Airbus to Expand in UK After Brexit

Mish

Airbus CEO Guillaume Faury announced expansion of Airbus production in the UK. Trump won't be pleased.

The Brexit doom and gloomers have been proven wrong already as Airbus Pledges Expansion in the U.K. After Brexit.

Chief Executive Officer Guillaume Faury said Prime Minister Boris Johnson’s Brexit deal, which will see Britain leave the European Union on Jan. 31, means the split from the bloc “is at least now for certain,” though the nature of future ties still needs to be worked out.

The European aerospace giant, which employs more than 13,500 people at 25 U.K. sites and supports 100,000 supplier jobs, warned under previous CEO Tom Enders that future production might be in doubt as the prospect of a no-deal Brexit threatened to create border delays and inflate costs.

“Airbus is committed to the U.K. and to working with the new government on an ambitious industrial strategy,” Faury said late Wednesday at a company event in London. “We see great potential to improve and expand our operations in the U.K. this year.”

Wings for all Airbus models are made in Britain, chiefly at sites near Chester and Bristol, as well as in Belfast at a plant previously owned by Bombardier Inc. and now operated by Spirit AeroSystems Holdings Inc. The U.K. will also play a vital role in helping Airbus transition to low- and zero-carbon technology, Faury said, while also praising its increased funding for the European Space Agency.

Trump Will Suck Airbus Into the Crisis at Boeing

A few days ago I wrote Trump Will Suck Airbus Into the Crisis at Boeing

This is an election year and Donald Trump is running for reelection. Upping the ante in the European trade wars will make him look tough to his base. Never mind that the Federal Reserve concluded the trade wars are hurting the US economy, businesses and workers.

Airbus is almost certain to become a target for higher tariffs. I won’t rule out adding the Mobile (AL) final assembly line to sanctions despite Alabama being the No. 1 supporter of Trump. There is no way Alabama will vote for a Democratic challenger to Trump; it’s a completely safe state.

Those two paragraphs are according to widely respected Leeham News and Analysis. They predate this UK Airbus expansion announcement.

Three Leeham Points

  • The Trump Administration is thinking about increasing the tariffs on Airbus aircraft from 10% to 25%. It has WTO authority to boost tariffs to 100% of the value of the airplanes.
  • The Administration is said to be unhappy with EASA, the European certification regulator, taking the stance it has, insisting it wants to independently review and recertify the MAX.
  • And, unrelated to the MAX, the Administration is said to be unhappy that the EU is dragging its feet in approving the Boeing-Embraer joint venture.

Trump Caught

If Trump does what he says, even more Airbus production will move elsewhere. If he doesn't, he gets to simmer.

Regarding Brexit, please consider Brexit Collusion Between France and UK? What Really Happened?

Mike "Mish" Shedlock

Comments (14)
No. 1-6
Sechel
Sechel

Orders are secured years in advance. I suspect airlines will lobby hard to see Airbus tariffs not happen. As both Boeing and Airbus are both crony capitalist business models that benefit form protectionism I doubt any one has the upper hand. And Boeing can't increase production easily and is still dealing with 737-MAX issues. Another Trump tariff that doesn't seem well thought out. This would wind up being a huge tax on airlines in an industry that never seems to do well long term

Sechel
Sechel

I suspect what Airbus is doing is increasing production around the world and not make any single country or region's please of origin account for too much of the total in effect hedging their bets. When Trump placed tariffs on China U.S. companies responded by shifting some production to Vietnam and other Asian nations.

This was from an Airbus press release just a few days ago.

Mobile, AL, USA – Airbus announced today that, as part of its plan to produce 63 A320 Family aircraft per month in 2021, the company will expand its industrial footprint in the U.S. by increasing the production rate of A320 family aircraft at its Airbus U.S. Manufacturing Facility in Mobile to seven per month by the beginning of next year. This increase, and continued recruiting for the A220 manufacturing team, will result in a further 275 jobs added at the Alabama-based facility over the next year. The company will also invest another $40 million through construction of an additional support hangar on the site, bringing its total investment to more than $1 billion in the Gulf Coast city.

Airbus's announcement hinges on a Brexit deal however. The aerospace giant had warned it could move wing-building out of the UK in the event of a no-deal Brexit.

Advancingtime
Advancingtime

Trump and Boeing should be more worried about China's C-919. The C919, being built by Chinese state-owned aviation manufacturer Commercial Aircraft Corp of China (COMAC), is a perfect example of Chinese intentions and is a kick in the teeth of those endorsing free trade.

COMAC has spent 11 years and $6.5 billion developing the C919, which is seen as China's answer to the Boeing 737 and Airbus 320. Deliveries of the C-919 should start next year.

The C-919 hits right at the core market of its competitors. It does not take a rocket scientist to calculate how rapidly China can ramp up production. The article below gives the details behind this threat to Boeing's dominance.

JustASimpleMan
JustASimpleMan

No surprise at all. Boeing are bleeding to death, Airbus getting record orders and the UK makes all of the wings (except for the diminutive A220, which is actually a Bombadier aircraft).

I'm sure that Macron would love to see them made in Toulon but the bottom line is that without the UK, there is no Airbus. Don't forget that Rolls Royce make a significant slice of the engines too. The Chinese, the Japanese, anyone can knock up a fuselage but it ain't no good without wings and engines.

.

Tony Bennett
Tony Bennett

Just another (potential) tariff that DJT can walk back at his leisure (as in whenever he wants to boost stock market to record high(er) in quest to win re-election).

Capn_Renault
Capn_Renault

Boeing and Airbus are both state sponsored companies, just like the ones the EU and US like to criticize in China.

Replace Trump and Macron, and the stand-off won't change one bit


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