Threat to the UK Aerospace Industry

The UK’s Aerospace Industry Is Under Threat, Again

That’s a bold statement, but it’s true.  Does anyone care?  Well we should: the UK has an enviable record in advanced engineering skills, high-tech products and world-leading manufacturing capability.  The aerospace industry is one of the foundation stones upon which our current prosperity is built.  Yes, as a country we are still prosperous but for a long while now we’ve been in relative economic decline.

Our aerospace industry is still the second largest in the world, lagging only the USA.  There are almost three thousand aerospace companies in the UK that together employ, directly or indirectly, a third of a million people.  At a time when the UK is struggling with the financial mess that more than a decade of Labour government has created it is worth remembering that the aerospace industry is still one of the country’s largest export industries (£14Bn in 2008).

Economists know that things change, and why they change.  Supply expands to meet demand, prices fall, markets saturate.  Geo-political pressures such as emerging markets, and the communications that facilitate globalisation, act seismically to produce long term and largely irreversible shifts affecting whole industries.  The effects of some of these factors are all too plain. Some of the greatest aircraft manufacturers were British: Avro, Bristol, De Havilland, Gloster, Handley Page, Hawker, Short, Supermarine, Vickers, Westland.   Most of these have now gone, or been absorbed by foreign ownership.

Instead of aircraft manufacturers, we now have a few divisions of the likes of Airbus and Bombardier making sub-systems such as wings and undercarriages.  These are supplemented by the smaller companies in their supply chains, which are horribly vulnerable should Airbus, Boeing, Lockheed Martin and even (the largely US-owned) BAE decide to do more business away from these shores.

That the UK government should be acting to help sustain and even grow our aerospace business is a no-brainer.  What is required is far-sighted policy-making that looks beyond the next general election.  But what is actually happening?  UK aerospace organisations are being actively encouraged to invest in Brazil, India or China (three of the BRICs).  Support is available to establish new offices in Bangalore, Shanghai or wherever a reasonable business case can be made. It’s an attractive proposition for the host countries.  They get immediate capital injections and boosts to their employment, but the benefits are far longer term.  For example, India, to date largely involved in the lower end of avionics software engineering and manufacture is visibly using these opportunities to “up-skill” their workforce in more advanced engineering disciplines.  The threat to British industry is obvious, and yet it’s being funded by our taxes.

China has long made aircraft that were only of a domestically acceptable standard, just like Illyushin and Tupolev in Russia.  Now though, China is starting to turn out Dreamliner lookalikes, and they’ll be aided and abetted in their aspirations by Western politicians and industry executives who won’t look beyond their own personal end-games.

The question is: who is looking out for the long term future of the UK aerospace industry? Already many engineering jobs are being transferred to countries such as India. 17% of UK computer science graduates are currently still unemployed six months after graduating.  For the whole of engineering across the UK the figure is 13% – that’s more than one in eight promising new engineers without a job!  And this comes only a few years after the acknowledgement of a massive skills crisis across all engineering disciplines.

The aerospace giants can hardly be blamed for outsourcing their engineering projects to lower cost suppliers abroad.  £10 per hour for an advanced avionics engineer is hard to ignore. These companies are after all in an incredibly price sensitive market, one that is ultimately driven by intense competition and our apparently insatiable appetite for cheap flights and holidays abroad.

Surely though, the answer cannot be to simply stave off short term problems by creating worse ones in the medium term?  The solution must be to support British industry, and to support it directly in those areas where it still has a lead over most of the rest of the world: advanced systems engineering, composites and aircraft design. Gradually pushing these high end skills out to India (which not only require years of high quality education but also valuable experience and apprenticeships at top companies) will simply give away our position as a world leader. What high-end skills and innovation will there be in ten years’ time unless we continue to grow and invest in our own avionics industry?

The fruits of investment need to be protected.  Not by protectionism as such – that is passé (largely because it’s counter-productive).  The US knows how to protect its technological lead: it’s done by strict export licensing of advanced technology.  It makes US companies sometimes a pain to deal with, but it’s a model we should learn from if we wish to generate economic wellbeing and protect the standard of living of generations to come.

It is imperative that the government, together with all those in positions of influence in the aerospace industry, encourages fresh thinking and innovation – that is how we have succeeded. For this we need a steady influx of bright and motivated engineering graduates. Policy makers must develop strategies to guarantee the long term and prosperous future of the UK aerospace industry as well as, but not instead of, supporting growth and expansion abroad.

References:

http://www.ukadvancedengineering.com/marketing/aerospace/

http://www.bbc.co.uk/news/10477551

[This article was published as a Letter to the Editor of Aerospace International (Jan 2011)

An abridged version of this article also appears at www.critical-software.co.uk]

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