The UK Aerospace Sector at a Glance

With 2017 drawing to a close and a new year just around the corner, I thought it relevant to take a look at the current state of the aerospace sector – and what we can expect in the near future. After all, the importance of UK aerospace is clear. According to a report by the ADS Group, a UK trade body that represents the aerospace, defence, security and space sectors, the sector contributes hugely to “continued growth and prosperity in every part of the country”.

This is not surprising, considering that UK aerospace had a turnover of ￡31 billion in 2016 and directly employed 120,000 people in 2017 (indirectly, the sector employed a further 118,000). According to a House of Commons Library briefing, the South West of England and the East Midlands account for nearly half of employment in the UK aerospace sector, at a figure of 43%.

Challenges Facing the Sector

While there seems to be a positive outlook for aerospace, the sector still faces some challenges that may impact it. The most recent one is, of course, Brexit. The uncertainty that surrounds the UK’s exit from the European Union has everyone wondering what the future of aerospace will be.

After all, Katherine Bennett, head of Airbus UK, said: “We can’t shy away from the fact that future investment made by Airbus will inevitably depend on the economic environment in which we operate. The company’s business model is based on our ability to move products, people and ideas around Europe free of restrictions”.

Because almost 90% of what the aerospace sector produces is exported (￡27.7 billion) as well, trade deals with other countries are crucial, meaning Brexit could change the playing field. For better or worse, it’s impossible to know for sure.

Another challenge to consider is the one concerning skilled labour, with the EEF emphasising the fact that the UK may lose access to skilled employees (in their Sector Bulletin: Aerospace) when it comes to aerospace manufacturing.

Opportunities for Growth

However, export opportunities can also contribute to a growth in the sector – case in point, in 2016, the value of UK aircraft seats exported was ￡550 million. 79% of all UK aerospace exports are engines and parts of aircraft. Of this, 35.2% are wings, fuselages, doors, control surfaces, landing gear and fuel tanks, worth ￡10 billion.

This is not the only thing that can help advance the sector, though.

According to the ADS Group, the government and the industry should work together to maximise growth opportunities. This entails factors like:

• Developing an ambitious industrial strategy that attracts global investment and builds on our successful sector strategies.
• Invest in industrial innovation to ensure the UK benefits from the jobs, exports and growth that flow from creative ideas.
• Deliver a Brexit deal that sustains the UK’s global competitiveness and ensures a stable transition.
• Prioritising productivity by supporting supply chain investment in new technologies, world-class skills and the latest manufacturing processes.
• Ensuring public procurement drives innovation, delivers wider industrial benefits for the UK and enhances our national security.

As a whole – and at a global scale – the aerospace market does seem to be moving forward. At the latest meeting held by NWAA (North Western Aerospace Alliance), which Dean Group attended, it was announced that China is in the advanced stages of building their wide-bodied aeroplane, the CR929.

This will meet the requirements of not just the Asian market, but others as well. For companies in the UK that operate in the aerospace sector, the meaning is clear: adapting to these market changes is crucial, as some businesses will move with them and others won’t.

The ones who do are likely to experience a growth themselves.

A Bright Outlook

The sector has expanded in a consistent manner over the past 5 years and has contributed 40% more to the UK’s economy in 2016, compared to 2014. The number of enterprises is also 14% higher now. This only serves to highlight the pattern of growth that has been seen in the sector for the past quarter of a century.

The UK aerospace sector is the largest in Europe and second only to the USA’s on a global scale, and it is expected that it will grow, at least, 10% more in the next year. The EEF estimates that this growth in the sector will come from increased passenger numbers, technological innovations in the parts that make up aircraft, and greater demand for air travel within developing economies.

It’s safe to say, then, that the sector appears to have a bright future.

I am Christopher Dean, the Managing Director of Dean Group, a company that specialises in high-quality investment casting.