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How Brexit Can Impact The Aerospace Industry

Current Events

Britain's scheduled withdrawal from the European Union is predicted to have economic effects immediately and over the long term. British manufacturing companies, in particular, are likely to experience some serious upheaval. Fortunately, there are measures in place to help the transition be as smooth and efficient as possible.

The majority of the concerns surrounding Brexit stem from the possibility of a “no-deal” exit. This means that the UK may leave the EU without any agreement in place to maintain trade relationships between them. This would cost the UK their preferential status within the EU market, and subject UK-based manufacturers to the same standards as other non-EU nations. This means stricter customs regulations, tariffs, and increased difficulty maintaining supply chains, among other challenges.

The CAA vs. the EASA

Currently, British aerospace manufacturers fall under the auspices of the UK's Civil Aviation Authority (CAA). This regulatory body approves parts made in Britain for use in the rest of Europe, but this won't hold up if Britain exits without a deal in place. Initially, the plan was to negotiate a way for the UK to remain involved in European regulatory bodies. More recently, this has been modified to the UK choosing to set its own regulations instead. Should that occur, aerospace companies within the UK would no longer be able to sell their products to clients in mainland Europe.

In response, over 600 of the UK's 800 aerospace manufacturers have applied to the European Aviation Safety Authority to ensure that their products are still approved to come to market, as well as put pressure on officials to remain part of EU regulatory organizations. Without some kind of new regulatory arrangement in place, these companies could find themselves with a severely restricted market share.

Shaping Future Regulations

Should the UK choose not to continue participating in EU regulatory agencies, aerospace manufacturers may ultimately experience serious setbacks in bringing their products to market. Remaining outside of organizations like the EASA would make it very difficult—if not impossible—for UK companies to have a hand in influencing future regulations. In that case, not only would their products not have the stamp of approval for the mainland European market, they may fall short of regulatory standards. If these standards are proprietary information, they would also be left without a way to “catch up” and attempt to conform.

Drifting Jobs

If UK aerospace manufacturers are able to continue participating in the mainland market, Brexit is not likely to result in significant job losses or difficulties in securing new talent. If they don't, the UK may lose a lot of appeal for new investors, as well as experiencing delays at the border for new workers. Some companies, like Airbus, have also put pressure on UK officials by threatening to close down their factories in the UK if the UK and the EU aren't able to strike a deal.

Trade Freedom

One significant concern involves the delicate balance between a European market and trading freedom. While aerospace manufacturers have voiced legitimate concerns about losing the ability to sell their products in mainland Europe, officials have expressed equally legitimate concerns that striking the wrong deal could hamstring their ability to create new trade deals with other nations. While UK government officials have stated their intention to “[maintain] high standards” after exiting the EU, concerns about free trade have led to negotiations to remove references to EU regulatory organizations from the UK's declaration.

Preparing for a No-deal Exit

In addition to facing the possibility of a restricted market, UK aerospace manufacturers have also spent millions of euros on preparation. Since a no-deal exit could result in significant delays in supply, Airbus has already invested tens of millions of euros in stockpiling vital parts. Leaving the EU without a trade agreement in place would also restrict the UK's access to technology and engineering resources, so many companies are also investing heavily in shoring up their cyber security. Whether UK officials strike a deal or not, aerospace manufacturers have sunk a lot of resources into ensuring that they are prepared for the worst.

No matter how Brexit impacts the aerospace industry, UK-based manufacturers are making an admirable effort to get ready for it. Between applying to EU regulatory agencies, stockpiling parts in the event of supply chain disruptions, tightening up security, and preparing to withdraw from the UK should it become necessary, they are readying themselves for whatever Brexit may bring.