This week's Farnborough air show may no longer have the parade of British-designed and manufactured aircraft that graced the flightline in decades gone by. But the UK's aerospace industry plays a central supply chain role in many of the types on display, from the Boeing 787 to the Airbus Military A400M and Sukhoi Superjet to the Airbus A380.
It remains second only in size to the USA and in rude health despite the recession. The sector grew 5.4% in real terms last year, with rising defence sales offsetting a flat commercial sector, and weak sterling helping to boost exports, which represent 70% of the industry's total turnover.
The latest annual survey from aerospace and defence trade body ADS (formerly the Society of British Aerospace Companies) paints a picture of a balanced aerospace industry, with roughly half its £22.2 billion ($33.7 billion) turnover coming from defence, that has "ridden out the recession", says ADS managing director commercial aerospace and operations Graham Chisnall.
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However, there is some gloom. Many of the UK's 2,500 or so small and medium-sized enterprises in the aerospace industry have been badly affected by the downturn, laying off about 12% of their workforce in 2008-09.
This has been partly due to productivity gains and partly the effect of the dip in other sectors, such as automotive and industrial machinery, which many SMEs also supply. Some are likely to have also been a victim of "in-sourcing" by their large customers, keen to avoid redundancies.
WORRYING FINDING
Another worrying finding is that research and technology spending from government and business is down 7.4% for the year. Although much of this is attributable to a decline in defence projects, it comes at a time when in the commerical field new technologies such as composite aerostructures are coming to the fore and the UK's dominance in Airbus wing design is threatened by sister Airbus entities in Europe.
The UK's value contribution to the A350 has dropped to between 12-14%, well below the traditional 20% claimed by the UK when BAE Systems had that level of shareholding in the Airbus consortium. This is partly because contracts to design and manufacture wing skins went to Germany and Spain.
ADS is calling for more government investment in early-stage technology. "The idea that SMEs alone will innovate us to a higher global market share is not feasible," says Chisnall, who says that taxpayer funding for aerospace research has been a "stunningly efficient investment" in the past.
The Treasury got its mandated return on the Airbus A320 programme back after the 600th airframe was produced, he says. More than 4,300 have been delivered, with the government still collecting a dividend on every sale of the narrowbody family.
A further concern is possible defence spending cuts as the new Conservative-Liberal Democrat coalition government wrestles with its huge fiscal deficit. With operations in Afghanistan likely to soak up resources for many years, long-term "Cold War-era" commitments may suffer, although ministers have pledged themselves committed to retaining a sovereign defence manufacturing capability.
However, a sharp upturn in the commercial sector, which - barring the dreaded double-dip recession - ADS chairman Ian Godden predicts from next year, could compensate for any shrinkage in defence spending.
GROWING PRODUCTIVITY
That may not necessarily be great news for jobs. While workforce levels remained steady at just over 100,000 last year, employee productivity in the UK has been growing fast over the past 30 years. While in 1980 an individual worker generated around £80,000 (in 2009 pounds) for his employer, by last year that had risen to almost £250,000. Growth last year alone was 6%.
However, while employment on the shopfloor may be reducing, or at best standing still, as manufacturers get more competitive, demand for engineers and other high-skill staff remains high. "There is a desperate need for new people to come into the industry," says Godden.
One bright spot is that the numbers of students taking specialist aerospace engineering degrees has risen by almost 7% since 2000. Of UK aerospace employees, 36% have a university degree or equivalent.
Source: Flight International
