EADS sees decision soon on production

By Andrea Shalal-Esa

WASHINGTON (Reuters) - European defense giant EADS (EAD.PA: Quote, Profile, Research, Stock Buzz) could make an initial decision before year's end about moving additional production to the United States or other manufacturing sites, a top executive said on Monday.

"There is consideration beginning to bring other final assembly activities to the United States," Ralph Crosby, chief executive of EADS North America, told the Reuters Aerospace and Defense Summit, citing pressure from the dollar's slump against the euro.

"We really are at a preliminary point," he said, noting that final decisions would be made by top company leaders. "If we're going to get out of the euro trap, we have to do more stuff either here or in even lower cost manufacturing sites."

He said single-aisle freighters based on the A330 airliner would be a "logical candidate" to move to Mobile, Alabama.

That is where EADS has said it will assemble and later build the A330 airplanes that will be modified into aerial refueling tankers, if EADS and Northrop Grumman Corp (NOC.N: Quote, Profile, Research, Stock Buzz), the prime contractor on the program, win a multibillion contract from the U.S. Air Force next February.

Crosby said some decisions would be made soon on the issue, possibly before the end of the year.

"We just have to see. This is one of those opportunities that comes from unforeseeable challenges from the exchange rates," he said.

Louis Gallois, chief executive of parent company EADS, said in Paris on Monday that moving production outside the euro zone was needed for survival due to the continued slide of the dollar versus the euro.

Crosby said top executives were dealing "squarely" with the difficult exchange rate issue, noting that the rising value of the euro against the dollar meant that EADS had to generate even further savings to stay competitive with rivals like Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz), whose business is based in dollars.

"We've got to move more of our value into dollarized" markets, he said. "There's more to be done moving things into the dollar zone"

Crosby said he did not believe that EADS could or should accelerate its proposed schedule for the U.S. tanker program, which envisions manufacturing of the first four tankers in France, with the fifth tanker to be assembled in Alabama.

He said EADS would not want to add any risk to the program, noting that Boeing, its rival for the U.S. tanker deal, was running late with its tanker deliveries to Japan and Italy.

"Our job in support of Northrop Grumman is to have a high confidence schedule that is metered and makes sense ... that does not inject risk into the equation," he said.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Andrea Shalal-Esa; Editing by Jeffrey Benkoe)