Memorandum submitted by ADS (FC 65)
1. INTRODUCTION
(i) ADS is the trade body advancing UK AeroSpace,
Defence and Security industries with Farnborough International
Limited as a wholly owned subsidiary. A½D½S brings together
the combined strengths of the long-standing Association of Police
and Public Security Suppliers (APPSS), the Defence Manufacturers
Association (DMA) and the Society of British Aerospace Companies
(SBAC).
(ii) Aerospace, Defence, Security and Space
industries are major UK business sectors based on high-value engineering.
With a turnover of £20 billion a year, UK aerospace companies
continue to invest c. £1.8 billion in research and development
and sustain 223,000 UK jobs. Aerospace turnover was evenly divided
between civil and defence sales in 2008 with exports making up
a considerable share of income, accounting for 69% of UK aerospace
sales.
(iii) The UK has a 17% global share of the
civil aerospace market, 10% of the defence market and is well
placed to provide the equipment and necessary expertise to take
the lead in the increasingly significant security and space sectors.
UK companies also have a significant share of the global aftermarket
(service) sector, including maintenance, repair and overhaul
of both fixed-wing and rotary-wing aircraft providing significant
components of the UK industry.
(iv) As well as being substantial generators
of activity in their own right, the four sectors also stimulate
GDP and employment in other parts of the economy. For example,
the Space sector whilst supporting 70,000 jobs, also generates
an additional £1.6 billion a year through R&D spill-over
effects.
(v) There are many cross cutting Government
strategies that have an impact on the UK aerospace industry including
the Advanced Manufacturing Strategy, Low-Carbon industrial strategy,
High-level Skills Strategy & Leitch review, the Defence Industrial
Strategy and the developing Space Innovation and Growth team process.
(vi) Industry and Government developed a
joint strategy for the sector which was published in 2004 as the
Aerospace Innovation and Growth Team report (AeIGT). This publication
identifies the key strengths of the UK industry and identified
what was needed to ensure the UK maintained and grew its global
position. Both technology and skills investment were identified
as being of paramount importance. These conclusions have been
reviewed and underpinned by the development of a National Aerospace
Technology Strategy report and the development of a set of Technology
Roadmaps, which link collaborative research programmes to business
opportunities worth $3.15 trillion.
(vii) The overall trend is for strong order
growth over the next 20 years, Airbus forecast that 25,000 new
passenger and freighter aircraft valued at US $3.1 trillion will
be delivered between 2009 and 2028. Getting the right levels of
investment in UK research programmes is fundamental to UK based
companies winning work on future programmes and securing high-skilled
manufacturing jobs.
(viii) UK aerospace companies are world
leaders in the rotorcraft (helicopter) market which is forecast
to be worth £30 billion, up to 2027. Whilst the Defence Industrial
Strategy does include rotorcraft and identifies the need to retain
skills onshore to provide through life support for the Armed Forces,
there is no specific rotorcraft strategy designed to support the
development of the UK civil market.
(ix) Unmanned Aerial Systems is another
key market for the aerospace sector estimated to be worth $20
billion up to 2020, due to emerging developments in security and
surveillance. A key element to UK companies winning work in this
market in addition to sustaining the right investment into technology
development programmes is ensuring a supportive Air Traffic Management
framework which permits both flight and testing of unmanned systems.
2. The process for deciding where to make
cuts in SET spending
(i) We would strongly recommend that the
process addresses a number of key issues.
(ii) No cuts made where current spending
is fully recognized as supporting nationally-agreed strategies,
already underwritten by government, industry & academia.
(iii) If there are cuts, these should be
outside recognised institutes of excellence (ie We should protect
the "best" since this is more likely where the innovation
will come from).
(iv) Reduction in duplication across academia
in both education and research. There is scope to make cuts without
affecting UK research capability—for example, research could
be tested to verify its applicability to nationally-agreed strategies.
(v) Increase proportion of funding opportunities
where academia only get the money if they really team with industry.
3. UK Aeronautics Research Institute proposal
(i) The Aerospace and Defence KTN are brigading
government, industry and academia to develop a proposal for a
UK Aeronautics Research Institute. This will deliver leadership
in aeronautics research excellence and address fragmentation that
exists in the UK today.
(ii) Aeronautics expertise is currently
scattered across a large number of university departments. This
dilution of academic excellence threatens to degrade UK capability
and disable strategic inward investment from industry. In a number
of cases, technology "push" from publicly funded research
is currently disconnected from applications.
(iii) The absence of such a body means there
is no national organisation mechanism to undertake a programme
of underpinning research of national strategic importance which
can safeguard strategically important facilities and sustain and
grow National capabilities in composites, flight physics, electronics
and many other areas.
