Supplementary evidence submitted by SBAC Scotland
SBAC Scotland is pleased to provide the committee with further information regarding the importance of MOD contracts to Scottish companies.
IMPORTANCE OF MOD CONTRACTS TO SCOTTISH COMPANIES—CONTEXT
1. SBAC and SBAC Scotland both complete annual survey's of the aerospace and defence sector and these sources provide some context for the importance of MoD contracts to Scottish companies.
2. In recent years the civil sector has provided the greatest growth with 8% increase in 2006 compared to 2% growth in defence. The chart below puts these recent figures into the context of a longer time period.
Figure 1
UK AEROSPACE INDUSTRY REAL GROWTH OF SALES CIVIL AND DEFENCE 1980-2006
3. The impact of this long term trend is further underlined by the following chart which shows the move from an industry where sales turnover is predominantly in the defence sector to one where the majority of UK sales turnover is now in the civil sector.
Figure 2
UK AEROSPACE INDUSTRY SALES BY ACTIVITY 1980-2006
4. The contribution the domestic defence market made in 2006 to the UK aerospace and defence sector is shown by the following chart.
Figure 3
UK AEROSPACE INDUSTRY SALES BY TYPE AND REGION
5. In 2006 the growth within the segments in figure 3 were as follows: Defence domestic +0.1%; defence exports +6.0%; civil domestic +13.8%; civil exports 6.6%.
6. For sales specifically to the UK Government the picture in 2006 was that this was the only customer to reduce its purchasing from the UK sector as shown in figure 4.
Figure 4
UK AEROSPACE INDUSTRY SALES BY CUSTOMER
7. If we put this into an international context we can see that sales to the UK Government have traditionally been significantly lower than either the EU average or for US companies sales to the US Government.
Figure 5
UK, EU AND USA AEROSPACE INDUSTRIES SALES TO THEIR OWN GOVERNMENTS 1980-2006
8. If we look to the Scottish survey we find that the Scottish sector also experienced growth with defence and naval in particular performing well, see figure 6.
Figure 6
TOTAL SCOTTISH AEROSPACE, DEFENCE AND NAVAL SECTOR SALES 2005 AND 2006
9. Within this total 2006 growth shown in figure 6, aerospace exported 69% (£682 million) of sales compared to 44% (£306 million) exported for defence. Naval exported 59% of sales worth £362 million.
10. In comparison for 2005 aerospace exported 83% (£764 million) of sales compared to 21% (£110 million) exported for defence. Naval exported 56% of sales worth £308 million.
11. In summary both the UK and the Scottish sectors have responded to the falling revenue from UK defence contracts by pursuing and securing greater defence exports.
AVERAGE WAGE
12. The Committee asked for confirmation regarding the average salary for the sector. In the SBAC Scotland 2007 survey we reported that using data from the Office of National Statistics Annual Survey of Hours and Earnings (ASHE) and its other transport equipment classification which would include aerospace and naval sectors as the majority of the code. This shows that the Scottish sector's average wage rate was £29,380 and that this was 34% above the Scottish national average of £21,944.
SBAC Scotland
May 2008
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