Industry

THE IMPORTANCE TO THE SUSTAINABILITY OF THE BRITISH ECONOMY OF THE AVIATION AND AEROSPACE INDUSTRIES.

The United Kingdom is fortunate in having an internationally competitive and successful aerospace industry which, in terms of today’s revenue, ranks number two in the world. It makes a major contribution to the UK economy, with annual sales of £20 billion, high value-added, a strongly positive balance of trade and the employment of 124,000 highly skilled people. The proportion of employees educated to graduate level is rising towards forty percent of the total and salaries are running at forty-three percent above the national average. The industry’s importance is underlined by the fact that, today, the UK economy has a potentially unsustainable dependence on financial services, largely concentrated in the south east of England, with the rest of the national economy lagging and drained of high value employment. By contrast, aerospace epitomises the kind of industry that can provide sustained UK growth for the future, based on high barriers to entry and the creation and exploitation of intellectual property, with the benefits spread across much of the country and across a wide section of society. These conditions provide a significant catalyst for inward investment.  Without such industries, the UK will not, in the long term, be able to sustain the level of skills needed to meet the technological and economic challenges of the future.

As well as making a vital contribution to a sustainable economy, aerospace is, and has been for the last century, a vital element of national security and defence. Although much of the UK defence capability will be based on international collaboration, without a strong domestic base, the UK will not be able to participate as an equal in multi-national programmes.  It will also be increasingly difficult to maintain and upgrade its military inventory, particularly in time of urgent operational need.  A vibrant aerospace industry is thus a pre-requisite in retaining an independent defence and security policy.

For our present strength to be sustained, there are three fundamental requirements. These are: the ability to outpace or at least match our competition on the acquisition of advanced technology; the availability of a skilled and educated workforce; and a coherent and consistent defence industrial strategy.

In the UK and elsewhere, governments have always played a major role in the development of aerospace technology in partnership with industry. While the UK aerospace industry continues to invest in applied research and technology acquisition, UK Government spending in this critical area has fallen well behind competing nations, despite the UK’s high levels of expenditure on pure science. Aerospace companies are well-motivated towards investing in partnership with government in order to generate the technological edge to gain international competitive advantage in product development, manufacturing and value creation. In so doing, the UK Government is in a position to exercise operational sovereignty by retaining key technologies on-shore.  It is thus vital that Government invests in the National Aerospace Technology Strategy, in partnership with industry, to ensure that the UK is positioned to compete for the next generation of platforms.

Aerospace is utterly dependent on a flow of well-educated entrants to the work-force for which it must again rely on Government. Real improvement is required across the spectrum from basic literacy and numeracy to the production of high quality graduates in engineering, mathematics and the physical sciences.

For aerospace companies to maintain a defence capability in the UK, they must have visibility of future national defence requirements from UK Government on a consistent basis over an extended time-scale. Without the probability of a commercial opportunity, industry cannot justify a UK presence or the continued development of technology in the UK. It is essential that progress is maintained on a Defence Industrial Strategy to preserve the industrial capability and stimulate the investment necessary to underpin national defence capability.