Airbus's warning over its UK investment strategy, given the uncertainty of the future UK-European Union relationship, has prompted the government's business secretary to insist that an agreement suitable for the airframer is possible.
Faced with multiple questions over Airbus's concerns during a 25 June hearing in Parliament, business and industry secretary Greg Clark largely kept his responses centred on two central tenets – that Airbus's views should naturally be considered, and that the government was aiming to secure a future agreement which satisfied the needs of aerospace firms.
Airbus was "entitled to be listened to with respect", he said, adding that the government's intention is to secure a post-Brexit deal which will ensure that UK-manufactured products can be approved for use across Europe, with no "unnecessary friction", and allow skilled personnel to work across the multiple sites of an integrated operation.
Challenged that Airbus – if faced with new tariff barriers, customs procedures or regulatory divergence – could redirect investment outside the UK, to the EU or China, Clark retorted that he was "more optimistic" than some of his Conservative party colleagues over the prospects of a deal to avoid such a situation.
"The task before us is to make an agreement that implements [the decision to leave the EU] and which, at the same time, ensures that these avoidable threats of frictions and tariffs do not take place," he said.
"That is absolutely within our grasp and it is what [all parliamentary parties] should back during the months ahead."
Clark also suggested that Airbus's concerns had been directed not just at the UK government but also the negotiators on the EU side, and stated that he hoped the airframer's message "will be heard in Brussels".
Airbus has warned that it faces serious disruption to its production line if the UK withdraws from the EU single market and customs union without a deal that leaves its supply chain uninterrupted.
Clark said the UK-EU talks were moving away from terms of withdrawal and towards the future economic partnership.
"We are negotiating and setting out what we want to achieve through that, and this was always the time when that would be done," he said.
"For evidence from Airbus and other companies to come forward at this time is to be expected, given the focus of the discussions over the weeks ahead."
Clark refused to be drawn into condemnation of Airbus's warnings – disagreeing when one colleague suggested Airbus was making "ridiculous threats", and pointing out that companies should contribute to informed discussion. He also brushed aside scepticism of the government's ambitions for a UK-EU trade relationship.
Conservative pro-Brexit member Iain Duncan Smith noted the Airbus already operated outside of the EU, with its Chinese plants, while pro-Brexit colleague John Redwood argued that Boeing's investment in UK manufacturing showed that a complex supply chain could be run outside of the EU and "[gave] the lie" to any suggestion that the UK would not be able to continue supplying wings to Airbus.
"Given that our parts go backwards and forwards between the UK and the continent," replied Clark, "if we can avoid frictions, as I am certain we can, that enhances our ability to compete, which is to the advantage of Boeing as well as any other company in the industry."
Conservative member of parliament Mark Francois queried whether Airbus would really contemplate transferring its wing work to other facilities, such as Toulouse or Hamburg, given the expense and the scale of its investment in the UK.
Clark responded by describing this view as "too pessimistic", adding: "We do not want Airbus to be located in this country because it is too difficult for the company to go elsewhere.
"We want it to be here with enthusiasm because this is a good and profitable place to invest. I am determined that the [post-Brexit] deal we secure and the investment we make through our industrial strategy will add to our strengths and make us even more attractive."
Source: Cirium Dashboard
