Select Committee on Trade and Industry Written Evidence


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   IbidBack

105   Ibid. Back

106   DTI, Aerospace Innovation and Growth Team Report, p39 Back

107   IbidBack

108   Ibid. Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2005
Prepared 4 February 2005