• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • COMTECH banner

BATTLESPACE Updates

   +44 (0)77689 54766
   

  • Home
  • Features
  • News Updates
  • Defence Engage
  • Company Directory
  • About
  • Subscribe
  • Contact
  • Media Pack 2024

UK Aerospace and Brexit – Trouble Ahead? By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

June 26, 2017 by Julian Nettlefold

As the Brexit negotiations begin in Brussels this week, suffice to say perhaps that until some or all of the many genuine concerns can be allayed, the UK aerospace industry will continue to find itself stuck between a rock and a hard place.

This is a complex industry and one that while being for the most part very fit for purpose in respect of efficiency and strength, knows all too well that the outcome of the Brussels negotiations will decide whether as an industry it will be able to continue moving from strength to strength or whether it should better prepare to face the prospect of serious fall out from Brexit.

With repercussions of the Brexit decisions now starting to unfold, it no longer matters whether you believe the decision by Britain to leave the European Union was right or wrong. We are on the road to departing and what matters to an industry such as this is limiting the damage. Make no mistake, aerospace is a vitally important industry to the UK and one that has grown exponentially over the past twenty years. The bottom line is that our options are too few and in respect of maintaining our international strength, they are dependent on what David Davies and his team of Brexit negotiators can achieve in Brussels.

Thanks to manufacturing companies such as Airbus, Rolls-Royce and BAE Systems and other important companies that engage in a mix of either manufacturing, design engineering or service support and that will inevitably include aspects of defence such as Boeing, Cobham, Meggitt, GKN, Lockheed Martin, L3, Raytheon, Leidos, Northrop Grumman, Babcock International are, one way or another, all impacted by Brexit.

Airbus at both its Filton, Bristol and Broughton, North Wales plants employ well in excess of 12,000 personnel combined and Rolls-Royce employs over 8,000 people in Derby and many other elsewhere. With 6,000 workers in Belfast, Bombardier is also a big employer in the UK aerospace industry.

The list of small, medium and large specialist companies that engage in the UK aerospace industry exceeds 2,400 and with organisations such as the Aerospace Growth Partnership working hard to encourage investment and more to be spent on research and development technology to ensure Britain stays at the forefront of the industry, the future could, provided Brexit negotiations cater to protect the status quo of the industry, look very good.

To achieve all that we could do in the future requires no room being allowed for complacency. Manufacturing, technical and design engineering support aside, the majority of those employed within the UK aerospace industry are engaged in some part of the overall supply chain. Others engage in MRO, support services or play some role within the creation of research and development technology. In respect of both direct and indirect employment, latest figures suggest this translates to aerospace accounting for around 250,000 jobs and sales that are estimated to be worth in excess of £30 billion to the UK economy. Importantly, over 90% of aerospace products manufactured in the UK are exported and the value of this according to trade organisation ADS is put at £27.7 billion. Then there is the additional benefit to the economy of the taxation take from what is in the main, a very profitable industry.

While the UK continues to play to its huge strengths in wing and power turbine technology there are companies and indeed, countries within the EU that are actively looking to grab parts of the wings business if they can. Indeed, the UK is already reported to have been falling behind some of its continental European rivals in respect of investment in other related key aerospace infrastructure projects such as test beds for engines and aircraft structures that support the development of high-value design and cutting edge technology, this according to a recent report published by the Aerospace Technology Institute.

Arguably Britain has also already begun to lose out as the commercial aircraft manufacturing industry has moved increasing from using aluminium as the core material to build aircraft fuselage. Today both top and bottom skins of wings for the Airbus A350 are now built in Spain and Germany.

The many aspects of Brexit related concerns that could, if negotiations fail to find some kind of compromise, seriously damage the UK aerospace industry include serious fears in respect of customs border control implementation, skills shortages caused by a change to immigration policies, the importance of ensuring that the UK remains a member of the European Aviation Safety Agency (EASA) regulatory body and thus ensuring common standards in regard of all aspects of aircraft and aerospace certification processes and fears that aerospace companies based within the EU would quickly engage in protectionist policies that would have serious implications on the long term future of new investment being prevented from coming into the UK.

