UK based The Guardian reports that European based commercial aircraft manufacturer Airbus has confirmed that the company has undertaken serious consideration regarding the sourcing of aircraft wing manufacturing among British factories because of the continued lack of clarity relative to Brexit consultations. Airbus A320neo airplane

Tom Williams, the chief operating officer for Airbus Commercial Aircraft group recently told a BBC radio audience that his company was seriously considering whether aircraft wing sourcing should be continued or that alternative plans should be undertaken. The executive indicated the lack of current clarity was forcing Airbus’s hand and called on British government leaders to provide more specifics about trading arrangements under Brexit, which is scheduled for implementation in March 2019.

According to The Guardian report, he indicated:

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.

Asked if Williams was under political pressure from other European Union governments to sound the alarms, his response was that he was an engineer, and must deal with certainties.

Airbus reportedly directly employs 14,000 people among 25 sites across Britain with upwards of 100,000 jobs generated in the UK based supply chain. As Supply Chain Matters has published in prior commentary, the manufacturer is currently under enormous pressures to step-up the delivery cadence of its new, more fuel efficient single-aisle aircraft amid a number of significant supply chain related chokepoints.

This week, Airbus published a risk assessment relative to Brexit which reportedly provided a damning analysis for Britain leaving the EU without a definitive deal. It warned that that the currently discussed transition point of December 2020 did not provide enough time to reconfigure the supply chain and would likely cause disruption. In other words, a customs agreement or lack thereof, is noted as critical to Airbus.

Earlier this month, the U.K. government published long-awaited proposals addressing the problem of the border with Ireland, a remaining EU country, post Brexit. Reports had indicated that the effect was that the U.K. would not leave the customs union until a permanent, technology-enabled virtual border between Northern Ireland (part of the U.K.) and the Republic of Ireland was established. There were little specifics as to the when and how.

Implications

Once again, political developments relative to trade practices among nations and trading blocs nearly always impact inter-regional supply chain process flows. Today’s realities of just-in-time inventory flows across virtual regional borders is contrasted to political and corporate forces of clashing stakeholder interests.

The political backdrop of tensions among UK government Brexit hardliners and EU alliance countries under continuing threats for additional exits is heating-up to a Brexit boiling point. Many U.K. based businesses demand that that government pay more attention to their business and supply chain dependency needs while major EU based manufacturers such as Airbus seek utter clarity for maintaining a predictable and stable EU based supply chain ecosystem.

The need for a considerable step-up in production levels over the next three years can little tolerate delaying air cargo flights that carry completed wings or other aircraft components to assembly facilities destined to other European, U.S. or Asia based factories.  The report discloses that Airbus is considering stockpiling “billions of pounds” of parts as a continency to a Brexit disruption, which is ample evidence of the current Airbus production system cadence concern.

Crunch time as to planning and investment is becoming very real, hence the pressures and threats are building.

Obviously, there is a lot at-stake, both for U.K. jobs and for the continued existence of a well-developed aerospace supply chain.

 

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