Monday’s announcement by Airbus parent EADS that it will set up commercial-transport production in Alabama presents Boeing with a major problem. Although the two rivals have been competing globally for decades, this is the first time the European company has proposed to establish a manufacturing presence in Boeing’s home market. EADS wants to assemble the twin-engine A320 in Alabama. That not only is a threat to Boeing’s popular 737, which dominates the domestic market for single-aisle jetliners, but it also could undercut the Chicago-based company’s plan to offer the 737 as a successor to several types of Cold War military aircraft. Fortunately for Boeing, the Alabama plant will not be up and running for years, and even when it is Boeing will still have more employees in the state than EADS. However, an early test of what kind of political constituency EADS may have bought itself will come when the Obama Administration proposes sanctions against Europe for a long-running pattern of illegal launch aid given to Airbus — without which the company might never have been able to compete against Boeing. I have written a commentary you can read here.
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