Andy Tuscher gives an overview of the UK aerospace industry, which is continuing to thrive through continuous innovation
The UK aerospace industry is one of the most dynamic manufacturing sectors across the globe. It has experienced growth over the last 25 years, up by 73 per cent since 1990. It manufactures everything from aeroplanes and helicopters to spacecraft, rockets and satellites, dirigibles, balloons and gliders, providing high-value employment across the UK.
The split between civil and defence revenue is broadly even over time, despite variation year on year. However, the value of the space manufacturing industry is a small but important and growing percentage of total UK aerospace revenue.
Aerospace supply chains are global in their nature, with major components manufactured across the world. The UK success in civil aerospace has been driven by manufacturing parts and subsystems, such as turbo jets, turbo propellers and rotors, to satisfy the demand of internationally-based OEMs, such as Airbus, Boeing and Bombardier.
The sector thrives on its competitive advantage producing high-value, high technology products, an ability which has ensured the sector’s continued competitiveness internationally and the retention of a high share of global sales.
Characterised by long lead times and order books, a key difference between aerospace and other manufacturing sectors is a clear visibility of the order pipeline underpinned by consistent demand for new aircraft. This provides companies across the supply chain with the certainty to invest and innovate for the longterm, maintain high quality standards and a competitive advantage in R&D intensive production. Nevertheless, long global supply chains are the source of great challenge, potentially exposing production processes to disruptive kinks or bottlenecks.
The Aerospace Growth Partnership (AGP) is key in ensuring continued growth and competitiveness of the UK supply chain. This collaboration between government and industry tackles barriers to growth, boosts exports and grows the number of high value jobs in the sector. The AGP also supports the Sharing in Growth Programme which has helped SMEs secure contracts worth over £1 billion and create around 1600 UK jobs.
Key to the success of UK aerospace is the ability of companies to move up the value chain through continuous innovation. The global aerospace industry is underpinned by a relentless drive and focus on improving performance and safety but also the manufacturing process itself. Whether this is through the increased use of composite materials by airline manufacturers, the deployment of ‘commercial off-the-shelf’ technologies for satellite production, the development of 4IR technologies such as 3D printers and collaborative robots, or developing a viable alternative fuel to kerosene for aircraft; the sector is constantly evolving and has seen huge technological advances, especially in the last ten years.
Research and Development (R&D) underpins the technological advances and success of UK aerospace. The sector accounted for 12 per cent of all manufacturing R&D expenditure in 2015, investing £1.7 billion or 19 per cent of GVA output. To protect its competitive advantage, industry – supported by Government – must continue embracing new technology, both through implementing new and innovative manufacturing processes, or expanding into emerging markets.
The nature of the military aerospace sector means it is more home-domiciled, though not exclusively so. Major Original Equipment Manufacturers (OEMs) support an extended supply chain underneath, comprised largely of the same companies that serve the civil aerospace market. The main end-customer is the UK Ministry of Defence (MoD) but significant volumes of assembled aircraft and components are also exported overseas.
With MoD grappling with new pressures on spending, the Government’s upcoming National Security Capability Review will be critical for long-term prospects. A strategy based on long-term industrial sustainability that defines how the UK will procure its next generation of combat jets would provide the confidence UK industry needs to invest in R&D, skills and innovation. This would support a sustainable UK industrial base, which is good for the economy, and will prevent the loss of nationally held technological advantage that support national security.
The UK’s decision to leave the European Union has thrown up uncertainty in every manufacturing sector, and aerospace is no different. In particular, the concerns around the terms of any Brexit deal raise serious questions about the next generation of aircraft and where they will be produced. European OEMs face growing pressure to relocate jobs away from the UK as a result of leaving the single market. Furthermore, given the potential loss of access to highly skilled EU labour, this pressure is likely to ramp up, and puts both Germany and Spain in a strong position in bidding for further work on new models.
The UK and EU are poised to negotiate on to the terms of a post- Brexit trade deal, one step forward in a complex and long process. For the aerospace sector, to thrive we need clarity on the transition arrangements that will be in place after March 2019, to ensure it is business as usual for companies for as long as it takes until a final deal is reached.
Andy Tuscher is Director, NDI. NDI is a division of EEF, the manufacturers’ organisation. It represents, and provides services for, over 200 companies in the UK defence, space, aerospace and security sectors. Its aim is to raise the profile of member businesses and ensure they receive fair access to contracts in the defence, aerospace and emerging space and security sectors.
It encourages members to communicate and collaborate, proactively identifying complementary services and opportunities to joint venture, building relationships throughout the UK and beyond to deliver a comprehensive, disciplined and capable supply network.