Examination of Witnesses (Questions 200
- 216)
WEDNESDAY 11 FEBRUARY 2004
BAE SYSTEMS AND
AIRBUS UK
Q200 Albert Owen: You mentioned the
value you put on vocational qualifications and I agree with you,
Mr Fleet. Mr Scopes also talked earlier about visits to schools.
Do you agree with me that it is the partnership between the schools,
the training providers and industry which should make young people
aware of the opportunities in those industries and it is at that
very early age where there is perhaps that missing link? If they
are unaware of it, then they go on this wrong course to university.
It is the duty of all three: the training providers, industry
and schools.
Mr Scopes: Yes, and what we try
to do through our engineering schools programme is to give them
a vision of what they can do and that is through design of a number
of courses, competitions and things like that. I say that with
all the knowledge of a classicist; I apologise.
Mr Fleet: To tell you what we
do with local schools, looking at last year, 2003, we had 145
placements, so we placed 145 people who were doing A levels and
looking for a two-week or one-week work placement. We carried
out 27 visits to schools involving more than 600 pupils. We had
100 of our employees go out to schools, to speak to schools, to
educate schools about what we are doing. We visit primary, secondary
and special schools. We had over 50 visits by teachers; teachers
come to do training days and see that manufacturing is not the
dark satanic mills it was. They see an industrial revolution and
that we have moved on and work in very good environments. Last
year we held 10 careers and science fairs in the local area.
Q201 Mr Edwards: Could you tell us
whether your R&D function is centrally located or is it located
alongside your manufacturing sites? Could you say to what extent
defence R&D can have a non-defence commercial spin-off?
Mr Scopes: As far as the R&D
is concerned, we have two research and technology centres, science
centres if you like, in the company and we are also participating
in setting up, with Research Councils and so on, some towers of
excellence for certain areas of research and technology. When
you move along to the development side, where we are developing
product, most of that will take place not at any central site
but at the individual manufacturing and development sites. The
development of our military aircraft will take place primarily
in the North West at Wharton and the product of our Royal Ordnance
defence division will take place at those various sites. It is
not centralised in that sense. Spin-off into commercial? There
is clearly technology which comes out of the defence side which
is applicable on the commercial side and if you take the aerospace
sector as a whole, you do not suddenly wake up one day and build
a Concord or find yourself a place in an Airbus programme. A lot
of that capability has been developed through very advanced military
aircraft R&D which has been done in this country. Similarly
in the electronics sphere, very clearly a lot of work which has
been done, whether it is on electro-optics or whatever, is applicable
in due time in the commercial sector. So there is a spin-off.
There is also the broad wealth creating spin-off from conducting
high value added research and development which applies, whether
it is defence or commercial, which generates high value added
economy and brings wealth to the economy, as demonstrated by this
report to which I have been referring this afternoon.
Mr Fleet: We break it down into
two key areas: research and technology. That is when you are looking
at new materials to put on future aircraft, carbon fibre and such
like, all the processes we are going to use in the future, how
we are going to form the panels, etcetera. That tends to be done
in development facilities and they tend to be centralised at our
Filton facility because you do not want them dispersed. When you
go then from research and technology into research and development
you are then taking that technology and applying it. That tends
to be at the point of use. When you are doing the R&T it is
more the applied, looking at materials, properties, etcetera,
looking at the next generation of aircraft and what materials
can be used to give strength and lightness and that tends to be
done centrally. When you are talking about taking it from that
and deploying it on programmes, that tends to be at the point
of use.
Q202 Hywel Williams: The government
has a research tax credit system which was simplified last year
and other incentives to undertake research. How influential are
those? Are your research and development, research and technology
strategies set by your historic or strategic decisions or does
government have an influence on you in that way?
Mr Fleet: Tax credits are important
but to a very small degree. The value we had from them was about
£4 million. It generated £4 million,
6 million against £1.7 billion. It is important
every time you have funding which enables more research and technology,
more research and development. It is a good way. Obviously if
we had more it would be even better. If you look at how other
economies pump prime their research and technology in aerospace
and look in the US at NASA, it pumps billions in through NASA;
it pumps in billions. You are going to have to look at what we
do and our success rate and what it is likely to be over the next
20 years compared with what other economies are doing. If they
are doing a lot more, they will get a lot better.
Mr Scopes: I would not disagree
with that. By far the most important thing for directing our research
and development is the shape of the UK Government's future defence
procurement needs and the areas into which they plan to move and
the programmes which they plan to fund. That is what drives our
decisions.
Q203 Hywel Williams: So BAE does
take advantage of the tax credit system.
Mr Scopes: I would not be able
to give you here a figure for how significant that is. I just
do not have that with me.
Q204 Mr Caton: We have already begun
to explore the links between universities and you in the productive
economy. Mr Scopes, you mentioned your links with Swansea University.
Can you tell us a bit more about that?
Mr Scopes: I have been longing
to read this out: work on the numerical and computational expertise
in structured, unstructured and hybrid methods for the full fuel
solution of Maxwell's equations in the time domain. I hope that
is helpful.
Q205 Mr Caton: Could you explain
that?
Mr Scopes: In language I can get
somewhere near, they are working in areas of computational electro-magnetics,
numerical simulation, simulation environments and structures,
especially fatigue and fracture issues around structures.
Q206 Mr Caton: Can you tell us a
little about the relationship between the company and the university
which does the research? How do you have your input into getting
that sort of research started?
