Difficult decisions face aerospace industry
Posted on 6 March 2002
Future may focus on collaborative, not UK, projects
Difficult decisions have to be made by the Government about the
future of the UK's aerospace industry, a University of York academic has
Professor Keith Hartley says that although the industry has become
far more competitive than in the past, there is no guarantee that it
will remain that way. He said: "Concerns have been expressed about the
level of state support for both civil and military research and
development, and it is research and development programmes which provide
the next generation of projects for export."
Professor Hartley, of the Department of Economics, has been
commissioned by the Department of Trade and Industry to make a
four-month study of aerospace competitiveness. He says that between 1980
and 2000, using the USA as a benchmark, the UK aerospace industry
improved its competitiveness in productivity, scale of output,
development times, employment adjustment, exports and profitability.
But he predicts that it is unlikely that there will be any future
independent UK aircraft, helicopter and missile programmes. "Future
aerospace projects will be collaborative. Airbus is a model of
He added: "Governments remain important to the future of the UK
aerospace industry. They are major buyers of defence equipment,
including the funding of defence research and development, and they
provide support for civil aircraft research and development (eg Airbus
A380). They need to make difficult choices about the value to the UK of
its aerospace industry and their continued willingness to provide state
support for the industry."
Notes to editors:
- Labour productivity. The UK aerospace industry's labour
productivity relative to both the US and EU industries improved over the
period 1980 to 2000.
- Output is a major determinant of unit costs and
competitiveness. The US aerospace industry has the advantage of a large
home market, especially for military aircraft. However, on civil
aircraft, Airbus (with a UK involvement on wings, engines and equipment)
is approaching US scales of output (eg A320). Also, on military
projects, European collaboration results in output levels closer to
those in the USA and considerably greater than European national scales
of output (eg Eurofighter).
- Development times. Airbus is now competitive with Boeing on
development times. On current generations of combat aircraft,
development times are similar between Europe and the USA, confirming
that the US industry no longer has a competitive advantage in this
aspect of industry performance.
- Employment adjustment. Since 1980, the UK aerospace
industry's employment has become more responsive to variations in
output. UK employment adjusts far faster than the French aerospace
industry and it is approaching US levels of adjustment.
- Exports. Military aerospace exports have dominated UK
exports of defence equipment. There have been significant successes:
sales to Saudi Arabia; a world leader for subsonic combat aircraft
(Hawk); and supplying over 60% by value of US imports of aerospace
sub-systems (eg avionics; ejection seats; air-to-air refuelling). On
civil aircraft, Airbus has increased its world market share from under
10% in 1980 to almost 40% in 2000/01.
- Profitability reflects successful competitiveness. Over the
period 1985 to 2000, the UK's profitability generally exceeded that of
the US and EU aerospace industries. This was achieved despite the
advantage the US industry has with its larger scale of output and larger