2 Contribution of the Defence Industry to the Scottish Economy
6. We have heard throughout this inquiry that the aerospace and defence industry makes an important contribution to the Scottish economy. SBAC Scotland told us that "the Scottish aerospace, defence and naval sector is one of Scotland's nationally important sectors".[2] The aerospace and defence industry also provides employment across Scotland. SBAC went on to say "that while there are understandable clusters of businesses within our sector in some areas of Scotland the geographical spread of the sector is much more widespread than has hitherto been recognised".[3]
7. The defence industry in Scotland is not limited to ship building. Along with a recognised excellence in shipbuilding, Scotland also has a strong defence electronics industry, particularly photonics and opto-electronics.[4] Global companies with a presence in Scotland include Thales UK, Selex Galileo, Raytheon, BAE Systems Regional Aircraft, BAE Systems Insyte, Rolls-Royce, Goodrich, Teledyne and Inter-Tec and Spirit Aerosystems as well as Babcock Marine and BAE Surface Fleet Solutions.
8. A survey by SBAC Scotland found that in 2006 the aerospace, defence and naval industries in Scotland employed 16,203 people of whom 45% worked in the naval sector, 27% in the defence sector and 28% in the aerospace sector. Although the aerospace figure excludes defence work Warrick Malcolm told us that companies involved in civilian aerospace may also carry out defence work. He said:
I think if you look at the example of BA Systems regional aircraft their sales will be partly in aerospace and some of it will be defence [...] They are using it [...] to try to manage some of the peaks and troughs of this work. Certainly they would say yes, that they do need some of the MoD work and the defence work to help manage that in the natural cycle of the business.[5]
We recognise that much of the non-defence work is dependant upon a base-load income from defence work to share costs and ensure viability. The survey also found that 32% of jobs in these sectors were graduate level or equivalent and the average wage in the sector was £29,380 compared to a Scottish national average of £21,944.[6] Baroness Taylor told us that there are 18,500 service and MoD civilian jobs located in Scotland and a further 12,500 jobs generated by the MoD presence in Scotland.[7]
9. There were approximately 170 companies in Scotland involved in aerospace, defence and naval work in 2006. Total orders in the aerospace, defence and naval industry in Scotland were worth £2283.2m, made up of £614.2m naval, £684.3m general defence and £984.7m aerospace. Nearly half of this total, £1,050.06m, is in maintenance repair and overhaul and after sales.[8]
10. In 2006 the Fraser of Allander Institute at the University of Strathclyde carried out research for BAE Systems. They "estimated that the 2,860 jobs provided by BAE SFS at Govan and Scotstoun in 2006 supported an additional 1,633 jobs in other industries in Scotland."[9] The study also estimated that for "every £1 paid directly in wages to BAE Systems employees supports £0.46 worth of wage income elsewhere in Scotland" and that the £133.2m worth of output from Govan and Scotstoun supported an additional £105m worth of output from Scottish industry.[10]
11. The defence industry is vital to Scotland; defence and aerospace generate nearly £2.31 billion in sales, directly employ more than 16,000 people and support a significant number of other jobs. The MoD employs 18,500 people in Scotland and supports 12,500 jobs indirectly. The MoD and the aerospace, defence and naval industry provide high quality employment opportunities across Scotland and are key to the future of the Scottish economy.
2 Ev 104 Back
3 Ev 106 Back
4 Ev 114 Back
5 Q 228 Back
6 SBAC, Aerospace, defence and naval industry survey 2007, page 12, figure 7 Back
7 Q 424 Back
8 SBAC, Aerospace, defence and naval industry survey 2007, page 6, figure 1 Back
9 Ev 91 Back
10 Ibid. Back
|
