Tom Williams, chief operating officer and president of commercial aircraft at the European company, told MPs on the Treasury select committee that it would be “pretty scary” if Airbus were no longer able to operate a successful UK business with the ability to seamlessly move goods and people around the European Union.
Airbus employs about 15,000 people in the UK and makes wings at its factory in Broughton, north Wales.
“It would be a pretty scary model if we had Airbus and we didn’t have a successful business in the UK,” Williams said. “And I’m sure there’d be many people in Seattle and in Washington that would be more than delighted to see this scenario played out because they will take every opportunity to try and undermine the success of Airbus.
“I take the view that whatever is being decided in Washington will also be done very much with what is good for Seattle. So we enter into a dangerous phase.”
As well as the UK, Airbus has major manufacturing plants in France, Germany and Spain. Williams said that while the British business was so far unaffected by Brexit, decisions to invest in the UK over the longer term were at risk.
“At the moment we’re continuing to invest and we’re still highly committed to the UK. But clearly if we see a [change to the] macroeconomic climate or a blockage to the key operational points, it won’t change our decisions day by day, but it could in the longer term,” he said.
MPs also heard that multinational car manufacturers were already putting off investment plans in the UK while uncertainty reigns about what sort of trade deal the government might strike with the EU, and how long negotiations might take.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said: “I believe that companies are at least sitting on their hands … until there is a bit more clarity. I sense that the amount invested over the last 12 months will not be as high as the preceding one, two, three years.”
He said that Nissan’s decision in October to back more investment at its Sunderland factory was no guarantee that others would do the same.
Hawes warned in November that British car manufacturing was at risk of “death by a thousand cuts” if companies invested in other countries rather than the UK after the Brexit vote.
Airbus is an important employer in the UK. An announcement of a new order for 25 Airbus A330-300s from Air Asia in December will guarantee 1,500 direct jobs as well as thousands in the indirect supply chain. Airbus employs 6,000 people at its factory at Broughton in North Wales and 4,000 people at Filton, near Bristol. Link
Earlier – in July 2016
Airbus and Rolls-Royce, two of the biggest manufacturers in Britain, have warned that the government needs to swiftly secure favourable terms in trade negotiations with Europe to avoid jeopardising investment in the UK.
Rolls-Royce said it has held “high-level” talks with ministers about the areas that it is keen to resolve after the Brexit vote, while the UK boss of Airbus said he did not want to deal with thousands of pages of documents and tariffs when dealing with his colleagues in mainland Europe.
Airbus, which makes the A380 superjumbo, employs 15,000 people in Britain and issued some of the gravest warnings about the consequences of a vote to leave the EU in the run-up to the referendum. Speaking at the Farnborough airshow, leading figures from the Franco-German company and other major aerospace groups said they remained committed to their existing UK operations.
Tom Williams, chief operating officer of Airbus’s commercial planes unit, said on Tuesday that nothing had changed at the company in the short term, but it would have to make “big decisions” in three years’ time about investing in Britain, where Airbus makes wings for the A380 in Broughton, north Wales.
“We haven’t pulled back on investment in the months running up to Brexit. We have no major decisions on the horizon, which gives us two-three years for the whole thing to settle down. But then there will be big decisions,” he said.
“We need a situation that is no less favourable than now. When I build a set of wings in Broughton and send them to Toulouse, I don’t need a thousand pages of documents and tariffs. That’s not just for me, but all UK industries.
“With Brexit, nothing has changed in the short term, but of course future investment does come under review. But we could see a situation where we are in a positive scenario.”
Engine maker Rolls-Royce stressed that it was keen to secure agreements on the movement of labour, environmental standards and aviation regulations. Warren East, the company’s chief executive, warned that the main potential downside of Brexit for the company was uncertainty. Three-quarters of Rolls-Royce’s business is done outside the EU. “They [circumstances] may play out in an advantageous way, but it will be some years until we know,” he said.
Meanwhile, the chief executive of Boeing, Dennis Muilenburg, said Brexit would not change its approach to investing in the UK. The US aircraft manufacturer announced on Monday that it is doubling the size of its British business, creating 2,000 jobs.
“We have been here for 75 years and we have a very long-term perspective on our investment in the UK. So Brexit and some of the recent activities here doesn’t change that. We are going to maintain that long-term perspective and it doesn’t change our plans,” Muilenburg said.
Separate from Brexit, East raised the possibility of further cost reductions and job losses at the company as it undergoes restructuring. East has targeted up to £200m of annual savings by the end of 2017, but internal documents show that Rolls-Royce could earn an extra £1bn by boosting its profit margins, which would include further cost-cutting.
“I do not see any reason why we cannot achieve the sort of benchmark margin levels and that would imply that sort of number [£1bn], but it is not a fixed target. We will come out with another target when we have got something that we are sufficiently confident in that we can talk about tying a number to a period of time; like we have talked about £150m-£200m by the end of 2017. I do not want to come out with some sort of vague, hand-wavy ‘it’s a billion pounds … sometime … never’.
“One of the challenges we mentioned back in February with our full-year results is that we have to rebuild investor trust and you do not build trust by having hand-wavy arguments that nobody can really test you against.”