As the debate around what kind of terms the UK will leave Europe rumbles on and the Government call a snap general election announced to reassert their dominance in parliament, there’s good reason for the UK aerospace industry to be nervous about its future.
Currently, the UK is the second largest aerospace manufacturer in the world, and the fourth largest exporter, sending parts around the globe (in particular the EU). That means that any changes which affect the aerospace industries ability to freely trade with the world could be devastating to their business, and force them to move abroad. It’s a suggestion which has been noted by the government, who recently moved to reassure the industry in a speech, but fears linger
Now, research by the banking giant Santander and EEF has suggested that the sector will continue to thrive, despite those aforementioned risks.
The UK supply chain is worth around £12 billion per year, with the largest percentage manufacturing high tech components like wings and engines. The MRO sector is also large, worth over £2.1 billion in 2014, according to the ONS. There’s also the great many smaller manufacturers, who supply aerospace testing parts and other vital equipment which keeps the UK’s aerospace and aviation industries ticking over.
The survey suggests that increasing aircraft demand from emerging markets should help propel UK aerospace growth, though the report does highlight a myriad of risks to the sector like political pressure for Airbus to move jobs to the EU; regulatory de-harmonisation between the UK and EU; reduced access to skilled labour; and a price rise of row manufacturing inputs thanks to a weakened pound.
Regardless, the authors of the report remain optimistic. Paul Brooks, head of business development and manufacturing at Santander Corporate & Commercial said: “The UK’s aerospace industry has thrived off the back of its competitive advantage in the production of high-value added technology-intensive products, and we forecast that this will continue given that the UK is hardwired into the global supply chain,”
Meanwhile, George Nikolaidis, senior economist at EEF, added: “By staying at the forefront of cutting-edge technologies, aerospace manufacturers have managed to retain a high share of the global market despite fundamental changes in international value chains.”
Both men have high praise for the UK’s technological prowess, but they are worried about the UK’s participation in the latest research going forward. Collaboration in these Europe-wide research programmes by businesses and universities yields faster results than working on your own.
British aerospace companies currently receive £30m each year from RU research and development grants. That’s not a huge sum at all for aerospace companies which deal with huge numbers, it’s the access to the research programmes which is the real value proposition.