Britain’s five-decade dominance of wing construction for Airbus SE jets is under threat from rival countries playing up the uncertainties surrounding Brexit to pitch for a share of the high-value, precision manufacturing work.

Airbus has been approached by at least seven governments looking to poach future wing production after the company raised concerns about Britain quitting the European Union, stirring fears at the planemaker’s U.K. unit that it may see an erosion of its leading role, according to people familiar with the matter.
 

Airbus wing production line at the Broughton factory.Photographer: Matthew Lloyd/Bloomberg
 

As Airbus assesses plans for its next A320 narrowbody, it has been courted by EU members France, Germany and Spain, as well as the U.S. and China, where it has assembly lines, and even Mexico and South Korea, according to the people, who asked not to be named as the approaches weren’t public.

Airbus executives have hinted for months that the U.K.’s stranglehold on wing manufacturing, in place since the planemaker’s inception in 1970, isn’t guaranteed. Brexit further complicates things by threatening to add costs and complexity just as countries worldwide step up pressure on the company to win a greater share of production.

“Our first commitment is not to any particular nation,” Enders told a gathering of British aerospace and defense executives on Jan. 15. “It is first and foremost to the global competitiveness of the company and our industry.” Airbus declined further comment. 

Uneven Spread

Asia represents almost one-third of Airbus sales and wants more production

 

Bloomberg data
*2016 revenue

While Prime Minister Theresa May has sought to secure a deal that maintains strong ties to the EU once Britain leaves the bloc next year, political infighting has hindered progress in the negotiations. The uncertainty has caused companies from banks to automakers to reassess their U.K. investment plans.

As Brexit negotiations progress, the U.K. “will continue to work closely with aerospace companies to ensure they can continue to benefit from a frictionless trading environment,” the Department for Business said in a statement.

The British government provides financial support for Airbus wing development, and the U.K. is home to 15,000 of the company’s workers, or more than 10 percent of its overall staff. Airbus says its wing factory in the Welsh city of Broughton, a center of global aviation since it manufactured bombers during World War II, is one of its most productive. A second site in Filton, in southwest England, is mainly responsible for wing design.

“I’m sure the Germans would like more wing work, as would the French, as would the Spanish,” said Mark Tami, the opposition Labour Party lawmaker who represents the area that includes the plant. “This is a message we need the U.K. government to understand.”

New Model

Wings are one of the most complex part of an aircraft, which is why the U.K. has closely guarded its expertise in that field, drawing the envy of other sites in the Airbus organism. The German government, in particular, has complained in the past of not getting its fair share of work on key programs like the A350, and underpinned its protest by withholding some loans. 

While shifting existing work away from Broughton would be costly, Airbus may have an opportunity to select a new wing-assembly hub for an upcoming program. Plans for the next generation of its A320 narrow-body call for all-composite wings aimed at helping lower fuel consumption by 30 percent, one of the people said.

The U.K. makes composite wings for the A350, the company’s newest wide-body, using components manufactured in Spain -- which could give that country an edge in winning production contracts for the new A320 program or other models in development.

The head of Airbus U.K., Katherine Bennett, has already flagged concerns that China -- which accounted for a quarter of Airbus jet deliveries last year -- was “knocking at the door” looking for more work.

China Knocking

Airbus is increasing output at its plant in China, where it makes some wings and assembles about four narrow-body jets a month in Tianjin. Korea Aerospace Industries Ltd. already makes wing panels for the A320. And Airbus’s A320 plant in Mobile, Alabama, opened two years ago at a cost of 0 million, could benefit from a U.S. or Mexican wing factory.

Enders has said the U.K. will remain “very important” to Airbus after Brexit and that the company would like to continue to call it a home country, while adding that leaving the EU will strain supply chains and diminish the efficiency of its operations.

“There is a lot at stake, and we cannot as an industry perpetually walk on the edge of a cliff,” Enders said at the aerospace meeting. “Brexit, I’m afraid to say, is not going to strengthen, but it’s going to weaken Britain industry and it will weaken also British aerospace industry.”

source: Bloomberg