Aerospace giant Airbus has warned that it could pull out of the UK in the event of a no-deal Brexit scenario.
In a Brexit Risk assessment published by the company this week (21st June) it warns that leaving the single market and customs union without a transition deal would lead to severe disruption and force Airbus to reconsider its future in the UK. “Far from Project Fear, this is a dawning reality for Airbus. Put simply, a No Deal scenario directly threatens Airbus’ future in the UK.” said Tom Williams, COO for Airbus commercial aircraft.
The assessment adds that the transition deal currently envisaged by the government (which ends in December 2020) is too short for the EU and UK Governments to agree the outstanding issues, and doesn’t provide enough time for Airbus to implement the required changes with its extensive supply chain. Such a scenario would, it said, potentially affect any new investments in the UK and make it reconsider extending the UK suppliers/partners base.
The firm directly employs 14,000 people at 25 sites across the UK and supports more than 110,000 jobs in the wider supply chain.
Talking on BBC Radio 4’s Today program Williams said that a lack of clarity from the UK government and a reluctance to take onboard industry concerns were forcing the firm’s hand and that it is now beginning to “press the button” on crisis decisions. “We have become increasingly frustrated with the lack of clarity…and come to a point where we have to make serious decisions,” he said.
Williams added that the firm is now beginning to stockpile parts in preparation for “chaos at the border” and that it won’t use new suppliers until a transition deal is in place. He said that the company is now also considering halting investment in new capacity in the UK and seriously considering whether it should continue development of wings in the UK.
Williams said that he was also concerned that in the absence of a Brexit agreement, UK companies will no longer be covered by Europan Aviation Safety Agency regulatory approval – meaning that UK supplier’s parts cannot be installed on aircraft. With this in mind, the firm has stressed that it is vital that the EU supply chain gets prepared.
Airbus has more than 4,000 suppliers in the UK and an integrated supply chain with parts crossing the Channel multiple times. This is operated on a just-in-time basis relying on frictionless trade today provided by the combination of the EU Customs Union and Single Market rules.
Commenting on its impact on the supply chain, Paul Adams, head of aerospace at management consultancy, Vendigital, said: “Airbus is already stockpiling inventory for fear that customs delays could cause production downtime after Brexit. This is putting pressure on the supply chain and could create cash-flow difficulties for suppliers to its wing assembly plant in Broughton.”
Paul Everitt, chief executive of industry trade body ADS, added that Airbus isn’t the only aerospace firm planning for a painful Brexit. “Airbus is one of many businesses who are beginning to implement contingency plans and make decisions on future investment based on the worst-case scenario,” he said. “It is now vital that the government and EU negotiators work hard to reach pragmatic and creative solutions to make sure that the UK maintains regulatory alignment with the EU and the frictionless customs arrangements that industry depends upon to compete in global markets.”
Meanwhile, asked whether Airbus’s latest comments are the result of political pressure from the various European governments with a stake in the firm, Williams told Today: “I’m an engineer, not a politician, I have to deal in certainty, and we can’t continue with the current vacuum in terms of clarity.”