May 9, 2008 / 11:13 PM / 12 years ago

EADS underscores commitment to U.S. production

COLUMBUS, Mississippi (Reuters) - Europe’s EADS EAD.PA said on Friday its on-time and on-cost deliveries of light utility helicopters to the U.S. Army underscored the company’s long-term commitment to producing aircraft in the United States, despite concerns raised by some U.S. lawmakers.

EADS had already delivered 26 of the helicopters to the Army, all on time or ahead of schedule, and was steadily transferring production work from Germany to the United States, said Ralph Crosby, chief executive of EADS North America, during a tour of the Mississippi helicopter plant.

“The point is we’ve never made a commitment that we haven’t kept,” Crosby told reporters.

Some U.S. lawmakers have supported Boeing Co (BA.N) in its protest of a $35 billion Air Force aerial tanker program won by EADS and prime contractor Northrop Grumman Corp (NOC.N). These critics have said they fear EADS could renege on its pledge to produce those aircraft in the United States now that its team has won the competition.

“There’s absolutely no truth” to such statements, Crosby said, noting that EADS had already spent $500 million to build an engineering center in Alabama and it planned to meet its commitments on tanker production.

Crosby said EADS had pledged to build not only the A330 aircraft for the refueling tankers at a new plant in Mobile, Alabama, but also a new freighter version of the airplane.

That would create the third large aircraft manufacturing facility in the world in addition to an Airbus plant in Toulouse, France and the Boeing plant in Everett, Washington, he said.


Crosby said production work on the A330 freighter would create 22,000 direct and indirect jobs in the United States, in addition to the 48,000 jobs to be created by the military tanker program. EADS had a backlog of 77 freighter orders.

He said eventual production of aircraft at the Mobile plant could reach 36 to 42 airplanes a year, providing a major stimulus to the region’s economy and many new jobs.

“The transformational part of it is that we’ve become part of the industrial infrastructure of the United States,” he said, comparing it to similar moves by Japanese and German automakers to open U.S. production plants.

The first A330 freighters could potentially be produced about six months after the first military tanker, which was due to be delivered in 2011 before Boeing launched its protest.

Crosby said EADS stopped work on the tanker program, in line with Air Force orders, but was ready to resume work as soon as the Government Accountability Office rules on the Boeing protest. A decision is due by June 19.

He said the reaction to Northrop and EADS’ victory on the tanker contract was surprising because it was so visceral, but he said he fully expected the GAO to reject Boeing’s protest.

Boeing’s protests and efforts by its congressional backers to reverse the contract were clearly aimed at maintaining the company’s role as “the sole U.S. producer,” he said.

“It’s absolutely about keeping EADS and Airbus from manufacturing airplanes in the United States,” he said.


EADS won the Army helicopter contract in June 2006 and continued work on the program at its own risk during a protest of the award, which allowed the program to stay on a tight schedule.

Army officials told reporters they were pleased with progress on the program. They had given EADS a favorable report during a recent performance assessment and when asked by Air Force acquisition officials assessing the tanker bids.

“The contractor’s performance was painted in a very positive light,” Keith Roberson, the Army’s deputy program manager for utility helicopters, told reporters.

Army officials confirmed that EADS had delivered the helicopters on time, or ahead of schedule, and said their reliability in the field is running at over 90 percent, compared to about 82 percent for other Army helicopters.

EADS and its American Eurocopter unit had 171 workers at the Mississippi plant, and hiring is due to increase next year as it ramps up production.

EADS will move a portion of its production work from Germany to Mississippi in June, with full U.S. production slated to begin in March 2009.

Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn

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