Airbus has significant history and operations in the United Kingdom, dating back to the creation of the company. Recent political events however, namely the UK’s departure from the European Union, have called into question the company’s footprint there. Although nothing can be certain regarding the future of Airbus UK, the company is nonetheless concerned by Brexit.
History and extent of Airbus in the United Kingdom
Since Airbus’ first project, the A300, the UK has been involved in the European aerospace enterprise. Although the level of UK involvement fluctuated over the years, Airbus UK was formed in the 2000s. The wholly-owned Airbus subsidiary specializes in the production and assembly of wings, among other core-components.
According to the company, Airbus employs 14,000 people at 25 sites and contributes £7.8bn to the UK’s GDP. Moreover, the company engages with thousands of UK suppliers, such as Rolls Royce, and has made significant investments in research, education, and development.
” We continue to look for further clarity, and the removal of uncertainty, as soon as possible, so that Airbus, like every business in the UK, can properly plan for the future” – Airbus Spokesperson
When the United Kingdom held a referendum on its membership of the European Union in 2016, Airbus explicitly stated its preferences for continued EU membership. According to a publication by The Telegraph, the company even backed the official pro-EU campaign.
Worried, and perhaps even unsettled by the result of the referendum, Airbus has published a Risk Assessment outlining the company’s concerns. The document, which underscores the company’s increasing concern “by the lack of progress on the Brexit process”, is broken up into ‘no deal’ and ‘orderly exit’ scenarios.
“we remain concerned by a potential ‘no-deal’ and continue to plan for that scenario as that is the only way any responsible business can plan” – Airbus spokesperson
In the case of the former ‘no deal’ scenario, Airbus foresees significant disruptions to its supply chain and production processes. In turn, the company predicts that delays and associated penalties will ensue a financial prejudice amounting up to €1bn of weekly losses in turnover.
As for UK investments and operations, the Risk Assessment states that a no deal scenario will “force Airbus to reconsider its footprint in the country [… and that] key competencies [will be] grown outside the UK”.
As for an orderly transition, Airbus, like many commercial entities, would certainly prefer this option to no deal. That said, the company foresees significant amounts of risk associated with Brexit, especially the transition process.
Moreover, the risk report remains bearish on the consequences of Brexit post-transition. indicating that Brexit might invariably increase costs and complexity for all operations.
The future of Airbus UK and its wings
While one can only speculate on the future of Airbus UK, the Risk Assessment, from 2018, is not particularly optimistic. While the tone of the Assessment may in itself be a public relations tactic, the use of the phrases “reconsider’ and “refrain”, in the context of investments and operational footprint, may be telling.
From an operational perspective however, Airbus may not have much choice on where its wings are produced. According to the 2018 Risk Assessment, the manufacturer’s “industrial capabilities are already running at full capacity”.
Given that aerospace is a capital-intensive industry, it is unlikely that Airbus could relocate the production of its wings, among other parts, in the near future. Let alone, during the Brexit transition period.
What do you think future holds for Airbus UK? Will the European manufacturer relocate its production sites? Will the UK provide key economic actors more assurances on the post-Brexit future?