Mr Scopes: In each of these fields
I have described, there will be a relationship between somebody
in the company and one of the senior academics in the university
over quite a long period of time usually. Through that relationship
they will discuss areas in which they believe that department's
research could usefully be directed for the long-term interests
of BAE Systems or the industry. They will support the department
in securing funding from research councils and so on and in the
appropriate cases they will put company money into supporting
research in those particular areas in those departments. It is
a mixture of discussion, influence and in the end finance.
Q207 Mr Caton: Do you have similar
links with any other Welsh universities?
Mr Scopes: Swansea is the only
one I am aware of. Around the country we have about 50 all together
at different levels, but the only one I am aware of in Wales is
Swansea.
Q208 Chairman: Does Airbus have any
links with universities?
Mr Fleet: If you class NEWI as
a university, we have very strong links with them. Most of what
we call our higher apprentice people who are going on to be technicians
and engineers do that at NEWI. We have a one-stop shop with Deeside.
For the people being trained they work out which is the most appropriate
vocation. I deal with the one-stop shop people, but we do have
an awful lot of people going through NEWI and we hope they are
successful in attaining full university status, because we have
a long history with NEWI. I joined NEWI myself. I went through
NEWI back in 1974 when I did my HND in engineering.
Q209 Dr Francis: Are your students
part-time or full-time at NEWI?
Mr Fleet: Full time.
Q210 Dr Francis: Would some of them
not prefer to be part time because the government has recently
announced support for part-time students for the first time? In
Wales it is devolved and we were ahead of England.
Mr Fleet: If you are doing an
engineering qualification, HND type qualification, you do a six-month,
seven-month sandwich course and spend the other four or five months
in the place of work and that is what we have agreed with NEWI.
If you are doing a craft apprenticeship which last for three or
four years, you spend the first year full time in Deeside. Then
you spend the next two to three years going through the facilities,
learning your practical skills and finally going back on full-day
release and doing the written part. It depends what course you
are doing: it is horses for courses.
Q211 Mr Evans: Is the relationship
between both your companies and the universities—you said
earlier about 50 institutions so that is a lot—as vibrant
as it could be? Do you think it could be better?
Mr Scopes: In some cases they
are extremely strong and very, very powerful and in particular
I would say that the relationship with Loughborough is a very,
very powerful one.
Q212 Mr Evans: Is there a BAE chair
there or something?
Mr Scopes: I believe there is,
yes. We have also just set up this systems engineering integration
centre there, or help set it up. I am sure there is room for improvement
all round, but the excellent ones are very, very strong relationships
indeed.
Q213 Mr Evans: Is it the same with
Airbus? Are you happy or do you think either the universities
could do more, or government could do more, indeed Airbus could
do more to foster those links?
Mr Fleet: I think all three can
do more. We have become sometimes so blinkered in our own working
environment, in our own sphere that we forget the bigger picture.
People talk about partnerships: if you do get government working
together with industry and with academia, universities, one plus
one plus one, there is a multiplier effect and it can actually
make four or five. We do need to get better. We may be able to
learn from overseas, from the Europeans, from the Americans, how
they do it because they seem to be able to do it better. If we
are not quite sure ourselves, I believe in copying, if it is a
good process that we are copying. Maybe we could go and learn
from them how they are doing it better because their industry,
their academia and their government seem to manage that differently.
Q214 Mr Edwards: How do you feel
that government could help to bring you closer to the education
sector at any level of education you feel is appropriate?
Mr Scopes: It would have to be
through action to encourage science and engineering from an early
age and to give people a vision of what that can lead them to
in later career. Whether that is done through financial mechanisms
or through schools which are centred in schools of excellence
of science and engineering, all of those mechanisms would be possible.
Mr Fleet: I would say encourage
more engineering, wealth-creating courses, vocational ones, etcetera,
to make sure we create the wealth which the country requires.
I would say greater assistance in training. The majority of training
I have talked about is funded purely by ourselves and you do have
economic cycles, you do have the events of 11 September and we
have had a serious reduction in our revenues because we lost 30%
of our order book or future order book, overnight. Assistance
in training, looking at how we are going to re-skill the population.
Do not just wait for the downturn, when we have high employment
and are looking to create the skills. Do it during a time when
the economy is booming and we can afford it. Look at all the skills
of our people, how we progressively change that over the next
five, 10, 15 years, to make sure we do generate this thing called
the knowledge economy and that there are then industries out there
which are pulling people out and not just government pushing people
through academia and at the other end there is a job to go to.
Q215 Chairman: Thank you very much
for giving up your time, it has been very useful.
Mr Fleet: For the record, I should
like to say that one of the things you mentioned was regional
government and what we do and one of the things we do very well
is our relationship with our trade unions. Our trade unions are
great supporters of what we have done and campaign very hard for
repayable launch investment and everything else and our trade
unions are a real partner in what we do in Airbus. We also have
very supportive local MPs, such as Mark Tami and prior to him
Lord Barry Jones. Mark has carried on in the same vein as his
predecessor but is really very supportive of the site and does
open doors. Rather than going to the Wales Office, we know the
person to go and ask.
Q216 Dr Francis: Are you supportive
of the government's announcement about providing some funding
to modernise trade unions?
Mr Fleet: Any training changes
your attitude. Any training you do changes your attitude. We have
been sitting down talking to our trade unions for many, many years.
If the first time you speak to your workforce is when you have
a crisis, then you should be smacked. If you are speaking to your
trade union people all the time, when a problem looms they are
likely to listen to you. We communicate every month to the whole
management team, the whole trade union team, on the state of the
nation. When they go onto the shop-floor, hopefully the workforce
hears it in stereo: they hear it from the management team and
from the trade union team. They are key stakeholders in any major
business.
Chairman: Thank you very much indeed.
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