Aerospace jobs at Prestwick saved in short-term

The future of a major aerospace manufacturing plant which employs hundreds of workers in South Ayrshire has been secured - but only in the short-term while its new owner looks for a longer-term solution.

Airbus is taking over most of the operations of the Spirit AeroSystems site next to Prestwick Airport

Spirit employed about 1,150 people making the leading edge of wings for the A320 and A350 aircraft.

These are quality skilled jobs which represent more than employment and good pay. They are in a global sector which brings manufacturing know-how and technology innovation into the Scottish economy and helps it spread.

The same can be said in Northern Ireland, on a bigger scale and with a proportionately bigger impact from Spirit AeroSytems.

It took over the former Short Brothers aircraft factory by Belfast docks, which had been Bombardier between 1989 and 2020, and which now employs around 3,500 people.

The Spirit Aerosystems innovation centre which employs another 50 people at Prestwick is being taken over by Boeing, as the American aerospace giant spends big on buying back much of a company that it spun out in 2005.

In the past 20 years, Spirit AeroSystems, based in Wichita, Kansas, has spread its customer base to include the supply of fuselages and wings to Airbus and Bombardier as well as Boeing.

But its continued dependence on Boeing orders has been exposed by delayed production at its main client, explaining much of the $2.1bn (£1.6bn) loss reported for last financial year.

The American giant has struggled to regain momentum after production was stalled on its main product. That was due to concerns about the safety of its 737 Max aircraft and its safety regime more widely.

Disruption to production has affected output from its base in the north-west state of Washington as well as its suppliers.

Absorbing Spirit AeroSystems back into Boeing has been complicated. Boeing does not want to supply its rivals, but nor can it easily shut down that supply chain capacity.

While Boeing pays $4.7bn (£3.5bn) to buy part of Spirit AeroSystems, Spirit is paying $439m (£328m) to Airbus to take over the production capacity. Meanwhile, Airbus is extending $200m (£150m) of credit to Spirit.

To that has recently been added the major challenge of selling one of America's biggest exports into the headwinds of a trade war and sky-high tariffs imposed by China.

Chinese customers have begun to return newly-delivered Boeing aircraft due to the added cost of tariffs.

China is developing its own rival aircraft manufacturer, state-owned COMAC, winning orders to supply aircraft to Chinese domestic carriers. It aims to build 50 planes this year, and to expand internationally. It could be given a lot of help by a trade war that undermines Boeing's global reach.

Imposing tariffs on imports of planes for US carriers will make it easier for Boeing to compete in its domestic market, and could allow it to increase margins on each plane sold in the US. But retaliatory tariffs on US exports around the world makes it far more difficult for Boeing to compete.

Airbus, which manufactures in several European countries including the UK, has also been helped by Boeing's safety problems. The European's order book looks exceptionally healthy, with a backlog of more than 8,600 commercial aircraft at the start of this year.

So there is plenty work for a factory like Prestwick's. But Airbus does not consider Ayrshire's role of manufacturing parts of wings to be within its core operation. It would prefer to have a large contractor take on that role, as Spirit has done.

A similar operation in Malaysia has been sold by Spirit to another company.

The indications from Airbus are that it intends to stabilise the operation and absorb the Spirit workforce, and then to look for a longer-term relationship with the plant under different ownership.

But while a trade war is raging, and uncertainty a feature of many sectors including aerospace, it may prove hard to find investors.