Airbus has confirmed it is considering cutting thousands of jobs in the UK as it starts to “press the button on crisis actions” over concerns about Brexit.
The company said it could ditch plans to build aircraft wings in British factories over concerns that EU regulations will no longer apply from March 2019 and uncertainty over customs procedures, instead opting to transfer production to North America, China or elsewhere in the EU.
Airbus, which directly employs 14,000 people at 25 sites in Britain and supports more than 100,000 jobs in the wider supply chain, also said a no-deal scenario would lead to “catastrophic” consequences , which could cost the company billions of pounds in delays. The firm also said it was considering stockpiling billions of pounds of parts to prepare for Brexit disruption.
What is Airbus?
Airbus traces its roots back to 1967, when ministers from France, Germany and Britain agreed to jointly establish a European programme of aircraft development and production to take on the dominance of America. In 1969 a small group of engineers, who became known as the fathers of Airbus, were charged with getting the A300 plane off the ground. It was the first aircraft produced by Airbus Industrie, and the first A300 plane flew in 1972, with Air France the first customer.
In 2012, when the company was called EADS, Angela Merkel vetoed an attempted merger with British defence firm BAE Systems. She was concerned about German jobs , but was also thought to be fundamentally opposed to the Franco-German firm merging with BAE. Less than a year later, EADS rebranded as Airbus with three divisions - commercial planes; defence and space; and military and civilian helicopters.
Where is it based?
The company’s main base is Toulouse, France, and its German chief executive Tom Enders has led the company since 2012. It employs about 130,000 people in 180 locations, primarily in France, Germany, the UK and Spain.
What does it do in the UK?
It directly employs 14,000 across 25 sites, and supports a further 110,000 jobs. Its biggest base in the UK is at Broughton in north Wales, where the wings are assembled for all Airbus commercial aircraft, employing 6,000 people.
What does Airbus make?
Its bestselling plane is the single-aisle A320 but it it also makes civil and military helicopters and operates in the space and defence sectors making military aircraft, such as the A400M and Eurofighter Typhoon. It is also involved in developing cyber security systems for governments and Earth observation systems . In the UK, customers range from easyJet to the Ministry of Defence. Other key customers include Emirates, which agreed in January to buy up to 36 more A380s – the double-decker superjumbos.
Plans for China
China has become a major target for growth for Airbus in more recent years, as rapid growth in the aviation sector in the world’s second largest economy continues. It established a base there in 1994, and delivered its 1,000th commercial jetliner in 2013, aiming to reach its 2,000th by 2020, which will push its market share above 50%. Chinese deliveries now account for nearly a quarter of the company’s global commercial aircraft production.
Airbus could benefit from increasing trade tensions between China and the US, if Beijing decides to favour Airbus over its arch-rival - America’s Boeing.
On BBC Radio 4’s Today programme, Tom Williams, the chief operating officer of Airbus Commercial Aircraft, was asked if the company was planning to abandon its plans to build new wings in the UK. He replied: “We are seriously considering whether we should continue that development or we should find alternate solutions.”
Asked how many jobs were at risk, Williams pointed out that Airbus generates 100,000 jobs in the UK, including 14,000 directly employed by the company.
Williams repeatedly called on the government to provide more detail about trading arrangements under Brexit and said the lack clarity was forcing its hand.
He said: “Over the next weeks we need to get clarify. We are already beginning to press the button on our crisis actions ... We have got to be able to protect our employees, our customers and our shareholders and we can’t do that in the current situation.”
Asked if he was under political pressure from European governments that part-fund Airbus to sound the alarm, Williams said: “I’m an engineer not a politician I have to deal in certainty. And we need to have clarity. We can’t continue with the current vacuum in terms of clarity.”
Earlier, Williams said: “While Airbus understands that the political process must go on, as a responsible business we require immediate details on the pragmatic steps that should be taken to operate competitively.
“Without these, Airbus believes that the impacts on our UK operations could be significant. We have sought to highlight our concerns over the past 12 months, without success. Far from ”project fear”, this is a dawning reality for Airbus. Put simply, a no-deal scenario directly threatens Airbus’s future in the UK.”
In a risk assessment of the Brexit process published on Thursday, Airbus, which generates £1.7bn in UK tax revenues [pdf], gave a damning analysis of Britain leaving the EU without a deal. It said leaving the single market, and the customs union and the European court of justice would heavily disrupt its supply chain.
The risk assessment said operating under WTO rules could cost the company billions of pounds every week in loss of turnover and delay penalties. In the event of a no deal, the aerospace firm said it would be forced to reconsider its footprint in the UK, putting thousands of high-skilled jobs at risk.
In what the company called an “orderly” Brexit scenario with an agreement and transition period, the aerospace giant warned the current transition endpoint of December 2020 did not give the business enough time to reconfigure its supply chain and was likely to cause production disruption.
Darren Jones, the Labour MP whose Bristol North West constituency contains the Airbus Filton wing factory, attacked the government after Airbus’s statement.
Jones said: “Time and time again the government has been shown to listen only to hardline pro-Brexit MPs and not to the businesses that employ thousands of British workers, including Airbus. “Thousands of skilled, well-paid jobs are now on the line because of the shambolic mess the government have created over the Brexit negotiations.”
Thursday’s statement is not the first time Airbus has demanded further clarity on the Brexit process. In March, Katherine Bennett, the senior vice-president for Airbus in the UK, told the Today programme that a three-hour wait on a lorry at Dover “would be a critically bad issue for Airbus”, as would be delaying cargo flights carrying completed wings to Europe.
Bennett said: “It’s critical for our business to ensure that the wings that we build in Broughton and in Filton can get to France and Germany for the final assembly line.”
Bennett said Airbus spent about £5bn each year on the UK supply chain. “It’s really important that the parts don’t get held up in warehouses. We have a very just-in-time delivery system.”
She welcomed Theresa May’s intention for Britain to remain a member of EASA, the European air safety certification agency, warning that customs remained “pretty critical for us” and said that Airbus very soon would “have to press a button on a decision on stockpiling parts”.
She added: “It would be very expensive for us and a burden we don’t want to be suffering. Our key preference is for the UK to remain a home nation for Airbus. But we really need the conditions for us to be effective. We don’t want extra costs on our UK business which may make Airbus think differently about us.”
