UK aerospace leaders are warning that a no-deal Brexit could be a disaster for an industry that employs over 120,000 people and generated 35 billion pounds in revenue in 2017.
The aerospace industry is highly specialized and most key players are multinational companies—which makes it heavily dependent on having a stable connection with European and global supply chains. A no-deal Brexit threatens to end all that, putting the sector at a significant competitive disadvantage.
“It is important that the UK aerospace industry is able to maintain its high value manufacturing, world-leading research and growing international trade without any disruption,” said Colin Brown, chief executive of the Institution of Mechanical Engineers.
A no-deal Brexit means the UK will leave the European Union (EU), and its common market, without a trade arrangement that maintains the country’s trading relationship with the EU and allows for continued participation in that market as a preferential partner. The British government has been unable to negotiate such an arrangement, and time is running out—the UK is set to leave the EU on March 29.
If no deal is in place by then, Britain will lose its “insider” status and will have to enter into the market on the same footing as any other non-European country. This means longer waits at the border for parts and workers, a loss of sweetheart trade agreements, tariffs, reduced access to technology and engineering resources, supply chain slowdowns, and a significant loss of competitive power.
For example, British aircraft parts can be used in the EU if approved by a Civil Aviation Authority in Europe. But a no-deal Brexit means those approvals would no longer be valid. Bombardier, Rolls-Royce and Cobham—and more than 200 other companies in the sector—have applied to have their parts regulated by an EU member so they can continue to sell their parts in Europe.
The industry is preparing for the worst. Airbus has already spent tens of millions of euros preparing for a no-deal Brexit, including stockpiling parts and heightening IT security. “There is no such thing as a managed ‘no deal’; it’s absolutely catastrophic for us,” said Senior Vice President Katherine Bennett. “Some difficult decisions will have to made if there’s no-deal (...) we will have to look at future investments.”
Read more about what’s ahead for the global aerospace industry at Aerospace Trends to Watch in 2019.