For the UK aerospace industry, 2010 was a good year. According to the annual industry survey published by trade association ADS, revenues rose 2.1% to £23.1 billion, setting a new record for the eighth year running.

Also impressive was the 6.1% jump in productivity per worker, to £239,000. Total employment dipped by nearly 4% to 96,500, owing largely to the state of the general UK economy, which has put pressure on companies to lower costs and improve efficiency.

The now familiar story of strong civil business as defence spending weakens raised some alarm bells in the UK. Orders fell 11.1% in 2010, to £29.1 billion - still greater than the average of £27.5 billion in recent years - but a 3% rise in civil orders could not hope to offset a 29% drop in defence orders. Moreover, on the employment front, the trend is up in civil and down in defence.

However, ADS chief executive Graham Chisnall remains bullish. For sales and employment, he says: "There's locked-in growth on the civil side. It's going to be impressive." Over the next five years, he reckons that growth will be of "such a magnitude" as to "substantially offset" a flagging defence sector.

The UK industry's strength is impressive. For a country that represents some 3% of world gross domestic product, the aerospace sector accounts for 17% of world aerospace revenue, which is number one in Europe and second worldwide only to the USA. Much of that market share stems from the prevalence of Rolls-Royce and from Airbus, where wing-making is focused at Filton.

As Chisnall points out, in 15 years' time there will be only three companies in the world making large carbon fibre wings, and two of them are in the UK: Airbus at Filton and Bombardier at Belfast, along with Mitsubishi's operation in Japan.

And, he says, the UK's aerospace industry is well placed to push through a defence downturn. The UK government accounts for a far smaller share of industry revenue than is the case in other European countries or the USA. In recent years, the UK government has accounted for about a fifth of UK industry sales, compared to nearly 30% for its European counterparts and nearly 60% in the USA.

The expected growth in the world's civil airliner fleet, to some 26,000 aircraft by 2029, should bring £329 billion revenue to the UK, if the industry can hold its 17% world market share. Chisnall is optimistic that that share will remain, as despite the rise of manufacturing in developing markets, the difficulty of reproducing the workforce skills needed for volume manufacture of high-technology products is a significant barrier to large-scale transfer.

And, he adds, all indications point to significant government support for the industry. As Chisnall notes, every prime ministers' speech for the past four years has stressed the importance of aerospace to the UK economy, "and that's a change".

That government support will be critical, he says, and industry is currently engaged in a round of discussions with the government about how much can be made available.

What the industry needs to hold its competitive edge, according to Chisnall, is government financial support for training and for long-term research and development - government-industry projects to develop UK technology in order to mass-produce carbon fibre wings for the next generation of single-aisle airliners being one current example.

The expected growth in the world's civil airline fleet, to 26,000 aircraft by 2029, should bring £329 billion revenue to the UK if the industry can hold its 17% world market share

Source: Flight Daily News

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