Airbus Rips Apart the Imperial Delusions of Brexit
(Bloomberg Opinion) -- It would be a stretch to describe Tom Enders, a former paratrooper who steps down as Airbus chief executive in April, as “demob happy.” Besides Brexit, which threatens to upend the aircraft manufacturer’s European supply chain, Airbus is battling serious corruption allegations as well as various production challenges that have put pressure on cash flow.
Nevertheless, Enders has the air of a man whose problems will soon be someone else’s and thus he can finally say what he really thinks. So, on Thursday, he told us that the British government’s approach to Brexit is a “disgrace.” I urge you to watch his video address, and not just because Enders’ natty check blazer and roll-neck pullover suggests he takes fashion cues from Steve Jobs and Bertie Wooster (although perhaps the latter is helpful if your target audience is the arch-Brexiter Jacob Rees-Mogg).
The three-minute monologue categorically rips apart Brexiter delusions that everything will be fine in the event of crashing out of the EU without a deal and that somehow Airbus needs Britain more than the other way around. Airbus has always been outspoken about Brexit, but like many foreign-owned companies it faced a dilemma about how to communicate that alarm — until now.
Brexiters delight in painting such warnings as “Project Fear” (a kind of elite conspiracy against the vote to leave) and an affront to Britain’s sovereign right to decide its own affairs. This tweet from a Conservative member of the European parliament, responding to Enders by suggesting that Britain starts making its own planes, is a classic of the genre:
For a once largely sensible, pro-business political party, this is gob-smacking. Bannerman appears to advocate the expropriation of private property, as well as plucky little Britain launching a solo challenge to the Airbus-Boeing duopoly. Even China is finding that a difficult challenge.
With time running out before Britain departs the EU, it makes sense for Airbus to drop the diplomatic language and go for the jugular. U.K. lawmakers are already trying to kill the prospect of a “no-deal” Brexit, so any extra push from a major industrial employer can’t hurt. Warnings from Airbus have always carried more weight than even those from Britain’s car industry because of the high-tech manufacturing jobs and R&D supported by the company.
The ruling Conservative Party will look pretty incompetent if it delivers Brexit, only to usher in the twilight of one of the country’s most valuable industries. Even if a softer version of Brexit were forthcoming, the Toulouse-based Airbus has the right to decide where it wants to invest over the coming decades. This has been a concern since Britain sold out of the European giant more than 10 years ago; a departure from the EU only makes that worry more acute. Spain and other EU states would no doubt love to pick up some of the U.K.’s wing-manufacturing business, as Enders suggests.
Airbus plants are spread across several European countries and its supply chain is a modern marvel of cross-border complexity. Any policy that inhibits the free movement of goods or complicates certification of parts is thus pretty existential. The company spelled out the problem in a detailed risk assessment last year, which concluded that it could lose up to 1 billion euros a week in sales if Brexit is mishandled.
With Britain’s terms of departure as unsettled as they are, it would be irresponsible for Airbus to authorize new investment until it has clarity on the new regulatory and trading environment. That might take years. Enders’ sobering conclusion is that “in a global economy, the U.K no longer has the capability to go it alone.” The more reckless Brexiters would no doubt insist the opposite. They shouldn’t be surprised if multinational companies tell them to go right ahead and try.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.
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