1 Introduction
1. The UK aerospace industry (UKAI) is one of the
most successful sectors of UK manufacturing. Its importance and
achievements can be illustrated as follows:
— In
2003, the UKAI had a turnover of just over £17 billion and
captured ten percent of the world market for aerospace products;
— The UKAI accounted for just over four
percent of UK manufactured output and directly contributed just
over £5.5 billion to UK gross value added (GVA)[1]
in 2002, a similar level to the pharmaceutical industry;
— There has been a consistently positive
aerospace trade balance in the past two decades. In 2003
it was £2.6 billion (close to its long run average of £2.8
billion);
— In 2003, the UKAI directly employed just
under 122,000 people, 0.4 percent of total UK employment, and
three percent of total manufacturing employment. An additional
150,000 people have been estimated to be indirectly employed
by the industry;
— UKAI productivity was £54,000 per
head in 2001, 50 percent higher than the UK average and 35 percent
higher than for manufacturing as a whole; and
— The aerospace industry invested just
over £2 billion in UK R&D in 2003, second only to the
pharmaceutical sector. Three aerospace companies featured among
the top ten UK R&D investors.[2]
2. 2002 and 2003 were difficult years for the UKAI.
Turnover relating to civil projects was especially low as the
full impact of lower civilian passenger travel, due to the global
economic slowdown and the events of 11 September 2001 in the US,
were felt. The main issues of concern for the UKAI are: the economic
'health' of the industry; its future competitiveness; and the
implications for government aid to the industry following the
latest WTO dispute between the US (Boeing) and the EU (Airbus).
These concerns prompted our inquiry.
3. During the course of our inquiry, we took formal
evidence from: the Society of British Aerospace Companies (SBAC),
Airbus UK, the trade union Amicus, QinetiQ (the former Defence
Agency Research Agency, post privatisation), the Aerospace Technology
Steering Group (ATSG), the Department of Trade and Industry and
Boeing. We received nine written memoranda from other businesses
and organisations, which are reproduced in the Appendices. We
also received a letter from Smiths Group plc in support of the
written evidence submitted by the SBAC, which has not been printed.
1 A measure of gross domestic product (GDP) Back
2
See Appendix 9 and Appendix 14 Back
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