Brexit isn't done: what next for the UK's aerospace and defence industries?

Defence is intertwined with manufacturing, which means EU withdrawal could create significant upheaval.

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Pigs may not be able to fly, but whales can. The Airbus Beluga is a specially modified plane, designed to transport aircraft wings from Wales to the continent.

"The Beluga is one of the great sights of the skies in Chester," says Chris Matheson MP, whose constituency sits just across the border from Airbus's Broughton plant in Wales. "It marks the success of the supply chain flying between Hamburg, Toulouse and Chester."

The swollen belly of the Beluga carries a tale of European manufacturing success. Airbus makes wings in the UK, fuselages in Germany, tails in Spain, and noses in France. All the parts are then flown to Hamburg or Toulouse to be assembled. And what with the current travails of their main American competitor Boeing, business is booming.

"You cannot get an Airbus A320 for the next five years because all the slots are booked," says Paul Everitt, CEO of the trade body for the Aerospace, Defence, Space and Security sectors (ADS).

But Airbus has flown into some turbulence. Last year its German CEO Tom Enders branded the uncertainty over Brexit a "disgrace". He has since been replaced by Frenchman Guillaume Faury, who has taken a more emollient tone, most recently saying that there is "great potential to expand" its British operations. But, for a European manufacturing company that employs 13,500 people in the UK, there can be no two ways about it: leaving the single market and the customs union is bad, bad news.

To take one example, the Airbus 380 contains around four million components. With the aerospace industry running just-in-time supply chains, a hold up at the border can have disastrous implications. If just one of those four million components is missing because a driver has left customs paperwork on the dashboard at Calais, then the plane won't get built.

"From Spitfire to Concorde to the A380, generations of Bristol families have been involved in the advanced engineering and manufacturing of components for the aerospace industry," says Darren Jones, MP for Bristol North West. "Any delays or increased cost though will have an impact."

And it is not just components that can be held up at the border. There is also the small matter of people.

"A lot of the Airbus workforce are pan-European," says Jones. "A lot of my constituents will spend time in Toulouse on training."

At the moment, industry officials are predicting that aerospace employees will still be able to cross borders quite freely. But they are concerned about losing out on R&D funding for new green technologies. And they are very concerned about the European Aviation Safety Agency (EASA).

EASA come, EASA go

Realistically, wherever you are, if you want to build a plane to be sold around the world you have to comply with either European law (EASA) or American law (the Federal Aviation Administration or FAA). Currently manufacturers with bases in the UK – Rolls-Royce, BAE, Bombardier, Leonardo, GKN to name but a few – benefit from EASA.

"In aerospace we are moving towards a harmonisation of international standards," says Paul Everitt. "EASA and the FAA are the two dominant agencies. They are the people who determine what is internationally acceptable."

It is estimated that the UK contributes 40 per cent of technical expertise to EASA. Then through EASA, the UK has reciprocal agreements with not only the American FAA but also Brazil, Canada and in the near future China and Japan. "We move from a place where we have significant input to one where we wouldn't," says Paul Everitt. Furthermore, there is no safety case to change according to Everitt. "Any government that chooses to shift away needs to demonstrate very clearly that there will be no ill effects."

The problem for the government is that — even if it has only made one ruling in 38 years — the ultimate arbiter of EASA is the European Court of Justice. Clearly, this does not sit well with a Brexiteer understanding of sovereignty (a number of Conservative MPs with interests in the aviation industry declined to be interviewed). 

In order to stay competitive, aerospace will inevitably end up complying with EASA. But for political reasons, compliance needs to look like an autonomous decision. One convenient option doing the rounds is for the UK's own safety agency — the Civil Aviation Authority — to pay EASA to do oversight on its behalf.

"That has certainly been a scenario we have discussed," says Paul Everitt. "If the UK government decided not to be a part of EASA, I can't believe that they would see it as a great idea to outsource oversight to EASA, albeit that it would be a neat and reasonably effective solution."

In effect, the UK would pay to lose its say. By all accounts, industry figures think it is an illogical position, but it might just prove politically expedient. 

Going down like lead Typhoon

Because the civil and defence aerospace industries work cheek by jowl, there are many national security implications in moving away from a close relationship with Europe. When it comes to aerospace, safety truly is in numbers.

A good way of explaining Brexit to a toddler would be through the medium of fighter jets. For 40 years, the UK has cooperated with European partners in building the Eurofighter Typhoon. However, increasingly the UK buys F-35s from the Americans.

"The next-generation warplane should, if possible, be developed by a consortium including the UK," says Jamie Stone, defence spokesperson for the Liberal Democrats. "When you buy the F-35, you're never going to have all the intellectual knowledge about that aircraft, because there's no way Lockheed Martin are going to tell us absolutely everything."

Governments tend to be cagey about sharing defence technologies — even close allies like the UK and the US. So ideally, you build it yourself. But manufacturing a complex fighter plane is too big a job for a small country. Hence the need for collaboration.

"I am a very passionate advocate for having sovereign capability," says Mark Menzies, Conservative MP for Fylde – a constituency where 6,000 people work for BAE Systems. He suggests future cooperation with new partners outside of the EU like Japan. "Germany has become an increasingly unreliable defence partner," says Menzies. "The German parliament voted to suspend defence equipment sales to Saudi Arabia."

Collaborating with the EU can raise some annoying but – for the people of Yemen at least – valuable debates. And yes there is NATO to keep the UK under the umbrella of Western defence cooperation. But defence is intertwined with manufacturing, which means the UK's departure from the EU has implications. To take an example, the Galileo satellite system is a European cousin of American GPS. The armed forces of EU member states can use Galileo as a back-up if GPS fails. 

"The Europeans have been very clear with us that non-EU member states don't have access to EU defence technologies – they haven't even given the US full access," says Darren Jones MP. "Following the Brexit decision, the EU moved Galileo base stations off of British Overseas Territories in the Falklands. They moved contracts away from UK suppliers."

"We had the expertise. We had the heritage. We had the people to build this. But Europe was quite clear with us. The rules are the rules."

This piece is part of the New Statesman's Brexit isn't done series.

George Grylls is the winner of the Anthony Howard Award 2019.