Rolls-Royce considers stockpiling parts amid May’s Brexit issues

LONDON: Rolls-Royce Holdings Plc Chief Executive Officer Warren East warned the aircraft enginemaker may soon need to start stockpiling parts after Prime Minister Theresa May backpedlaled on her latest customs proposals as part of her Brexit blueprint.

If there’s no clarity on trading arrangements, the London-based company will decide on building a “buffer” of parts to sustain production in the fourth quarter, East said. Rolls-Royce is meeting with suppliers to help advise on how to manage the divorce from the bloc.

The comments are the strongest yet from the marquee British engineering brand, and capture the annoyance among businesses with the lack of progress being made in the negotiations. Rolls-Royce, along with Airbus SE, is concerned about the impact that border controls will have on parts being able to move freely, as well as the loss of access to regulators.

The UK government on Monday rolled back on core customs plans for post-Brexit in a so-called white paper published earlier this month in an attempt to ease concerns from members of parliament that had criticized the plan. The changes led to the resignation of Minister for Defence Procurement Guto Bebb.

“The white paper wasn’t a panacea, but it was very frustrating that having done a few interviews yesterday and talked about how incrementally positive it was, at least half of it was undone,” East said in a briefing with reporters. “It’s time to start being a bit constructive about negotiating something and that’s on both sides of the fence.”

Rolls-Royce has already shifted its design approval process for its large civil engines to its operations in Dahlewitz, Germany, to prevent having to halt deliveries after the exit.