Aviation & Brexit 100

One of the problems with using a tool like: risk assessment to apply to a big change is that of choosing a scenario that has a realistic likelihood.  I don’t know if the sale of crystal balls has increased during the last 3-years, but it is surely a good business to get into.  It’s been 1167 days since the UK European Union (EU) Referendum Vote.  This week has turned the domestic political world upside down as if we had been asleep for all those days.  The UK now has a Prime Minister at the head of a minority Government that could fall relatively quickly.

At the same time, the UK Government’s man with the fancy title; Chancellor of the Duchy of Lancaster has launched a massively expensive “Get Ready for Brexit” campaign.  This strangely assured act has not been lost on comedians and satirists.  Although the public campaign says you must get ready for 31 October 2019, the UK Parliament may have a different idea as it asserts control over the next phases of Brexit.

57 days to go and the risks of more upsets remain.  Whatever happens, be on day one or after a short stopgap, leaving the EU means that the UK will no longer be able to trade as it has for the last 40 years with the Continental Europe.

In the run up to the original Brexit deadline at the end of March 2019, UK manufacturers including aerospace companies took up stock-pilling.  That has been expensive and holding high levels of stocks undermines the efficiency of production and delivery systems[1].

The overall value of global aircraft deliveries to UK industry, so far this year is £17 billion[2].  However economic factors and the threat of a No Deal Brexit outcome has slowed production.  UK aerospace production fell 3.8 per cent in the first half of 2019, continuing a downward trend from 2018 as the impact of Brexit continues[3].

For the sake of balance, recent news is not all negative as the 2019 Aerospace Manufacturing Attractiveness report from the professional services firm PwC points out[4].  Although this report could be criticised for layering analysis on top of analysis.  Not only that but the historic data used derives from the status-quo being that the UK was in the EU.

It seems that reliable crystal balls are hard to come by.  Most of them tend to draw conclusions from past performance and look forwards on the basis that there’s a degree on linearity with respect to what happens next.  Unfortunately, that’s not so useful when disruptive forces act in random ways.  Brexit is a step change that is not amenable to simple thinking.

[1] https://thesiliconreview.com/2019/8/no-deal-brexit-threatens-aerospace/

[2] https://www.pesmedia.com/uk-aerospace-manufacturing-aircraft-deliveries-no-deal-brexit/

[3] https://www.adsgroup.org.uk/news/newsroom/uk-aerospace-production-slows-as-no-deal-fears-intensify/

[4] https://www.pwc.co.uk/industries/aerospace-defence/insights/2019-aerospace-manufacturing-attractiveness-rankings.html

 

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