Inward Investment in Wales

Written evidence submitted by Airbus

Company Profile

- Airbus is a global company, the world's leading aircraft manufacturer. Airbus consistently captures approximately half of all orders for airliners with more than 100 seats. In 2010, Airbus achieved a 50.7% share of the global market. Airbus in the UK is world-renowned for its centres of excellence for both wing design, integration and manufacture.

- Airbus has two UK sites located at Filton, near Bristol, and Broughton, in North Wales. Its total combined workforce is around 10,000 people. These sites are responsible for wing research and technology development, wing design, manufacture, management of the wing supply chain and wing integration. The two sites are also responsible for fuel systems and landing gear integration.

- The Broughton factory is widely acknowledged to lead the world in the manufacture of large civil aircraft wings. The principal focus at Broughton is on high value adding tasks that include the long-bed machining of large-scale components, such as wing skins, or panels, and stringers, which are used to fasten the skins together. The site is also responsible for the assembly and equipping of complete wings.

- Any audit of UK technological performance would rank the Airbus wing technology developed over the last three decades as among the country’s most significant achievements. This has given the UK and Europe a lead in wing technology that has played a major role in the market success of Airbus.

- Airbus is a wholly owned subsidiary of EADS (European Aerospace and Defence Systems). EADS employs around 116,000 people worldwide and has over 70 production sites in places like France, Germany, Spain, United States, China and Australia.

Airbus in Wales

The Broughton based factory has a long history. In 1935, the Government unveiled the "Shadow Factory Scheme", designed to move vital industries to remote areas in the North of the country. In 1937, the Broughton site was chosen to build a plant capable of producing Wellington bombers, thanks to clear, year round test flying conditions.

This factory was financed by the Government, but was leased to and managed by Vickers- Armstrongs Chester.

Since then, the factory has passed successively from Vickers-Armstrongs to de Havilland, Hawker Siddeley, British Aerospace, and BAe systems. In 2001, Airbus was formally incorporated into a joint stock company, with BAe Systems owning a 20% share, and EADS owning the further 80%. In 2005 BAe Systems sold its 20% share to EADS and Airbus became a wholly owned subsidiary. Since 1971, over 6000 Airbus wing sets have been produced at Broughton.

Today, the Broughton site employs over 6000 people (permanent and temporary), more than half of whom live in Wales. Its annual salary bill to Welsh resident employees is around £100 million per annum. Airbus provides its employees with secure, long term employment. For example 30% of employees have 15 years or more experience and 10% with 25 years or more experience within the company.

The 700 acre site has seen significant inward investment. Excluding R&D, Airbus has invested over £1.86 billion into the Broughton site during the last 10 years, to create a state- of- the- art, high tech, innovative and modern facility.

A number of key suppliers are based in or near the Airbus site in Broughton. Businesses such as Metal Improvement Company, Electroimpact and Hawker Beechcraft all have a manufacturing presence on site. Aerotech and Gardner both have facilities based on the adjacent business park, which was established with the support of the Welsh Government.

It is estimated that as a result of the supply chain impact, in addition to the 6000 directly employed Broughton workforce, a further 2000 people are employed by suppliers to Airbus, located on, or in close proximity to the Broughton site.

Thus, Flintshire is recognised by many as the "engine" of the North Wales economy and has established Airbus as a key component of the wider UK economy. To that end, Airbus’ Welsh supply chain is also worth nearly £121 million per annum.

Airbus is currently in the preliminary stages of enhancing its engineering skills base at Broughton. Indeed, 25 fully qualified engineers have started at Broughton since January 2011, with a planned recruitment of a further 25 before the end of the year.

Skills in Wales

Airbus currently employs almost 400 apprentices at its Broughton site, with a further 20 based in Filton. Not only is the scheme recognised internally (70% of senior managers at Airbus started their careers as apprentices), but also externally. For example, the Sector Skills Council for Science, Engineering and Manufacturing Technologies (Semta) recognised the Airbus apprenticeship as a "model progression route".

Due to the high tech nature of the industry in which Airbus operates, training and skills support is a fundamental part of business activity. Therefore, Airbus has developed close relationships with a number of universities and further education colleges in order to ensure that the workforce is equipped with the correct skills set for current, and future business needs. Typically, all first year apprentices will attend Deeside College, where tuition and training costs are provided by the Work Based Learning and Further Education budget from the Welsh Assembly Government. Partnerships between Airbus and local education institutes, such as Glyndŵr University, allow for the progression from foundation degrees, to Masters degrees, and eventually full Chartership.

