U.S. firms hitch ride on French Airbus
New A380 jumbo jet brings aerospace orders stateside
By August Cole, MarketWatch
Last Update: 12:01 AM ET June 8, 2005
SAN FRANCISCO (MarketWatch) -- When the Airbus A380 makes its public debut at the Paris Air Show this weekend, expect to hear as many cheers in English as in French for the biggest passenger plane ever built.
The plane is a centerpiece of European pride. Entering service next year, the super-jumbo jet symbolizes for many Airbus' ability to take on Boeing in the struggle for dominance of the commercial aircraft industry.
Yet the 555-seat monster should be as big a hit in Pittsburgh, home to Alcoa Inc (AA: news, chart, profile) , as it is in Paris.
"It's fair to say we have more applications on this plane than any other," said Michael Adkins, global marketing executive for Alcoa's aerospace sheet business. Hundreds of jobs at the company's Iowa and California facilities are linked to the millions of fasteners, wing pieces, and other U.S.-made components aboard the French-built aircraft.
Alcoa is just one of at least 200 American companies counting on the super jumbo jet to expand its aerospace business, filling a gap as Boeing Co.'s (BA: news, chart, profile) longstanding dominance of the commercial aviation market slips.
Goodrich Corp. (GR: news, chart, profile) has some high-profile work building the landing gear on the A380. The Charlotte, N.C. company is also working on evacuation slides and exterior lights for the plane, among other systems.
"If you look at Airbus, we're the No. 2 ... non-engine supplier after Snecma. And when the A380 starts rolling off that production line, I think there's a good chance we'll turn into No. 1," Goodrich Chief Executive Officer Marshall Larsen told a Merrill Lynch investor conference this month.
For suppliers around the world with parts on the plane, the giant A380 is also a flying billboard for their engineering prowess.
Big plane, big numbers
Toulouse-based Airbus, 80% owned by European Aeronautic Defence and Space Co. (FR:005730: news, chart, profile) and 20% by BAE Systems Plc (UK:BA: news, chart, profile) , claims it spent $6.9 billion last year buying U.S.-made airplane parts and counts 140,000 American jobs that are linked to its business. Airbus directly employs 52,000 around the world.
"With regard to the A380, there clearly was an identified opportunity to be part of one of the most advanced airframes ever flown," said Alcoa's Adkins, noting the company has six new patented alloys in use on the plane.
"You go from a lab to a facility that's the size of a golf course," he said. An A380 wing is made up of 10 distinctly different panels -- most of them made in Davenport, Iowa, Adkins said.
For some smaller firms, working on the A380 is seen as the opportunity of a lifetime.
Peter Zieve, founder of Mukilteo, Wash.-based Electroimpact, said that his company's past work on the manufacturing tooling for the A380 brought in $200 million worth of business, about half of its sales for the past 20 years. "On the 380, we branched out into areas we hadn't done before," said Zieve.
At the same time, Airbus must be mindful of courting suppliers in the U.S. so as not to appear negligent of its roots across the Pond.
"It's hard for Airbus to remove a significant amount of work from Europe to the U.S. without hurting its domestic market," said William Alderman, head of aerospace investment and advisory firm Alderman & Co.
Playing defense
Airbus counts airlines around the world among its customers. In the U.S., shippers UPS (UPS: news, chart, profile) and FedEx Corp. (FDX: news, chart, profile) are already in line for A380s.
But the one customer the company really covets is not a commercial carrier at all, but good old Uncle Sam.
"The quid pro quo is Airbus commercial work coming to the U.S. suppliers and U.S. military work going to EADS," said Alderman. "Airbus and EADS are really trying to court the U.S. military market."
The allure of the $490 billion U.S. defense budget is only growing, despite efforts by some members of Congress to thwart foreign firms from getting a piece of it.
EADS and Airbus, meanwhile, are pressing ahead with plans to market their air-to-air refueling tanker, which will be assembled in the U.S., to the U.S. Air Force. See full story.
August Cole is an editor for MarketWatch in San Francisco.
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