UK aerospace in 2007 - a message from the SBAC President

UK aerospace in 2007 - a message from the SBAC President

This past year's results showed aerospace and defence on a steady path of growth with turnover approaching £20bn (split about equally between civil and defence). Aerospace manufacturers across the UK remained extremely busy delivering against a strong order book and a heavy backlog. However, the low value of the dollar against the pound compressed the total sales figure, with growth at one per cent.

Orders remained very strong, soaring 65 per cent to a record £43.8bn. Investments in research grew to £2.92bn, with £2.7bn for development related research and £255m for early stage research programmes. This raised R&D intensity to 15 per cent of turnover and reaffirms the commitment of the UK industry to developing the innovation and technology which will underpin continued UK competitiveness and high skilled jobs.

During 2007 productivity increased strongly with levels up 6.5 per cent to £175,100 turnover ratio per employee. Driving increased productivity improvements by better supply chain practices is a key priority for our sector and it is good to see the Supply Chains for the Twenty First Century (SC21) improvement programme delivering results.

Exports in the sector accounted for 62 per cent, or £12.2bn, of sales reinforcing the global nature of the aerospace market. Conditions remain very competitive in the sector and civil exports remained at the same level whilst defence exports decreased slightly over the previous year.

The record order book underscores the UK as a competitive location for aerospace manufacturing with significant inward investment driven by this global interest. UK companies also have a significant overseas presence, employing 50,800 people and generating revenues of £8.5bn.

Looking ahead, long-term demand for air travel is projected to grow internationally at 4-5 per cent per annum with demand for new civil aircraft worth an estimated $1.6 trillion over the next 20 years. The large number of orders this past year reaffirms this trend. The increase in demand for travel also comes with a need for greater efficiencies and environmental improvements. The UK aerospace industry is a pioneer in this respect having led the way with the world's first Sustainable Aviation strategy. The high levels of investment in research recorded this year will help us make progress in the development of new technology that delivers real improvements.

Investing in skills and training is an essential element of aerospace and defence competitiveness and our industry is committed to the development of our employees across all disciplines. The industry continues to provide high value and highly skilled jobs and 39 per cent of all employees in the sector hold a university degree or equivalent.

These survey results for our industry are reassuring at this time. Revenues for 2007 showed growth and the long-term future outlook for the sector looks strong with order books at record levels. The industry's commitment to the UK through increased levels in R&D is an important indicator of continued investment in technology development and skills improvement.

I strongly believe the industry is entering a defining period in its development. Global economic conditions mean that there are stern challenges ahead. Globalisation and intense cost pressures are making aerospace research, development and production more internationally mobile.

Competition in our business continues to grow each year and maintaining leadership in technology is becoming harder. Recruiting, retaining and developing the skills and people necessary for a vibrant future, is also becoming more difficult. If the UK industry is to maintain its position of strength, it is essential that industry and government work together to address the challenges that we face. The SBAC is fully committed to playing its part in helping to develop a sustainable aerospace industry in the UK, sustainable economically and sustainable environmentally.

Alex Dorrian, CBE
President SBAC and Chief Executive Officer at Thales UK