(iv) Other nations such as France and Germany
have maintained large, powerful, publicly funded research institutes
in the Aerospace sector (eg DLR and ONERA), which has given them
greater influence on the European stage, eg in shaping the Framework
Programme.
(v) The proposals are still being developed
but the objective is that an institute would reduce complexity
and encourage greater industry and university collaboration. The
ease of working through a central point of contact in comparison
to separate negotiations with multiple universities is attractive
to industry and academia. In addition, the institute would provide
a stronger link between academic research and the market-driven
National Aerospace Technology Strategy. The NATS roadmaps span
more than a decade but research grants usually last a few years.
The institute would provide continuity to research programmes
and a stronger link between academic research and commercial applications.
(vi) Currently, the UK is strategically
disadvantaged with respect to influencing EU Aeronautic Strategy
for two reasons.
(vii) The UK is not represented on influencing
bodies such as the Association of European Research Establishments
(EREA).
(viii) We are unable to attract anything
more than 50% EU funding in the absence of a Public Research Institute.
(ix) There is a real opportunity to address
these gaps and deliver greater linkages between academia and industry
and to increase the ability of the UK to achieve greater EU support
for research funding. The objective is not to duplicate or competitively
undermine the excellence already established within Industry,
Academia and RTOs, but to create coherency between these individual
entities, thus ensuring UK Aeronautics remains globally competitive
and sustainable. Initial proposals will be finalised in February
2010.
4. What evidence there is on the feasibility
or effectiveness of estimating the economic impact of research,
both from a historical perspective (for QR funding) and looking
to the future (for Research Council grants)
(i) In the development of defence equipment
and technology the Government through the MoD has a direct influence
on aerospace through both procurement and research investment.
There has been much public discussion about the need for a Strategic
Defence Review and A½D½S supports this process. Since
our armed forces cannot do their job without defence equipment
provided by industry it is essential that a renewed and refreshed
Defence Industrial Strategy is an integral part of the SDR process.
(ii) Defence equipment like health and IT
procurement programmes is a direct means by which Government investment
has the ability to channel investment into skilled jobs, technology
and innovation, whilst at the same time delivering world-class
equipment to our Armed Forces.
(iii) A recent report by Oxford Economics
produced an analysis of how a range of sectors contribute to the
national economy. The report concluded that relative to other
parts of the economy, the defence industry generates significant
benefits consistently across a range of comparators. These include:
returns to the Exchequer, impact on GDP, number of jobs, skill
development, research and development investment and export potential.
Across all these criteria, defence is judged the third most attractive
sector out of 27 included in the study.
(iv) Defence equipment also provides export
opportunities as equipment that is tried and tested in the UK
is more likely to attract export customers. Defence exports in
the UK account for 55,000 jobs and additionally encourage innovation
and contribute returns to the Exchequer.
5. The differential effect of cuts on demand-led
and research institutions
6. The implications and effects of the announced
STFC budget cuts
(i) The UK has an excellent academic base,
however international competition is intensifying. Full economic
costing is making the UK a more expensive place to do academic
research, and protracted negotiations with some Universities over
intellectual property rights are hampering the pace at which new
programmes can be launched.
(ii) Research Councils are increasingly
receptive to the needs of industry, and initiatives such as EPSRC
Strategic Partnerships are welcomed and should be encouraged.
(iii) The benefits of a strong Aerospace
industry have been recognised by other nations. The global nature
of the industry enables companies to make choices as to where
they invest, including in innovation. The UK must remain vigilant
and agile to respond to the increasing threat of very attractive
propositions being tabled overseas. It is inevitable that manufacturing
will follow where innovation takes place.
(iv) The technology and innovation created
by aerospace research often transfers between civil to defence
applications and vice versa. For example composite materials developed
in civil aerospace are used in defence applications, defence technology
has a role in security applications. The same is true of skills
and process improvements. There is an opportunity to achieve more
efficient investment in government supported research through
bringing together joint defence and civil programmes. The Technology
Strategy Board which has a coordinating role in investment is
the natural body to bring these different objectives together.
Advancing this goal does require the full engagement of academia
also.
(v) The network of Advanced Manufacturing
Research Centres have an important role to play in creating new
designs, products, processes and skilled employees for both aerospace
and wider applications, as many technologies from the sector spill
over into other sectors.
(vi) The proposed Manufacturing Technology
Centre (MTC) in the Midlands, along with the Advanced Manufacturing
Research Centre (AMRC) in Sheffield and the Advanced Forming
Research Centre (AFRC) near Glasgow, will provide a powerful
network linking companies, industrial sectors and universities
and spanning a range of high integrity, high productivity process
technologies. At several levels, the network will provide an infrastructure
capable of supporting future public and privately supported manufacturing
technology research.
(vii) Industry experience with the Advanced
Manufacturing Research Centre (AMRC) an initiative led by
Sheffield University and Yorkshire Forward has been very positive.
