This morning's Times article investigates a Bain report on the positive and negative impacts of Brexit on the aerospace industry.
The positive is very good - potentially +£200m in increased profits due to tariff protection and exchange rate fluctuations.
But it's the negative I would like to focus on: because I wonder whether, with a bit of lateral thinking, this couldn't also be a positive.
The issue is this: if Britain leaves the EU with no regulatory regime in place, due to a mutual EASA/FAA agreement, UK companies would not be able to export to the US. Since 90% of our aerospace revenue comes from exports, that's a big issue. That is, unless supply chains can be restructured.
So what happens if we swap the word "issue" for "risk" and apply Rev D thinking to this? Because this is exactly what Rev D is about: addressing major (or minor) changes to the value chain by treating each new risk as an opportunity. Brexit, along with the US election, is probably the biggest P in the PESTLE analysis that every aerospace board should be undertaking as part of their contextual review. There are probably some big L's in there too.
As Paul Kahn, the UK head of Airbus points out, the predominant aerospace business model is based entirely on free global movement of parts. But what if the contextual review were to change that? Might there be, for example, further opportunities to shorten the supply chain, in a similar way that the automative industry has done; taking account of new technologies like 3D printing to do that? Who knows what that might lead to: possibly shorter NPD cycles, increased corporate agility and greater efficiency. Sadly, the aerospace industry is not known for any of these and that cannot help competitiveness in these days of rapid change and constant market disruption.
So rather than wait for a Google, Apple or Tesla to transform another sleepy market, why not use these powerful external forces and the new tools like Rev D that we have available, to reshape aerospace for the better? The industry did it when the military market hit the buffers. It could do it again.
“If we leave the EU with no regulatory regime in place, UK companies that cannot get export certified wouldn’t be able to export to the US,”