Report says small aerospace firms vulnerable to overseas competition and most doomed to fold within two years
Foreign competition will drive half the UK's aerospace suppliers out of business in two years and could permanently damage the entire industry, despite government and industry groups' best efforts.
This is the conclusion of a report focusing on the prospects for the industry in the south-east of England, drawn up by Bravura Consulting for the Farnborough Aerospace Consortium, a regional industry group, and cited by the national Society of British Aerospace Companies (SBAC) as a reason for greater co-operation on business methods in the UK industry.
Small aerospace suppliers are particularly at risk from overseas competition, says the report's author Bert Hunter. Few are turning to offshore suppliers in lower-cost countries in eastern Europe and east Asia, and many do not regard foreign competition as a real threat. But the threat is real and getting worse, he says. "A lot of metal-bashing work has already gone to eastern Europe and we can't do anything about it. There are other issues: first, now that the 10 new entrants have joined the European Union, they will have much better access to the UK. Second, China is now much more concerning; it is both a low-cost source and a major customer. Third, formerly supplier relationships were very tribal and local, but now companies are restructuring on a global supply base, not just whoever happens to be near the assembly plant," he warns.
Small size is a crippling disadvantage in competing in the global aerospace marketplace, meaning that most of the companies doomed to fold over the next 18-24 months will be "mom-and-pop operations". Smaller companies tend to lack the skills and resources needed to manage suppliers overseas, and their size makes it more difficult for them to hedge against exchange rate fluctuations.
ALEXANDER CAMPBELL/ LONDON
Source: Flight International