Science and TechnologyWritten evidence submitted by The Aerospace, Aviation & Defence Knowledge Transfer Network (AAD KTN)

Background to AAD KTN

AAD KTN is a single overarching network for the Aerospace, Aviation and Defence sectors spanning Government, Industry and Academia with the principal aim of promoting and enabling innovation in the UK.1 The AAD KTN is funded by the Technology Strategy Board (TSB) and has around 3000 members. Aerospace, Aviation and Defence as combined sectors employ close to 500,000 people through some 9,000 organisations in the UK. Aerospace continues to be a UK success story being first in Europe and second only to the USA in terms of turnover;2 Aviation contributes some £8.8 billion to the UK economy;3 Defence industries’ success lie in their ability to export leading edge technology valued on average at £5 billion per year.4 The growth of global air traffic over the past 50 years has been substantial and forecasts indicate that it will continue at some 5% per annum.

The majority of the KTN activity takes place through 13 National Technical Committees (NTCs) and by having the custodianship of the National Aerospace Technology Strategy (NATS).5 The NTCs are forums facilitated by the AAD KTN which are focused around key technology themes with experts from industry, academia and government with a remit to advise on future R&T priorities that should be invested in. The National Aerospace Technology Strategy represents the UK national aerospace technology plan developed and delivered by a multi-stakeholder forum comprising of industry and university representatives, alongside government departments and agencies.

Since 1 March 2011, the KTN’s remit extended into aviation related activities and now has six priority themes:

National Aerospace Technology Strategy.

Autonomous Systems.

Aviation and the Natural Environment.

Maintenance Repair and Overhaul (MRO).

Passengers and Security.

Introduction of Biofuels to the airport infrastructure.

The KTN is also host to two pan-KTN programmes working across Space and Defence communities. In Space the KTN is the custodian of the National Space Technology Strategy (NSTS) and in Defence the KTN is catalysing Science and Technology connectivity between the MoD and non-defence communities. These programmes attract a further membership of around 3,000.

The AAD KTN’s response the questions posed by the Science and Technology Committee is as follows:

1. What are the difficulties of funding the commercialisation of research, and how can they be overcome?

1.1 From the various interactions with our membership the KTN believe the funding landscape within the UK has become complicated to navigate with a vast portfolio of initiatives. Ranging from the SME focused assistance through to the recently re-badged SMART scheme now delivered by the TSB to the Regional Growth Fund, aimed at generating employment, operated by the Department for Business, Innovation and Skills. The KTN can spend much time assisting organisations, large and small, in understanding this landscape explaining how all the support mechanisms fit together. There is a need for the landscape to be presented to the SME, the entrepreneur in such a way that it is able to articulate its need and identify the mechanism to assist them more easily.

1.2 The success of the UK aerospace industry depends on the ability to deploy world-class technology, which requires long-term investment in research and technology. Aerospace is also a safety critical and highly regulated industry. It typically follows a technology development cycle constrained by regulation and certification. New technology can take up to 15 years to progress from basic science to product application. This can therefore result in long payback period for investments made in technology development which can be a challenge for the supply chain, even the larger companies.

1.3 If there is a need for both government and industry to demonstrate impact as a result of joint working through SMART, SBRI, KTP or other such mechanisms then it would be advantageous for the metrics across the innovation landscape, Research Councils to the Technology Strategy Board to the Regional Growth Fund to be better aligned. For instance, Research Councils metrics could cover demonstration of KTP or Feasibility Study follow through; KTP could demonstrate Collaborative R&D follow through as a measure of success. If metrics are to be used to demonstrate impact, then it is the KTN’s belief that the metrics could and should be used to drive the right innovative behaviour across all sectors.

2. Are there specific science and engineering sectors where it is particularly difficult to commercialise research? Are there common difficulties and common solutions across sectors?

2.1 Aerospace/aviation, nuclear, space and marine are highly regulated thereby represent sectors where it is harder to commercialise research due to the additional hurdles that exist. The latest aircraft are increasingly complex “systems of systems” and their often large size poses technological challenges in their own right. Development work is spread not only across the initial R&D process, but also into the vehicle’s operational phase, since aircraft and their systems are modified and updated during their operational life, which may be several decades long. The aerospace industry is very conservative in terms of exploitation of innovation because of the certification requirements. New entrants to the aerospace market can find it difficult as they have to demonstrate the appropriate “worthiness” and must be prepared have a long term plan. Some of these issues reside in the also fragmented and complex regulation landscape of aerospace, there are currently multiple bodies and organisations that are involved in regulation, but there is no overarching approach.

2.2 The space community upstream is also heavily regulated with even longer timescales of delivering technology through to completion and yet it is recognised that the value of the downstream space sector is significant. For the UK to truly take its 10% of the forecasted £400 billion Global Space market over the next 18 years as stated in the Space Innovation and Growth Strategy then there is a need to balance short term investments with long term investments to secure the UK’s access to satellite based data.

3. What, if any, examples are there of UK-based research having to be transferred outside the UK for commercialisation? Why did this occur?