In 2009/10, in order to provide flexibility for potential market downturns and thus a shortage in immediate full time employment opportunities within Airbus,, the company worked with the Welsh Assembly Government and trade unions to extend the apprenticeship period by one year. This allowed Airbus to equip trainees with the new skills sets needed for the A350 XWB programme.

The craft and higher apprenticeship represents an individual investment of £55,000 and £75,000 respectively, over a period of 3 years.

Airbus also operates a two-year graduate programme which employs around 60 graduates each year. The company is in The Times Top 100 Graduate Employers.

The research relationship between Airbus and UK-based universities is very strong. The company has research and development links with 35 UK universities, including Bath, Bristol, Cranfield, Imperial, Cardiff and Glyndŵr. The main mechanisms for partnership with universities include: direct research contracts; sponsorship of PhDs; support to university bids for funding from the Engineering and Physical Sciences Research Council (EPSRC); as well as inclusion of Universities in TSB and EU supported collaborations.

In January 2011, the aerospace market had improved so much that the against the background of improved market conditions the business was able to award permanent Airbus contracts to 770 former Blue Arrow employees, who had formed the basis of the complementary workforce at Broughton. Unite the union commented on the announcement "Unite is pleased to have reached an arrangement with Airbus, which will see 770 Blue Arrow workers offered permanent Airbus employment. We hope the new labour agreement will ultimately result in more permanent Airbus jobs in future."

Skills development of its workforce is key to Airbus’ success. Operators training to work on the A350XWB will pass through demo boxes. A demo box is a full scale representation of a jig that Airbus would use in a production environment. They allow Airbus to trial new manufacturing and tooling techniques as they provide an accurate representation of what one might expect when production starts.

Last year Broughton spent over 71,000 man hours training its employees. Excluding apprentices, this represents an investment of around one million pounds.

Relationship with Government

Airbus has a strong relationship with the UK and Welsh Government’s, and is committed to maintaining this. Through site visits, Airbus management aims to provide key government stakeholders with up to date information regarding latest orders, economic impact and employment figures. Cabinet and Shadow Cabinet ministers, MPs and AMs have all visited Broughton in recent months.

Recently, the Rt. Hon. George Osborne MP visited Airbus and said:

"Airbus is incredibly important to the UK economy, and is one of the best companies in the whole of the UK. What’s great is the enthusiasm amongst apprentices and their self confidence that they are doing the right thing, not just for their career, but also in making a valuable contribution to the broader economy".

The week before, the Rt. Hon. Ed Balls MP visited and said;

"Lessons should be learnt from Airbus – It is an example of a business that invests in skills". This kind of cross party support is essential to Airbus.

The Business, Innovation and Skills Department (BIS)is the primary interface for corporate issues with Airbus. Regular meetings and site visits ensure all issues are aired. Airbus often provides BIS and UKTI with updates on key sales campaigns around the world and the Government regularly shares information on sales missions being co-ordinated. Over the last few years this process has been tightened up and Airbus is always keen to find when Ministers are on visits to other countries as far in advance as possible. This gives Airbus the opportunity to provide a briefing or facilitate events or visits. Other governments share the planning of their Ministers more extensively.

With the expansion of aerospace manufacturing elsewhere in the world, the support provided by the UKTI will be even more significant

Repayable Launch Investment, which was provided for the A320, A330/340 and A380 projects, is an income generator for the UK taxpayer. On the A320 p rogramme for example, repayments by the company ha ve already been more than three times the amount initially provided by the Government.

Airbus represents itself in a number of government forums, including the Welsh Business Advisory Group and the BIS Skills and Retention Group.

There is also an Airbus presence in a number of trade bodies, which include the Aerospace Leadership Council, the Technology Strategy Board, the CBI, Semta, ADS, and the Aerospace Sector Strategy Group (Semta / ADS). Airbus senior management tend to play a prominent role in these groups, often acting as a Chairman or board members.

Airbus has been awarded "Anchor Company" status by the Welsh Government. Whereas the term is not a formal designation, it is used to recognise high-growth businesses with a significant corporate presence in Wales. This entitles Airbus to a high level, strategic relationship with the Welsh Government, resulting in a close cooperation between the public and private sector.

Within this context, Gareth Jenkins, Advanced Materials and Manufacturing Sector Chair, recently visited the Advanced Composite Training and Development Centre in Broughton to view the site at first hand and gain an appreciation of some of the business issues faced.

Broughton is located in a "Tier 2 Assisted Area". This has enabled Airbus to secure support for some major capital investment projects.

Airbus values its close relationship with the UK and Welsh Governments, and is mindful of being a prime recipient of Welsh Government support. However due to the current economic climate, and the changes highlighted in the Welsh Government’s "One Wales Agreement", Airbus will be keeping a watchful eye on how the new policies develop.

June 2011