APPENDIX 17
Supplementary memorandum by the Society
of British Aerospace Companies
ECGD AND UK AEROSPACE EXPORTS
1. It is difficult to isolate any given
part of the export process in order to assess its specific impact
on UK export sales. The provision of Export Credit Guarantees
has historically played an important role in individual sales
campaigns and over time has made a significant contribution to
the export success of UK Aerospace. As the SBAC noted in evidence,
a large proportion of export credits are not in the event taken
up by customers; and in these examples, the provision of a backstop
credit would act to assure customers rather than have a direct
and measurable impact. However, as the NERA report has shown,
the return to the Treasury from ECGD all activity has been positive.
2. Even if the provision of export credits
cannot be separated from the totality of the export process, the
importance of exporting per se to UK aerospace cannot be understated.
a. A Bank of England paper showed Aerospace,
at 54.2%, to have the second largest export to domestic sales
ratios of all UK manufacturing.[102]
b. In 2002, UK Aerospace exported over £12
billion worth of civil and military goods, with about two-thirds
going to civil customers.[103]
c. Over the last decade, Aerospace has exported
on average 63% of its total output. [104]
d. The UK Aerospace industry has contributed
on average £2.7 billion to the UK balance of trade over the
last 10 years.[105]
e. Compared to five other manufacturing sectors
which showed a deficit on the balance of trade, Chemicals, Medicinal
Products, Machinery and Transport, Road Vehicles and Motor Cars,
aerospace recorded a surplus on the balance of trade.[106]
f. In terms of export intensity, UK aerospace
exports 63% of turnover, compared to the US at 56% and an EU average
of 59%.[107]
g. UK world civil market share is estimated
to be in the region of 12%; the civil market growth forecast suggests
something in the region of 4-4.5% over the next 20 years worth
an estimated $250 billion a year in sales. [108]
3. Although there are very good prospects
for long term growth in the civil market over the next two decades,
it will be highly cyclical with the possibility of shocks comparable
to the aftermath of 9/11. In this context, the provision of a
competitive Export Credit Agency will be vital in leveling the
peaks and troughs of commercial bank investment particular in
times of crisis.
4. Although only a few aerospace companies
benefit directly from ECGD support, the SBAC would underline the
importance of these companies as "routes to market"
for their extended supply chains with several thousand indirect
beneficiaries of ECGD support.
5. It cannot be emphasized enough that the link
between export credit guarantees and UK exports is also a function
of what is available from our major competitors. That is principally
these days a function of what is on offer from Eximbank for US
exporters. This has a particular resonance in both civil and defence
aerospace sales, especially when coupled with the other supports
given by government to the US aerospace industry.
102 G. Cameron et al, Openness and its association
with productivity growth in UK manufacturing industry, Bank of
England 1999 Back
103
SBAC, UK Aerospace: Facts and Figures 2002: Chapter 10 Back
104
Ibid. Back
105
Ibid. Back
106
DTI, Aerospace Innovation and Growth Team Report, p39 Back
107
Ibid. Back
108
Ibid. Back
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