Automakers, Aerospace Lament No Targeted Aid in U.K. Bailout
Airbus Union in U.K. Calls for French, German Style Job Support
(Bloomberg) -- The U.K.’s failure to set out specific support for aerospace or automaking in its 30 billion-pound ($37.6 billion) package to help the economy get through the coronavirus has left the two key sectors feeling vulnerable.
Planemaker Airbus SE’s main U.K. union said thousands of aerospace workers across the country will fear for their jobs after Chancellor Rishi Sunak left out targeted aid for manufacturing in a plan issued Wednesday.
The U.K.’s automotive trade group added that it “stands alone” among Europe’s largest carmaking countries in failing to provide dedicated measures.
“It’s bitterly disappointing the chancellor has stopped short of supporting the restart of one of the U.K.’s most important employers and a driver of growth,” Mike Hawes, chief executive officer of the Society of Motor Manufacturers & Traders, said in a statement.
Sunak unveiled plans to get Britain through what could be the worst recession in 300 years. The measure include a cut to the value-added tax for tourism and hospitality businesses, and a 2.1 billion-pound plan to fund jobs for young people hit by unemployment. But the chancellor resisted calls to extend beyond October the U.K. furlough subsidy that the aviation and auto industries have relied on.
Airbus said last week it plans to eliminate 15,000 positions across its commercial aviation division, with 1,730 jobs to go at the company’s U.K. locations. The decision will result in 81.3 million pounds in lost wages in the country, according to a study from Acuity Analysis commissioned by the Unite union.
“While our competitors in France and Germany have pumped billions of targeted support into their aerospace industries to protect jobs and maintain skills, the U.K. has failed to take similar action,” said Unite national officer for aerospace Rhys McCarthy.
Hardest Hit
Aerospace has been among the hardest-hit sectors on the virus, with a knock-on effect from grounded flights leading airlines to delay plane orders and manufacturers to slash jobs. The Airbus job cuts are set to hit U.K. employees harder, as France and Germany extend their furloughs and plow billions into supporting the sector.
Staffing cutbacks at the European planemaker’s wing plants in Broughton and Filton will generate a loss of around 1 billion pounds to the local economy, according to the Unite study.
European airlines, airports and aerospace companies have set plans to eliminate more than 110,000 jobs, including 9,000 positions at U.K. enginemaker Rolls-Royce Holdings Plc.
Bentley, Aston Martin Lagonda Global Holdings Plc and supplier Johnson Matthey Plc are among the European automotive manufacturing companies planning to shed more than 50,000 posts in total, based on a Bloomberg tally.
More U.K. jobs are at risk, and automakers are seeking sector-specific measures to support cash flow such as business rate holidays, tax cuts, along with policies that would boost consumer confidence and big-ticket purchases, according to the SMMT.
No Added Furloughs
Sunak ruled out extending salary support measures and said it would risk giving people “false hope” that their jobs will continue to exist. The manufacturing sector has called for a targeted scheme to reflect the reality that demand has evaporated in the near-term, while preserving skilled workers for its eventual return.
Unite wants to see an extension of the scheme as well as a specific aerospace fund which could take equity stakes in companies. The next planned statement from the chancellor will come in the autumn.
©2020 Bloomberg L.P.