The European aircraft maker Airbus could be the first of many firms to threaten to end its investment in Britain, putting tens of thousands of jobs at risk, if the government cannot provide urgent clarity on Brexit, the leading business lobby group has warned.
The CBI said a growing number of companies were making plans based on the assumption that Theresa May’s government would fail to strike a deal with the EU. The French-based aerospace giant Airbus, which employs 14,000 people in the UK, confirmed on Friday it was preparing to drop its UK investment plans as it started to “press the button on crisis actions”.
The firm, which operates from 25 sites in the UK and supports a further 110,000 jobs in its supply chain for parts and services, said it was working on the worst-case scenario – a no-deal Brexit – because of a lack of government detail on post-departure trading arrangements. Its concerns centre on fears that EU regulations will no longer apply from March 2019, when Britain leaves the EU, and uncertainty over customs procedures that could hit production and sales.
Josh Hardie, the deputy director-general of the CBI, said: “We’ve increasingly seen companies talking about speaking out as the possibility of no deal has grown. March 2019 is not far away when you’re talking about the kind of adjustments companies like Airbus would have to make to even be slightly ready for a no-deal scenario.
“Companies are now being forced to prepare for the reality of a cliff edge and I think we could see more statements like this if negotiations continue as they are.”
The head of BMW UK said the firm, which makes Minis and Rolls-Royces in Britain, needed clarity on future trading arrangements by the end of the summer.
Ian Robertson told the BBC: “If we don’t get clarity in the next couple of months we have to start making … contingency plans – which means investing money in systems that we might not need … which means making the UK less competitive than it is in a very competitive world right now.”
Downing Street said the prime minister would listen to the concerns of Airbus and that No 10 was confident the government would deliver a Brexit deal that could avert job losses.
“It’s right we talk to the industry when they raise concerns,” a Downing Street spokeswoman said.
“Airbus were in Downing Street with the prime minister in April as part of an aerospace roundtable, [the business secretary] Greg Clark spoke to them this week … we are listening to their concerns.”
Airbus could scrap plans to build aircraft wings at Broughton, north Wales, instead moving production to China, the US or elsewhere in Europe. The company is already stockpiling parts over fears that a hard Brexit could cause major disruption to production lines.
Airbus published a Brexit “risk assessment” on Thursday which said that if the UK left the EU next year without a deal it would force the Toulouse-based firm “to reconsider its investments in the UK, and its long term footprint in the country”.
The company makes wings for its bestselling A320 aircraft in Britain and also for its A330/A340 and A380 doubledecker superjumbos. It said it would “refrain from extending” its UK supply base, which consists of about 4,000 suppliers.
Tom Williams, the chief operating officer of the company’s Commercial Aircraft said the company was “seriously considering whether we should continue” the development of wings in the UK.
Allie Renison, the head of EU and trade policy at the Institute of Directors, said the statement from Airbus should serve as a wake-up call for Brexit negotiators on both sides of the table. “The UK and EU need to seriously up the ante in making progress not only towards a completed withdrawal agreed but also, crucially, a new future relationship,” she said.
Paul Everitt, the head of the trade body for the UK aerospace sector, ADS, said it was a “troubling time” for Airbus workers and worrying for the manufacturing industry.
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.
Britain’s car industry, which is heavily reliant on foreign investment, has already warned that a no-deal scenario would put thousands of jobs and hundreds of millions of pounds of investment at risk.
Rachel Reeves, the Labour MP and chair of the business, energy and industrial strategy committee, said: “Airbus and other businesses have been very reluctant to speak out, but this stark warning must serve as a wake-up call to government to ensure we do not crash out without a deal, which would have devastating consequences for UK jobs and for many of the UK’s most important industries.”
Clark has repeatedly warned that thousands of manufacturing jobs could be put at risk if the UK did not “minimise friction” in its trade with the EU after Brexit.
The comments by Airbus may provide a boost to cabinet members who prefer a soft Brexit and have argued for closer alignment with EU regulation and a customs partnership to minimise border checks.
Asked if he was under political pressure to sound the alarm, Williams said: “I’m an engineer, not a politician, I have to deal in certainty … We can’t continue with the current vacuum in terms of clarity.”
Downing Street said the company was “within their rights to communicate how they want to” but said dialogue would continue.
“We are confident that we are going to get a good deal where trade is as free and frictionless as possible, including for the aerospace sector,” the prime minister’s spokeswoman said.
“The UK makes a vital contribution to the success of the European aerospace industry and it is in no one’s interest to disrupt the sector’s cross-border supply chain. We have made good progress. Now we are working towards a full agreement in October and part of that work is listening to businesses.”
