Brexit: Airbus starts to 'press button on crisis actions' over fears of 'no deal' EU withdrawal

Warning over the loss of thousands of jobs should serve as a 'wake-up call' to government, MPs say

Aerospace giant Airbus has warned that it has started to “press the button on crisis actions” as fears of a “no-deal” Brexit could force it to pull out of the UK, causing the loss of thousands of jobs.

In one of the most significant interventions from big business since the Brexit vote, the European planemaker said it would “reconsider its investments in the UK and its long-term footprint in the country” if Britain left the European Union’s single market and customs union without a transition agreement.

The warning must act as a “wake-up call” for the government, MPs said, as Airbus employs 14,000 people at sites including Bristol, Portsmouth and North Wales, and a further 110,000 jobs could be affected through the supply chain.

Business leaders are becoming more critical of the lack of clarity from the government over future customs arrangements, which has proved a sticking point in the Brexit talks due to concern about the prospect of a hard border in Ireland.

Theresa May has ruled out staying in the EU’s customs union but different Brexit factions in her own party are deeply divided over the way forward.

In a Brexit risk assessment on its website, Airbus said the planned transition period - due to run until December 2020 - was too short and it would “carefully monitor any new investments in the UK and refrain from extending the UK suppliers/partners base”.

Chief operating officer Tom Williams told the BBC’s Today programme: “We’re becoming increasingly frustrated with the lack of clarity and obviously time is running – we’re coming up to less than nine months to go.

“Now we have to come to the point where we have to make serious decisions. Quite often those decisions are long-term in nature and without clarity it’s too dangerous for us to proceed.

“We’re talking about decisions in terms of safety stocks, buffer stocks of components, assuming that there will be chaos at the borders and that material won’t be moving freely.

“We are talking about ‘do we invest in further capacity?’ And we are also talking about what will happen to components from suppliers to us and to airline customers, which today are certified under IATA rules and at the end of March next year those certifications will be invalid.

“Those components won’t be able to be fitted in aeroplanes.”

Asked how soon decisions would have to be taken, Mr Williams said: “As we go through this summer, over the next weeks, we need to get clarity. We are already beginning to press the button on crisis actions.

“The challenge of this is not a one-off decision. It will be a series of significant decisions that will accumulate as we go over the next couple of months.”

In its risk assessment, Airbus says it is “getting increasingly concerned by the lack of progress on the Brexit process”.

Vital parts cross the channel multiple times, so the business relies on “frictionless trade” under customs union and single market rules, it added, saying “any change in customs procedures, logistics and environmental standards would have major industrial and cost impact”.

It went on: “A no-deal Brexit must be avoided, as it would force Airbus to reconsider its footprint in the country, its investments in the UK and at large its dependency on the UK.

“Given the ‘No-deal/hard Brexit’ uncertainties, the company’s dependence on and investment in the flagship Wing Of Tomorrow programme would also have to be revisited, and corresponding key competencies grown outside the UK.

“This extremely negative outcome for Airbus would be catastrophic.

“It would impair our ability to benefit from highly qualified British resources, it would also severely undermine UK efforts to keep a competitive and innovative aerospace industry, while developing high value jobs and competencies.”

Darren Jones, whose Bristol North West constituency contains the firm’s Filton wing plant, said it was a “shambolic mess”.

The Labour MP and People’s Vote supporter 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.”

Conservative MP Stephen Crabb said the warning from Airbus should be a “wake-up call”.

The former Welsh Secretary, said: “The enormous Airbus factory in North Wales is one of the jewels in the crown of UK manufacturing. This is a wake-up call.

“A pragmatic, sensible Brexit that protects trade & jobs is vital.”

And Sir Keir Starmer, the shadow Brexit secretary, tweeted: “If proof was needed that the PM’s Brexit red lines need to be abandoned (and fast), this is it.”

Unite’s assistant general secretary Steve Turner said: “People voted to leave the European Union, but didn’t back leave to lose their jobs and see their livelihoods smashed on the cliff face of a ‘hard Brexit’.

“Theresa May needs to ask herself whether she is willing to lay waste to vibrant manufacturing communities on the altar of Conservative party interests and Tory infighting.

“If the answer is no, then the government needs to provide certainty over the UK’s relationship with the European Union to unlock investment by securing frictionless trade and a regulatory framework agreement for the aerospace industry as a matter of urgency.”

A government spokeswoman said: “We have made significant progress towards agreeing a deep and special partnership with the EU to ensure trade remains as free and frictionless as possible, including in the aerospace sector, and we’re confident of getting a good deal that is mutually beneficial.

“Given the good progress that we are continuing to make in the negotiations we do not expect a no-deal scenario to arise.

“The government is working closely with companies to understand their concerns ahead of leaving the EU and alongside industry will invest almost £4 billion by 2026 to ensure the UK remains a world leader in civil aerospace.”

BMW also warned about the uncertainty caused by Brexit.

Ian Robertson, special representative of the BMW Group in the UK, told the BBC: “If we don’t get clarity in the next couple of months we have to start making those contingency plans – which means investing money in systems that we might not need, in warehouses that might not be usable in the future, in effectively making the UK automotive industry less competitive than it is in a very competitive world right now.

“That is a decisive issue that ultimately could damage this industry.”