End of beginning or Beginning of end for UK Airbus?

Posted on 17 Aug 2009 by The Manufacturer

Is a £340m development loan for Airbus in the UK too little too late? Howard Wheeldon speaks out

Yes, months after the German and French governments confirmed loan development aid of about £1bn each to Airbus for the A350XWB plane we should be pleased that the British government has finally decided to make £340m of development loan aid available. But before you get too excited though, ask yourself why it is that if Britain is supposed to have a proportional share of Airbus program manufacturing in some kind of relation to the amount of development loan aid commitment it is prepared to make, why is it that we are putting in only a fraction of the aid being put in by France and Germany?
The answer may be quite simple – they are prepared to show greater commitment to manufacturing and jobs perhaps; they are somewhat better at seeing the wood for the trees meaning that by failing to actively encourage the British government to provide a similar level of aid means that when the next new Airbus aircraft development [the A320 replacement] comes into view in a few more years time it will be to Germany and France that development and manufacturing of the wings is done.

In summary, rather than being in a position to welcome what the British government has announced today all that I can see is blood on the hands of the Business Secretary, Lord Mandelson – the blood of many more British jobs being lost in ten to fifteen years time.

Leave aside for a moment if you will that in the case of the Boeing/US loan subsidy dispute against the EU/Airbus the WTO is expected to make initial private report conclusions known to both complainant and defendant during week beginning August 31. A WTO ruling that goes against Airbus and the EU could, subject to the necessary appeals process of course, deal a serious blow to the A350XWB state loan aid plan just as it could repayable loan aid already provided by the four government partners on the A380 program. For now though it would be clearly wrong to speculate either way what the result of this particular dispute will be.
Neither can we ignore that the WTO will some time during 2010 rule on the separate EU/Airbus case against the US/Boeing.

The specific £340m repayable loan aid from the UK together with the separate £60m support made available to GKN for wing spar development earlier has been sanctioned by the British Government for Airbus under the provisions of the Civil Aviation Act 1982. The monies will be paid from the £750m Strategic Investment Fund. Whilst between the devil and the deep blue sea on the issue of this particular subsidy (Against it on all reasonable grounds but pro it on the basis of ensuring that the UK maintains a place at the Airbus manufacturing table) I am left to conclude that we are in the A350 XWB development witnessing as far as Britain is concerned the very last commercial aircraft wing development and subsequent full manufacturing and export process.

In other words the UK government is prepared to accept that the UK commercial aerospace industry should be allowed to go the way of shipbuilding, engineering, chemicals, textiles and many other manufacturing industries.

I sincerely hope that I am proved to be wrong but right now my view is that far from praising the number of jobs that have been saved in Broughton and Filton we might better see the results of today marking the slow beginning of the end for yet another huge British manufacturing success story. The Business Secretary may not rue this day personally as he runs hard to keep up with his own hype but as he walks around with his eyes firmly closed others will be quick to see through the UK government game just as they will have also spotted the game that Airbus management together with German and French governments are probably also playing.

Howard Wheeldon is the senior strategist at BGC Partners
Tel: 0207 894 7618
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