The latter point is hugely important and put simply, if the UK was forced to go it alone and create a separate regulatory regime, even if this was to be created along exactly similar lines and rules that govern EASA, the additional costs and process requirements together with the probability that there might need to be a double authorisation required by EASA would potentially not only double the cost for UK companies supplying components to the EU but also act to discourage investment in the UK sector.

Under existing World Trade Organization (WTO) rules the aerospace industry is exempt from tariffs. However, this ruling provides no guarantees and there remain considerable concerns that EU based companies engaged in the industry would do all that they could to encourage governments to find loopholes that might raise the cost of production for UK aerospace businesses. For instance, this could include removal of EU exemptions on raw materials used to make components being reversed, raising the cost of UK manufactured parts and in the possibility of there being customs delays and increased requirement processes put in the way that could seriously delay both import and export of components and make the UK a far less attractive and cost effective solution.

Today it can be said that the UK aerospace industry is intertwined into the global supply chain. We manufacture wings for all Airbus aircraft here in the UK, a large array of commercial and military jet engines, propellers, actuators, fuel tanks, a significant amount of landing gear used on both commercial and military aircraft, aircraft seats and cabin interior equipment. The UK has long been the second largest player in the aerospace world after the USA and in respect of exports, the UK is the fourth largest.

None of us engaged within or who are supporting our industry should be under any illusion that Brexit creates many challenges. Whilst Brexit may be good for some industries it is, I am afraid, just no use our suggesting that in the UK aerospace industry we have all that we need to mitigate the circumstances caused by Brexit.

Right now it appears that what industry wants to see occur in respect of Brexit negotiations is not about to be prioritised. We will have to live with the uncertainty caused for just a little longer but in the meantime all of us, the likes of the CBI, EEF and all the other lobbying bodies looking to our trouble government to protect the UK aerospace industry from being ravaged by those in France, Germany, Spain and elsewhere that would love to take a larger slice of the aerospace industry cake for themselves from achieving their respective goals.

(Commentary will return on Thursday)

CHW (London – 20th June 2017)

Howard Wheeldon FRAeS

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon

@AirSeaRescue

 

 

Filed Under: News Update

Primary Sidebar

Advertisers

  • qioptiq.com
  • Exensor
  • TCI
  • Visit the Oxley website
  • Visit the Viasat website
  • Blighter
  • SPECTRA
  • Britbots logo
  • Faun Trackway
  • Systematic
  • CISION logo
  • ProTEK logo
  • businesswire logo
  • ProTEK logo
  • ssafa logo
  • AtkinsRealis logo
  • IEE
  • EXFOR logo
  • sibylline logo
  • Team Thunder logo
  • Commando Spirit - Blended Scoth Whisy
  • Comtech logo
  • GoExporting logo
  • ECHODYNE logo
  • Supercat logo
  • Galvion logo
  • Leonardo DRS logo
  • MTC logo
  • IDC logo
  • IDC logo
  • DVD2024 logo
  • SDSC logo
Hilux Military Raceday Novemeber 2023 Chepstow IAV 2024

Contact Us

BATTLESPACE Publications
Old Charlock
Abthorpe Road
Silverstone
Towcester NN12 8TW

+44 (0)77689 54766

BATTLESPACE Technologies

An international defence electronics news service providing our readers with up to date developments in the defence electronics industry.

Recent News

  • HENSOLDT acquires ESG Elektroniksystem- und Logistik-GmbH

    December 5, 2023
    Read more
  • NAO Report – MoD Equipment Plan for 2023–2033 Is Unaffordable

    December 4, 2023
    Read more
  • AUKUS Defense Ministers Meeting Joint Statement

    December 2, 2023
    Read more

Copyright BATTLESPACE Publications © 2002–2023.

This website uses cookies to improve your experience. If you continue to use the website, we'll assume you're ok with this.   Read More  Accept
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT