As the European Union prepares for a no-deal Brexit outcome, aeronautics leader Airbus has issued one of the strongest statements yet, warning it could pull its investments in the UK if no agreement is reached with the EU.
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In a risk assessment released this week, Airbus – which employs 14,000 people across 25 sites in the UK – warned it would "reconsider its investments in the UK, and its long-term footprint in the country" if Britain leaves the single market and customs union without a transition agreement.
Tom Williams, Airbus commercial aircraft chief operating officer, said the company is preparing for major changes to its business operations with Brexit tipped to create major operational challenges to the company and the broader UK aerospace industry.
"In any scenario, Brexit has severe negative consequences for the UK aerospace industry and Airbus in particular. Therefore, immediate mitigation measures would need to be accelerated," 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."
Airbus said that the memorandum between the UK and EU makes its clear that an orderly Brexit with a withdrawal agreement is preferable to a no-deal scenario, the planned transition, which ends in December 2020, is still too short for the EU and UK governments to reach key agreements and will not allow Airbus and other companies to implement the required changes across supply chains.
Airbus has more than 4,000 suppliers in the UK and an integrated supply chain with parts crossing the English Channel multiple times. Airbus said this is operated on a just-in-time basis relying on frictionless trade provided by the combination of the EU customs union and single market rules. Any change in customs procedures, logistics and environmental standards would have major industrial and cost impact.
"We have sought to highlight our concerns over the past 12 months, without success," Williams said.
"Far from Project Fear, this is a dawning reality for Airbus. Put simply, a no-deal scenario directly threatens Airbus’ future in the UK."
The design, production, maintenance, repair and overhaul, and use of parts in the aerospace sector follows tight regulations and can only be executed by certified organisations under EASA, such as design organisation approval (DOA), production organisation approval (POA) and maintenance organisation approval (MOA). More than 10,000 original aircraft parts originate in the UK.
In the absence of a Brexit agreement, UK aerospace companies will not be covered anymore under existing regulatory approvals, including EASA approvals. All UK companies will need to transfer their DOA, POA and MOA into the EU.
This would mean that should a single supplier not be certified, its parts cannot be installed and consequently prevent the delivery of aircraft.