The centre which opened in 2004 operates as a department of the
University around a partnership of some 40 industrial companies.
The focus is on machining processes, composites and automated
assembly.
(viii) The programme has already been expanded
with a £10 million additional investment earlier this year,
by Yorkshire Forward with support from Rolls-Royce. The Rolls-Royce
Factory of the Future, has delivered a four-fold expansion of
the AMRC on the same Sheffield site. Further plans are also being
formulated to further expand facilities with two further buildings
providing a 40% increase in floor space.
(ix) The compelling characteristics of the
model are pace and scale underpinned by industrial leadership
and a very non-traditional and results-led approach from the University.
(x) This successful model has been built
upon and scaled up to bring a broader range of technologies whilst
preserving the benefits of specialisation within each Centre.
In 2007, industry achieved agreement with Scottish Enterprise
and Strathclyde University to launch the AFRC—a Centre that
will focus on advanced forging and forming processes with an initial
capital input from Scottish Enterprise of £17 million. Land
preparation is now complete, construction has started and the
Centre will open during 2010.
(xi) The Manufacturing Technology Centre
(MTC) represents an ambitious step towards completing the
first stage of a UK network. The proposal is to bring together
three Universities—Nottingham, Birmingham and Loughborough
along with The Welding Institute and a more broadly based, cross
sector industrial partnership. The scale of the Centre reflects
the very rapid growth seen in Sheffield and an intention to straddle
a broader range of process technologies including high integrity
joining, net shape fabrication and automation.
(xii) The programme is now at an advanced
stage with the East Midlands Development Agency and Advantage
West Midlands. A final formal decision on funding is expected
during Q3 2009 with MTC research projects being launched during
the second half of 2009 and the facility to be opened early 2011.
The MTC was "announced" as part of the Government's
manufacturing strategy in September 2008.
(xiii) A½D½S expects that industrial
support for the manufacturing research network will be strong
and international. As with the AMRC in Sheffield, we believe that
industrial membership of the new Centres will grow rapidly once
the facilities are open.
(xiv) A number of leading industrial companies
are already committed to centres within the emerging network (including
Rolls-Royce, Airbus, Boeing and BAE Systems) with significant
interest from a wider group of cross sector industrial partners.
(xv) At an industrial level A½D½S
believes that there are strong overlapping interests in high integrity,
high productivity manufacturing technologies that will continue
to attract a range of industrial sectors—including automotive,
heavy vehicles, nuclear, oil and gas and aerospace.
(xvi) In summary the benefit of these centres
to industry include.
(xvii) Access to world-class research facilities
and academic staff supporting fundamental and applied research
in manufacturing technology.
(xviii) Strong market pull and industrial
leadership from partners, especially the larger Original Equipment
Manufacturers.
(xix) Leverage knowledge from cross-sectoral
collaborative partnerships between leading academic institutions
and major industrial companies.
(xx) Rapid "technology pipeline"
from concept—demonstration—exploitation, bridging
the gap between University research (MCRL 1-3) & industrial
application (MCRL 7-9).
(xxi) We cannot allow any spending cuts
to impact on the above activities, as this will further disadvantage
the UK.
7. The scope of the STFC review announced
on 16 December and currently underway
8. The operation and definition of the science
budget ring-fence, and consideration of whether there should be
a similar ring-fence for the Higher Education Funding Council
for England research budget and departmental research budgets
(i) We recognise the need to review all
governmental spending in the current economic climate. However,
we must also recognize the need for the UK to be ready and able
to support and maximize its potential when the upturn comes.
(ii) We would strongly advocate that the
scope of the review addresses an improved use of available funding,
rather than carte-blanche cuts. An independent review of the benefits
accrued, and the direct linkages to nationally-approved strategies
would be preferable criteria for the review.
(iii) Ring-fencing budgets would be acceptable,
if determined against the above criteria.
9. Whether the Government is achieving the
objectives it set out in the "Science and innovation investment
framework 2004-14: next steps", including, for example, making
progress on the supply of high quality science, technology, engineering
and mathematics (STEM) graduates to achieve its overall ambitions
for UK science and innovation
10. Whether the extra student support, which
the Government announced on 20 July 2009 for 10,000 higher education
places, delivered students in science, technology, engineering
and mathematics courses
(i) We fully support all initiatives that
will encourage increased uptake of STEM subjects throughout education.
It is too early to determine whether these initiatives have been
successful, although the initial results look promising. However,
we would also caution that the ongoing proclivity to continually
launch new initiatives is not helpful. We would strongly recommend
that we use this opportunity to fully assess the full spectrum
of initiatives, and rationalize them to ensure a more comprehensive
possibility of success.
(ii) We are in grave danger of confusing
the landscape—let's simplify, get better value-for-money,
and be successful—the success should be measured on output,
not input.
January 2010
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