Scotland's engineering tradition, long a national stereotype, continues to attract aerospace business to the country, according to an industry analysis prepared jointly by government and trade bodies.
The Industry Baseline Study - commissioned by economic development agency Scottish Enterprise and the Scottish division of UK aerospace and defence association ADS - aims to present the "first-ever comprehensive picture of Scotland's aerospace, defence and marine sector" .
Its authors accept that the boundaries between aerospace and defence can be blurred, but they believe that around 20% of the sector - 170 companies generating £643 million ($965 million) in "gross value added" to the Scottish economy each year - falls into the aerospace category.
BRAND VALUES
Neil McManus, chairman of ADS Scotland and managing director of Prestwick-based Spirit AeroSystems (Europe), believes that Scottish aerospace is reasonably healthy and recovering slowly but steadily from the downturn: "The mood is quite positive, bearing in mind we're starting to see rate increases in programmes - for example, the single-aisle market is going up strongly."
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© Spirit AeroSystemsScottish engineering spirit is in evidence at Prestwick |
The sector's continued health is helped by the enduring image of the Scottish engineer, McManus says. "The Scottish brand holds up well."
This is backed up by Ian McMahon, head of aerospace defence and marine at Scottish Enterprise. Scotland is still perceived internationally as a location where engineering remains a strong part of the industrial landscape. While companies may use emerging nations for labour-intensive, commodity-type work, they still tend to look to somewhere like Scotland to address the higher-end, value-adding element.
This can be seen, he says, from the presence there of companies such as General Electric, Goodrich, Rolls-Royce and Spirit AeroSystems. Indeed, he notes, the maintenance procedures for GE's new GEnx powerplant are being developed at the company's Prestwick facility.
A survey conducted as part of the Industry Baseline Study found that very small levels (around 1%) of investment in the Scottish aerospace sector comes from either venture capitalists or "business angels". While noting that this is replicated in other industrial sectors, McMahon says that Scottish Enterprise has been seeking to improve the situation through a "co-investment fund" whereby it takes on part of the investment risk.
Scottish Enterprise speculates that the owners of many small and medium enterprises, having painstakingly nurtured their creations, do not want to yield control to venture capitalists taking a stake in their companies. McMahon adds the observation that some SME owners may be risk-averse and happy to grow at a gentle pace, rather than driving ahead and trying to take their companies to the next level.
A large percentage of the Scottish aerospace sector is accounted for by a relatively small number of major firms. "We feel the SME community has a lot to bring to the party in terms of innovation and unless we unlock its potential, we're missing a trick," says McMahon.
Scottish Enterprise is trying to get the SME community more closely involved with Tier-1 suppliers and OEMs. McMahon says that R&D being undertaken by SMEs would also benefit from closer involvement with larger organisations.
OVER-REGULATION
Some comments from respondents to the survey complained of over-regulation and multiple layers of governmental bureaucracy. McMahon says he does not feel this is a problem, but the respondents' viewpoint finds some sympathy from McManus. "I would say yes, there is bureaucracy. I see more pace and progress in other countries. For example [Spirit] has a presence in Malaysia and it's more dynamic."
Respondents also complained of a continuing shortage of air links between Scotland and other major European destinations, but on this McManus is less sympathetic. "Yes, the connectivity is not as good as in the south-west or north-west of England, but our HQ is in Wichita, which has similarly limited connections. You just have to plan around it.
Source: Flight International
