APPENDIX 16
Memorandum by the South West of England
Regional Development Agency
The South West Regional Development Agency is
pleased to respond to the House of Commons Trade and Industry
Select Committee inquiry into the competitiveness of the UK aerospace
industry.
SOUTH WEST
RDA
Our goal is to improve the economy of the South
West. This involves giving people the skills they need, encouraging
enterprise and improving communications. We also promote the strengths
of the region and help people to regenerate their communities.
All our work is guided by the Regional Economic Strategy. The
aerospace industry is one of our priority sectors and we are working
very closely with the DTI, AeIGT and industry to promote the continued
growth and strength of this sector.
1. THE IMPORTANCE
OF THE
UK AEROSPACE INDUSTRY
TO THE
UK ECONOMY
1.1 South West England has one of the most
important and diverse aerospace regions in the world. It has enormous
expertise in the design and manufacture ofamongst other
thingsjet engines, wings, propellers, under-carriages,
avionics, rotary wing aircraft, fuel systems, materials, missiles
and aircraft testing services. At least 43,000 people work directly
for companies in the industry, many undertaking highly skilled
engineering design, development and manufacturing tasks (Mair
and Mair Report, South West Aerospace: the challenges ahead,
the regional agenda 2002).
1.2 This long-standing and respected expertise
is evident in the role the region's companies are playing in the
development of the Airbus range of civilian and military aircraft,
the US-led Joint Strike Fighter (JSF) aircraft and the EH101 helicopter.
1.3 The South West is home to some of the
world's most respected prime contractors, a highly developed supply
chain, excellent universities/colleges, and the West of England
Aerospace Forum (WEAF)one of the most dynamic industry
groups in the aerospace industry offering practical help to the
700+ member businesses. The region also houses the UK's largest
procurer of manufactured goods, the Defence Procurement Agency,
part of the UK Ministry of Defence.
1.4 Of the 11 largest aerospace companies
in the UK (by employees), nine have major facilities in the region
(see those underlined). This demonstrates the region's attraction
for major national and international companies looking for critical
business advantages.
|
Prime Organisation
| UK based
aerospace employees |
| BAE Systems | 25,000
|
| Rolls-Royce | 23,500
|
| Airbus | 11,000
|
| Bombardier Shorts | 6,300
|
| Smiths Aerospace | 5,000
|
| Thales | 5,000
|
| Cobham | 3,500
|
| GKN Aerospace Services |
3,500 |
| Goodrich | 3,500
|
| Westland Helicopters |
3,500 |
| MBDA | 2,500
|
| Astrium | 2,000
|
| (Source: SBAC) |
|
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|
Highlights include:
1.5 Airbus UK: It is headquartered in Bristol
and employs over 5,000 highly skilled employees involved in the
design of wings, fuel systems and landing gear and the manufacture
of trailing-edges for the Airbus family. It is well into a £300
million investment at the Filton site which makes it one of the
most important sites within the Airbus group.
1.6 Rolls-Royce: The Bristol Patchway facility
is the headquarters of the Rolls-Royce military engine division
and is the second-largest R-R site in the UK and third-largest
in the Group (after Derby and Indianapolis). The company recently
announced the redevelopment of the current site at a cost of £75
million.
1.7 Smiths Aerospace: Headquartered in Cheltenham,
the company is playing a leading role in the move towards the
"more electric aircraft" and announced major contracts
for Boeing 7E7 and Airbus earlier this year.
1.8 Messier-Dowty: Part of the SNECMA group, the
company has won two major contracts in the past six months, winning
both the Boeing 7E7 and Airbus A400M landing gear.
1.9 Westland Helicopters Ltd: Following the sale
by GKN of their 50% share in the company, the business is now
wholly owned by Finnmecanica of Italy and employs almost 4,000
people in Yeovil.
1.10 Supply chain companies: The West of England
Aerospace Forum is a trade association for the South West Aerospace
Industry and represents over 700 organisations. The forum works
in partnership with its members on many levels to promote the
sector both in the UK and worldwide. WEAF champion the interests
of all aerospace companies in the region, particularly the SMEs
that help make the South West a region of global excellence. WEAF
is funded by the SWRDA for £5 million over three years.
