Airbus hated Brexit from the off but, until now, it had confined itself to soft expressions of worry in public and harder lobbying behind the scenes. Its dramatic warning that it could stop investing in the UK is a radical departure from that position and carried a sting.
The aircraft manufacturer did not merely say a no-deal outcome to Brexit talks “directly threatens Airbus’s future in the UK”. It also said an “orderly” Brexit, complete with a trade agreement and a transition period, would also be risky. In effect, the group will freeze investment in the UK until it can judge how a new set-up would work and how many extra costs its UK factories and research centres would bear.
John Longworth, the co-chair of Leave Means Leave campaign, accused Airbus of running a scare story and reheating Project Fear. Tariffs on aeronautical products are zero, he argued, and so “nothing will change” if the UK leaves the customs union. Yet he overlooked the detail of the Brexit assessment by Airbus, which barely mentioned tariffs. Instead, the worries were about the movement of employees between the UK and the EU, logjams in the supply chain and aircraft regulations.
The most critical issue on that list is probably UK membership of the European Aviation Safety Agency (EASA), which certifies aircraft parts and runs safety checks. In theory, the Civil Aviation Authority could do the job in the UK, as it once did, but Airbus doubts the body could assemble the expertise in time to provide a smooth transition. Norway is a non-EU member of EASA and so the UK, if it is prepared to accept the European court of justice as the legal authority behind EASA’s rulings, could also stay within. But a deal has not yet been struck, which is one of many reasons why Airbus is shouting that time is running short.
Its supply chain frustrations will be shared by other large manufacturers with cross-border operations that run on a just-in-time basis to keep costs low. The fear of “chaos at the borders” in 2020, as Tom Williams, the Airbus executive in charge of the commercial aircraft division, put it, is real. Downing Street’s talks about aiming to “minimise” friction is no longer reassuring: at this late stage, big business wants technical details rather than good intentions.
Airbus plainly cannot move 14,000 UK employees and its sophisticated equipment out of the country overnight. But it says it will “refrain from extending its UK suppliers/partners base” because any likely transition period will be too short to make full adjustments to the supply chain. In other words, delay and ambiguity is already costing investment.
And, for the longer term, the Airbus warning about “repatriating competencies and patents” was an unsubtle reminder that it – and not the UK – owns much of the intellectual property used in aircraft design and manufacture.
Hardline Brexiters may conclude that Airbus, a huge Franco-German company in an industry that is not a stranger to skulduggery, is stirring the pot on behalf of EU politicians. An alternative conspiracy theory says the company is using Brexit as a cover to shift production to China over the long term.
Unfortunately, both interpretations look too elaborate. Its Brexit assessment seems to be what it claims to be: a hard-nosed analysis of specific economic risks. Some of those risks have solutions, not least the EASA question, but the general frustration in the boardrooms of big companies is now intense. They accept Brexit will happen – but they want to see a vaguely coherent plan.