3.1 Other “traditional” aerospace nations and increasingly the emerging aerospace economies support research and development activities of their aerospace sector. In an increasingly global industry with countries keen to develop their aerospace industries, companies have a broad choice of country in which they locate their facilities. This remains a potential threat to the UK that aerospace manufacturing will move overseas. All the major aerospace companies have started this process and initially the activities moved offshore tended to be the ones that will benefit from cheap labour rates. The danger is that as the overseas economies become more technically sophisticated, a mass move of R&D activities will look increasingly attractive. The decision to move offshore is not a straightforward one and for aerospace this can be influenced by other factors such as the need to access a particular market (such as the US or Asia) or a skills base.

3.2 The UK was not in a position to secure the carbon composite wing skins for the latest Airbus aircraft A350XWB due in part to the long term investments of other “Airbus” nations (Spain and Germany) in composite capability. The UK has responded to the challenges and opportunities of composites with several significant investments including the National Composites Centre based in Bristol, now part of the High Value Manufacturing Catapult. The Catapult centre has the potential to become an extremely valuable initiative for advanced manufacturing sectors such as aerospace as they represent a longer term plan of Government and industry collaboration.

3.3 Rolls Royce continues to make investments in the UK, but has made significant investments, including R&D facilities, in Singapore, Germany and the US. In Singapore, a large number of companies have clustered around the Seletar Aerospace Park where for instance Rolls-Royce have based a Trent aero engine assembly and test facility, a wide chord fan blade manufacturing facility as well as a regional training centre and Advanced Technology Centre, an integral part of the Rolls-Royce global network for technology research.

4. What evidence is there that Government and Technology Strategy Board initiatives to date have improved the commercialisation of research?

4.1 The Catapults centres have the potential to be a valuable initiative. The High Value Manufacturing (HVM) Catapult represents an opportunity where UK government investment can assist industry by providing access world leading manufacturing capability, both in terms of equipment and academic knowledge. In effect, the HVM Catapult assists those companies wishing to de-risk manufacturing technologies and processes to such a state where they feel confident in the business case to make the necessary investments in capital equipment.

4.2 The TSB’s Collaborative R&D funds collaborative projects which not only support industry to industry activity but also academic to business research activity. In certain cases where the academic content of a project is of a high standard, the Research Councils are in many cases able to support the academic content. The collaborative working relationship between the TSB and the Research Councils will be essential in assisting the process of transferring scientific research into industry.

4.3 EPSRC, a major focal point for the aerospace sector, are increasingly looking to ensure the investments in scientific research are aligned to the interests of industry and will look for academia to confirm the impact of any proposal. However, it must be recognised by all parties that industry focused research has to be balanced with the need to allow academia the opportunity to look at blue sky research. A positive move to support commercialisation of scientific expertise EPSRC has supported portfolio of Centres for Innovative Manufacture to allow industry access academic research capability at the low technology readiness levels.

4.4 The role of NATS and NSTS is to articulate an agreed set of priorities for the UK aerospace and space sectors to preserve and expand its position in the global aerospace industry.

5. What impact will the Government’s innovation, research and growth strategies have on bridging the valley of death?

5.1 The UK government has committed to maintain the science and research budget at £4.6 billion per annum and so able to continue to support a wide range of sectors covering the seven research council remits. However, at approximately £300 million per annum, the TSB are not in a position to assist UK industry transfer research from such a wide spectrum into more commercialised products. The competition for TSB investments is fierce, and whilst competition is advantageous, leads to strong and focused businesses, the very high levels of over-subscription are indicative that should the TSB budgets be increased then more R&D would be de-risked here in the UK thus creating greater opportunities for commercialisation of innovation.

6. Should the UK seek to encourage more private equity investment (including venture capital and angel investment) into science and engineering sectors and if so, how can this be achieved?

6.1 The KTN believes that the UK needs to encourage more private equity investment but recognises there is a potential mismatch in expectation as aerospace suffers from long term payback whilst the private equity community look for short term return on their investment. However, once secured on an aerospace platform, there is the likelihood of the commercialised product generating a long term income flow. An opportunity could exist to bring the private and industry close together. If information was published on the successful recipients of UK government grants, this could highlight to the private equity community potential opportunities in the future. There might also be an opportunity due to the over-subscription of grant applicants for those not successful in obtaining grant but deemed to be worthy of support by the assessment process to be flagged up the private equity community.

7. What other types of investment or support should the Government develop?

7.1 In addition to national governments’ support for research, the EU supports research at the European level. Companies pursue their national competitiveness through national programmes but get extra value in wider collaborations at the European level. A strong national capability, supported through a national programme puts the companies in a good position to win a significant part in European projects. This “leverage” function should not be underestimated in value to the UK.

7.2 There are some resources to assist UK supply chains in accessing/navigating the EU landscape. However a greater level of resource to assist this process would ensure that UK businesses could increase access and share of the EU funds. The Innovation and Research Strategy has identified further staff resources for the TSB to help leverage EU funding however a TSB presence permanently in the EU with a resourced, knowledgeable team whose sole purpose was to represent, inform and connect would improve the UK’s draw down of EU funding.

February 2012

1 www.aeroktn.co.uk

2 UK Aerospace Industry Survey 2010.

3 What is the contribution of Aviation to the UK Economy, Oxera Report, 2009.

4 UK Aerospace Industry Survey 2010.

5 https://connect.innovateuk.org/web/national-aerospace-technology-strategy-nats/overview

Prepared 12th March 2013