America As Low-Cost Manufacturing Center

Moneybox
A blog about business and economics.
July 3 2012 11:23 AM

America As Low-Cost Manufacturing Center

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Louis Gallois, chairman and CEO of European aerospace and defence group EADS, right, and Airbus CEO Thomas Enders pose in front of military transport aircraft A400M at Airbus headquarters in Toulouse on Jan. 13, 2011.

Photo by PHILIPPE WOJAZER/AFP/GettyImages.

I focused last week on the political economy aspects of an Airbus plant opening in Mobile, Ala., but Stephen Trimble's piece for Flight Global makes it clear that there are some very down-to-earth dollars and cents aspects to this move as "the new factory in Mobile gives Airbus a relatively low-cost manufacturing centre to target a US market expected to generate thousands of orders for narrowbody aircraft over the next 20 years."

Americans are used to thinking of ourselves as a high-wage manufacturing center at risk of losing jobs to low-wage producers in Asia, but in this context Mobile is the low-wage alternative to Hamburg and Toulouse. At the moment the market for A-320 class aircraft is growing strongly, so production in Mobile won't come at the expense of production in Europe. But in the event of a future downturn, European aerospace workers ought to be worried that it's their factories that will get shut down rather than cheaper nonunion ones in the American South.

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Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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