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Last Updated: Monday, 3 December 2007, 18:10 GMT
EADS 'to produce outside Europe'
Aerial shot of Airbus A380 plane

The head of European aerospace company EADS has given his strongest indication yet that some Airbus manufacturing will be moved outside Europe.

"We don't have a choice," its chief executive Louis Gallois told Europe 1 Radio, describing dollar weakness as "our main problem".

In the past, Mr Gallois has said some production will be moved outside Europe under certain circumstances.

Airbus prices its planes in dollars but most of its costs are in euros.

The steady fall in the value of the dollar - almost touching $1.50 last month - against the euro has hit the value of Airbus' earnings.

The announcement by EADS failed to lift its share price, which fell almost 2% at 21.51 euros at the end of the trading session.

'Deep crisis'

Airbus manufacturing is currently all conducted in Europe, although some takes place in the UK, which has not adopted the euro.

"There is a deep crisis afflicting a certain number of industries that is due solely to the fact that the Americans are following a policy that will mean a never-ending decline in the dollar," Mr Gallois claimed.

There is some suspicion in European industrial circles that Washington authorities are not particularly concerned about the falling dollar because it makes US exporters more competitive.

But US officials insist that a strong dollar is in the best interests of their economy.

Tanker contract

While no Airbus manufacturing currently takes place outside Europe, there is a final assembly plant planned in the Chinese city of Tianjin.

And Airbus' parent company EADS has a helicopter plant in the US.

EADS has also said that it would build an assembly plant in Mobile, Alabama, if the US Air Force decides to buy 180 in-flight refuelling tankers from it.

EADS has joined up with the US defence group Northrop Grumman to create the KC-30 tanker, which is based on the Airbus A330.

They are competing with Boeing for orders from the US Air Force that could be worth a total of $100bn.

As the tanker is based on the Airbus A330, it is not inconceivable that the new plant could also be used to manufacture civilian aircraft.

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