Brexit could cause Britian to lose U.K. aerospace clout
Britain risks losing clout in the aerospace industry, one of its largest skilled employers, due to concerns over its departure from the European Union, a corporate overhaul at Airbus and a new Franco-German push on defense, industry insiders say.
July 21, 2017 By Reuters
Initiatives from a new continental combat jet to a decision by Airbus to downgrade its U.K. representation, as well as the redeployment of some research projects, have left the $90-billion U.K. sector feeling increasingly sidelined.
France and Germany last week announced plans for a joint fighter, catching many in Britain off guard.
Though chiefly designed to rejuvenate the Paris-Berlin axis, the move has highlighted questions over Britain’s place in the European powerhouse after Brexit and left its biggest defense firm BAE Systems maneuvering for a place.
“Everyone is now simply acting on the basis that Brexit has happened, and let’s get on with life,” said former French security adviser Francois Heisbourg, chairman of think-tank IISS.
The move coincides with plans by Franco-German-led Airbus to shake up its U.K. management.
Airbus Group U.K. president Paul Kahn is leaving as part of wider plans to shed management layers, Airbus said this week.
Government affairs chief Katherine Bennett will run the Toulouse-based company’s UK arm as senior vice president.
Officially, the changes are nothing to do with Brexit. A top executive in Spain is also leaving the slimmed-down firm.
But the four-nation giant is aware of the intense focus on Britain’s role in flagship European ventures, while Airbus remains represented at more senior levels in France and Germany.
“You couldn’t say there is no link to Brexit,” a person familiar with the process said.
The industry’s ADS lobby, of which Kahn remains president, says aerospace and defense support 363,000 direct jobs in Britain and has warned against a ‘hard Brexit’ that could see trade tariffs and restrictions on movements of workers.
Airbus alone employs 12,000 in Britain where it builds wings for jetliners and campaigned to keep the country in the EU.
Although Bennett will report directly to CEO Tom Enders, Kahn’s departure after three years deprives Britain of a strong voice inside Europe’s largest aerospace group, insiders said.
The reshaping of Airbus’s U.K. presence does not end there.
Industry sources say civil planemaking operations chief Tom Williams is unlikely to be replaced when he eventually retires, leaving a significant gap in the firm’s U.K. profile.
Williams, who turns 65 on Friday, is Airbus’s “national representative” to Britain on key matters and has warned the country is entering a “dangerous phase” over Brexit. No departure date has been set for one of Britain’s top industrial managers.
Airbus declined to comment.
In the long term, Britain faces competition for wings production when design starts on the next generation of Airbus jets next decade. Germany and Spain both want the work.
For now, the chill toward Britain is felt mainly though a drip feed of small changes, though these collectively represent what one insider called an “insidious” threat to UK relevance.
Britain will have less responsibility for Europe’s Galileo satellite program. Some R&D work has been removed from British universities. And plans for a small but symbolic “Cyber Lab” at Airbus in Britain have been shelved.
“You are less likely to see UK leadership of projects with continental content. There will still be UK content but more likely under French or German leadership,” one source said.
That partially reverses the trend of recent years with rotary wing research placed in Britain after Airbus recently won a major military services contract.
Supporters say Britain remains attractive for investment, with public funding for new technologies and a weaker pound offsetting uncertainty over Brexit.
Asked whether she feared a stronger Franco-German defense axis leaving Britain in the cold, Defence Procurement Minister Harriet Baldwin told Reuters: “Far from it … We are very happy with how things are going with our European friends and allies.”
Senior commentators are worried about the health of Britain’s industrial base, however, especially if it fails to win a place in the planned Franco-German fighter program.
“…you have a certain critical mass of design and development engineers and if they are not fed with noble work they will dissipate over time,” said defense and aerospace consultant Brian Burridge, ex-commander of U.K. forces in Iraq.
He likened this to years of under-investment in nuclear power stations, which saw Britain turn to foreign partners.
“Just as we saw in our nuclear power-generation industry: if suddenly, for strategic reasons, you want to change your indigenous sovereign capability that would be very difficult.”