Finding The Right Location, Successful Dimensions in Foreign Direct Investment

Topics: Aerospace, Supply chain management, Supply chain Pages: 66 (9859 words) Published: April 2, 2014
FINDING THE RIGHT LOCATION:
FOUR DIMENSIONS OF
SUCCESSFUL FOREIGN
DIRECT INVESTMENT
Airbus Assembly Line – Mobile, Alabama

This whitepaper explores the key drivers
impacting the aerospace industry, the process
for developing a comprehensive location
strategy in response to industry expansion,
and these critical locations factors that lead to
location strategy success in the Southeast
U.S.:

Overview
With the announcement earlier this year by
Airbus that it plans to invest $600 million to
build jetliners in Mobile, Alabama, the
Southeast U.S is well positioned to attract
foreign direct investment and U.S suppliers
to the region. Central to the supply chain
discussion are location strategies that
optimize the value chain, drive innovation
through the involvement of education and
academia in proximity/joint working
relationships and provide flexibility for
adapting to business change. Location
decisions such as these are special events
that require careful attention to many
conflicting strategic, operational, financial
and intangible factors that can set the stage
for either great success or fantastic failures.

 Strategic Shift in Supply Base Location
 Integrated Global & Local Supply Chain
Sourcing Strategy
Global commercial aircraft orders have
increased six percent in 2011, with
accelerating demand for new, more fuelefficient and technologically advanced aircraft. According to a number of studies,
the industry will have to increase production
by 45 percent to meet demand in the coming
year to address the backlog orders. This is
evident by the recent announcement by
Airbus to double its current $12 billion spend
on U.S. suppliers. The demand issues up
and down the supply chain will place greater
pressure on program management,
manufacturing capability and capacity, cost
and the greening of aerospace products.
Collectively, these issues will be one of the
biggest challenges facing the industry in the
coming years.

Newmark Grubb Knight Frank & Southeast Commercial Real Estate Services Group

 Cost Pressure of Supply Chain Operations
Continues to be a Significant Industry Issue

 Comprehensive Business Location
Strategy & Decision Making

 Labor Dynamics and the Impact on
Location Strategy
Economic Climate & Regulatory Dynamics
Taxes and Economic Incentives
Transportation Logistics & Cost
Facility Requirements & Real Estate
Conditions
 Community Capacity & Fit
 Bringing it All Together – Best Practices In
Location Strategy






The paper is positioned to provide you with an
understanding of the complexity of the
process, regional issues and high-level data

1

manufacture world class commercial
aircraft in Mobile, Alabama.

Strategic Shift in Supply Base
Location
analytics required to make comprehensive
and transparent business decisions
Airbus supports more than 210,000
American jobs in more than 40 states. In
2011 alone, Airbus spent $12 billion in the
U.S., marking four consecutive years of
spending in the U.S. that has topped $10
billion annually.
Airbus plans to double its annual $12
billion spending with U.S. manufacturers
in the coming years due to a strong global
backlog of more than 4,400 aircraft and
growing future demand. With this
continued investment in the U.S., Airbus
can now forge a more comprehensive and
holistic approach to building its A320
family of aircraft to serve the U.S. market
and sales objectives.

supply chain of making airplanes are key
determinant variables such as:

 Skilled Labor Availability and Labor
Growth

 Cost Effective Labor Availability
 Academic Institution Focus on Aerospace
 Employee Training at the Local Level,
Specifically Community Colleges

Key Strategic Issues in the
Aerospace Industry
Overview of Aerospace Market
Condition
The aerospace industry as a whole
continues to develop technology to increase
airline profitability and meet every...

References: 6, 2010
2
A&D executives, 2012
Deloitte, 2012 Global aerospace and defense
industry outlook, 2012
Alix Partners, Preparing for Takoff: The 2012
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