EADS (EAD.PA) unit Airbus, the world's largest commercial jetmaker, said the Mobile, Alabama, plant would build up to 50 A320-family jets annually within two years of its 2016 opening and create 1,000 jobs.

It will be the second Airbus plant outside Europe that manufactures its most popular jet, after China.

Analysts said the move, reported by Reuters last week, could reshape the U.S. aerospace industry and boost manufacturing on the U.S. Gulf Coast. But Boeing (BA.N) said the move should not distract attention from controversial European subsidies received by Airbus.

The rivals are involved in the largest-ever dispute at the World Trade Organization, accusing each other of billions of dollars in illegal aircraft subsidies.

A crowd of about 1,000 industry executives and local dignitaries -- including American Airlines (AAMRQ.PK) Chief Executive Tom Horton, JetBlue Airways Corp (JBLU.O) CEO Dave Barger and Goodrich Corp (GR.N) CEO Marshall Larsen -- crammed into the Mobile convention center to hear the announcement, arriving to the strains of the rock group Steve Miller Band's 1977 hit "Jet Airliner" and rocker Tom Petty's 1991 "Learning to Fly."

BOOST FOR GULF COAST

Local economic development officials said the new plant would be a shot in the arm for the Gulf Coast, as big manufacturing operations like Airbus tend to lure suppliers and additional jobs. State officials had been lobbying Airbus for years.

"It's like giving birth to a baby -- after seven years of labor," former Alabama Governor Bob Riley said.

The region in the southeastern United States is still recovering from the devastation caused by Hurricane Katrina in 2005.

"Something like this just gives us new marketing opportunities, new opportunities to talk to a lot of different aerospace companies," said Neal Wade, chairman of the Aerospace Alliance, an association of government and business leaders from the states of Louisiana, Mississippi, Alabama and Florida.

"Mobile will be only the third place where giant jets are built," said Wade, Alabama's former secretary of commerce. "So you immediately put yourself into a different category in terms of what's going on along the Gulf Coast."

Airbus suppliers welcomed its move.

"It makes all the sense in the world for Airbus to be here," said David Hess, president of United Technologies Corp's (UTX.N) Pratt & Whitney unit. "We're glad they are here."

Manufacturing has been a relative bright spot for a U.S. economy still struggling to recover from a 2007-2009 recession. However, data on Monday showed manufacturing activity unexpectedly contracted in June, the first dip in three years. (Additional reporting by Tim Hepher in Paris and Jed Horowitz in New York, writing by Scott Malone in Boston; editing by Maureen Bavdek and Jeffrey Benkoe)

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