John Williams said during a pre-conference meeting on Jan. 7. The resolution also asked for “no new tariffs” impacting Mobile jobs.
“Right now it’s our local Airbus’s opinion, as well as ours, that what is in place works for Mobile,” Williams said.
Mobile County Commission followed suit Jan. 9 with its own resolution. Commission President Jerry Carl — a candidate for Alabama’s District 1 U.S. House seat — is typically a supporter of most Trump’s policies. However, he said this issue is about one thing: local jobs.
“We’re trying to protect our jobs. There are good jobs — high paying, high-skilled jobs,” Carl said. “There’s been a lot of work from a lot of people to get Airbus here, and we want to keep them. They could just as easily build [these planes] in Canada or somewhere else.”
If Airbus were to look at moving some of its operations out of the U.S. due to new EU tariffs, it wouldn’t only be a problem for Mobile. The company has heavily invested in other areas in recent years.
In addition to its operations in Mobile, the France-based company has an extensive presence throughout the U.S. It currently employs approximately 4,000 Americans at 38 locations in 16 states. In the last three years alone, Airbus has spent nearly $50 billion in the U.S., and with more than 450 U.S. suppliers supporting its operations, the company’s presence currently supports more than 275,000 American jobs.
Commissioner Connie Hudson said Airbus’s Mobile facility was designed to manufacture eight A320 aircraft every month, and the newly announced expansion would get it close to max capacity. That could lead to additional expansions down the road, though Hudson said she wouldn’t speculate about the future.
“I’m hoping that the president and his administration will take another look at this and realize how detrimental it could be to communities like ours, and especially to Mobile when we’re currently set to become the fourth-largest aerospace manufacturing hub in the world,” she said. “On this issue, we are all in lockstep as a community, and we’re hoping that the U.S. trade representative will [hear] us.”
On Jan. 7, the Baldwin County Commission adopted a resolution and sent a letter to Lighthizer’s office asking to avoid placing tariffs on aircraft parts and components “as a result of the Airbus-Boeing dispute.”
The letter notes more than 600 Airbus employees call Baldwin County home, “along with thousands of other citizens who work within the aerospace industry.”
“We implore you not to place tariffs on aircraft parts and components,” the letter reads. “Airbus has made a tremendous impact on the Baldwin County community over the past decade, contributing to our position as a leader in the global aerospace industry and growing our economic development capacity. The investments Airbus has made in our region helped Baldwin County and allowed Collins Aerospace to expand to over 1,200 employees alongside additional suppliers. The livelihoods of the workers and their families will be greatly impacted by significant job loss if tariffs on aircraft parts and components are put in place.”
Responding to press questions at the meeting, Commissioner Billie Jo Underwood explained it was “unified effort” with several other local municipalities.
“This really lies in the hands of the White House,” she said. “We’re trying to head it off so we don’t have this impact … At one point in time it was excluded and now it’s resurfaced so we’re just trying to be proactive and hopefully the White House will see … It could really cripple the aerospace industry as we know it over here.”
Commissioner Skip Gruber said Collins Aerospace “is a big, huge thing for Baldwin County … that’s one of the reasons we’re taking such a hard stance.”
The county is also still trying to recruit an anchor manufacturer to its 3,000-acre South Alabama Mega Site, which was initially purchased for $32 million in 2012, and is currently undergoing a $7 million infrastructure investment courtesy of the Alabama Department of Commerce’s Growing Alabama Credit.
“There are other aerospace providers and suppliers that can and hopefully will choose to be located to Baldwin County that will add to the significance of what Airbus is doing and will add to the prosperity of our whole county,” Commissioner Joe Davis said.
The tariff debate comes as Airbus announced last week it would expand its footprint on the Brookley Aeroplex and increase production to seven planes per month by the end of the year. The company will also invest another $40 million through construction of an additional support hangar, increasing its overall investment in Mobile to more than $1 billion, according to a statement from Airbus.
“We are proud of our partnership with Airbus, and are grateful for their continued investment in the city of Mobile,” Stimpson said. “This latest expansion demonstrates their confidence in Mobile workers to deliver the world’s finest airplanes. We’re building great things together.”
The announcement comes as the company plans to produce 63 A320 family aircraft per month worldwide in 2021, according to the statement. The announcement also follows huge growth in 2019 that saw Airbus add 600 new jobs at the manufacturing site with plans in place for production of four A220 aircraft per month in Mobile by 2025. Airbus is on track to produce about 130 aircraft in the Port City each year for its airline customers, according to the statement.
“Airbus has been manufacturing in the U.S. for many years now through our helicopter, aircraft and satellite products,” Airbus Americas Chairman and CEO Jeff Knittel said in the statement.
“This increase in commercial aircraft production in Mobile is an exciting expansion of our significant industrial investment in the U.S., and it continues Airbus’s positive contribution to American aerospace.”
The increased investment is due to a “terrific team of employees in Mobile, as well as support from the community and elected state and congressional leaders,” Knittel said in the statement.
“We look forward to building on that strong relationship with our neighbors,” he said. “This goes beyond jobs to include our support of education initiatives and future workforce development that will positively impact the community for decades to come along the Gulf Coast.”
In a statement, Gov. Kay Ivey said Thursday’s announcement strengthens “the core of a rapidly expanding aerospace cluster along the Gulf Coast.”
“Moreover, the company’s plans to increase aircraft production in Alabama, yet once again, means new investment and new jobs,” she said. “Today’s news of the Airbus expansion is a big vote of confidence in the quality and caliber of the Alabama workforce.
“Today’s announcement will also better position Mobile to remain on track to becoming one of the top four cities in the world for aerospace manufacturing,” she added.
Along with the rate increase and new team members, Airbus will have a lot more to celebrate in Mobile in 2020: Airbus Defense and Space will celebrate its 15th anniversary in April, Airbus’s newest final assembly line for the A220 will open and the delivery of the first U.S.-made A220 will take place.
The company will also welcome the graduation of the first students from the FlightPath9 high school student training program in May, participate in the opening of the Flight Works Alabama aviation experience center in June and deliver its 200th U.S.-built A320 family aircraft in the summer.
Reporters Jason Johnson and Gabriel Tynes contributed to this story.
This page is available to subscribers. Click here to sign in or get access.
It looks like you are opening this page from the Facebook App. This article needs to be opened in the browser.
iOS: Tap the three dots in the top right, then tap on "Open in Safari".
Android: Tap the Settings icon (it looks like three horizontal lines), then tap App Settings, then toggle the "Open links externally" setting to On (it should turn from gray to blue).