2. INDUSTRIAL PERFORMANCE
IN THE
CURRENT ECONOMY
2.1 The region has an even balance between civil and
military activity which has provided some protection against the
impact of 11 September.
2.2 In the defence sector Westland, Rolls-Royce, Cobham,
Claverham and Thales are all major contractors and significant
exporters. The UK MoD remains the key market for these and many
other smaller companies. Rolls-Royce has a major share of the
Eurofighter engine programme and a central role in the huge JSF
contract by virtue of its pioneering work on the lift fan.
2.3 Airbus overtook Boeing as the world's leading supplier
of large civil aircraft in 2003. The design of the A380 and A400M
has increased the activity at Filton and the volume of work in
the supply chain. Some of the region's leading first tier suppliers
have also announced substantial contracts for forthcoming Airbus
and Boeing programmes.
3. CHALLENGES IN
THE DOMESTIC
AND INTERNATIONAL
MARKETS/BARRIERS
TO TRADE
3.1 Certain defence contractors are concerned by slippages
in the timing of major defence orders including:
3.2 Typhoon/Eurofighter: Rolls-Royce and Cobham
have both faced difficulties as a result of delays in the awarding
of the second tranche of orders. The latter commented that this
contributed to the 140 job losses announced in September 2004
(Source: Financial Times).
3.3 Future Air Tanker: the EADS-led consortium
(which includes Cobham, Rolls-Royce, Thales and VT Group) are
affected by the delay/possible cancellation of this programme.
3.4 Helicopters: The delays/possible cancellation
of the BLUH and SCMR versions of the Lynx, and the effect this
could have on the Merlin programme give rise to serious concerns.
3.5 Exchange rates: The strengthening of Sterling
and the Euro against the US dollar (in which aircraft are sold)
is eroding margins and resulting in price pressure in the supply
chain.
BARRIERS TO
TRADE
3.6 Concerns over the level and type of support offered
by other nations to attract high value work remain, specifically
France, the USA and Canada.
4. INVESTMENT IN
RESEARCH AND
TECHNOLOGY
4.1 According to the AeIGT report, the industry nationally
spends £150 million on R&Tsecond only to pharmaceuticals.
The bulk of all R&T work in the region is undertaken by aerospace
companies either using their own resources, in collaboration with
others under a variety of UK or EU funded programmes or by commissioning
research with universities.
5. PROGRESS TOWARDS
THE IMPLEMENTATION
OF THE
RECOMMENDATIONS OF
THE DTI-SPONSORED
AEIGT
5.1 In October 2004, the RDA agreed to contribute over
£3 million towards a £14 million Airbus led investment
in composites materials in the region. This facility is a direct
response to the AeIGT report which stated ". . . the UK is
now falling behind in the rate of technology acquisition . . .
. The consequences of this can be seen in the migration of R&T
activities on small and medium size aero engines . . . to the
USA, Germany and Canada, and the threat posed to the UK position
on civil aircraft wings by the heavy investment in composite technology
in Spain and Germany". These facilities will form part of
the National Composite Network which will be formally launched
on 30 November.
5.2 The Agency and West of England Aerospace Forum is
supportive of the AeIGT process. Agency staff are active on the
Integrated Wing Aerospace Technology Validation Project (one of
the four pilot ATVPs) and the Advanced Aerospace Materials and
Structures Aerospace Innovation Network (one of the three AINs)
as a representative of the RDAs and DAs.
5.3 The ATVPs and AINs envisage the RDAs and DAs making
significant financial contributions to supplement those of industry
and other public sector bodies. The Agency is actively working
with AeIGT, DTI and other RDAs to find ways of engaging constructively
in this process. It will be a very significant challenge to find
the sums of money envisaged from existing sources but we are actively
engaged to find solutions if possible.
6. GOVERNMENT SUPPORT
FOR THE
AEROSPACE INDUSTRY
6.1 Whilst CARAD has been abolished it seems that the
new DTI business support products of Collaborative R&D and
Knowledge Transfer Networks can be used to deliver at least some
of the needs of the AeIGT working groups. There are concerns however
that the government/public sector will be able to deliver the
additional £50 million per annum identified in the AeIGT
report.
6.2 The Agency works closely with the DTI Aerospace and
Defence team. A reduction in the capability or capacity of this
team would be of concern.
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