Airbus wants Brexit clarity as it faces higher spending

By Tim Hepher

PARIS (Reuters) - A senior Airbus executive has urged Britain's government to provide clarity on post-Brexit customs rules as the planemaker faces an immediate rise in spending to start preparing for possible delays in the movement of parts.

Tom Williams, chief operating officer of the planemaking business of Europe's largest aerospace company, said Airbus is strongly committed to its British factories as long as they can be run with the same efficiency as before.

"We are coming to quite a momentous event. The important message we try to put across to ministers is we are only a year away now; the clock's running pretty fast," Williams said in a video conveyed to Airbus's 14,000 UK staff via YouTube.

Due to long lead times, Airbus is facing immediate decisions on whether to increase spending on parts in order to build up an extra buffer stock to cope with potential disruption when Britain leaves the European Union on March 29, 2019, he said.

Airbus's operations in the UK, where it makes wings for all its jetliners, rely on a "just-in-time" inventory policy and the ability to move "working parties" of employees across borders to cope with specific problems, Williams said.

"If we think there is going to be a kind of gumming up of the docks and the airports, certainly in March of next year and during a transition period, then clearly from our point of view we are going to have to start ordering additional components now, because it is less than 12 months away.

And that is at a time when all of our suppliers are already pretty busy," he said.

An Airbus spokesman said it was not yet possible to estimate the cost of such an increase in inventories.

Williams' comments place Airbus at the centre of a political debate over post-Brexit customs rules and emerged as Prime Minister Theresa May was preparing to set out her vision for Britain's post-Brexit relationship with the EU.

May has said Britain will not join a customs union with the EU after Brexit, delighting some Brexit supporters who say staying in a customs union would prevent other trade deals.

But the leader of the opposition Labour Party, Jeremy Corbyn, has backed Britain forging a new customs union with the EU. He wants to join forces with rebel Conservative lawmakers to block May's plans in a vote in parliament due in coming months.

Under a 1980 agreement among 32 members of the World Trade Organization, civil aerospace parts are not subject to duties.

But the aerospace industry is concerned that extra paperwork caused by new customs borders could introduce costly delays.

ADS, a UK trade association for the aerospace, defence, security and space sectors, has welcomed Corbyn's backing for a customs union with the EU, and suggested that new processes could otherwise cost the sector 1.5 billion pounds a year.

(Reporting by Tim Hepher, Editing by Sarah White)

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