How secure is the future of the UK aerospace sector? Worries mount over the long-term health of the UK’s aerospace industry due to R&D shortfall. [caption id="attachment_5680" align="alignnone" width="373" caption="The new A350XWB wing North Factory at Broughton incorporates several 'green building' features. (Airbus)"][/caption] On 13 October Airbus officially opened its new £400m wing factory in the UK which will produce the carbon-fibre wings for the A350XWB twin-aisle airliner – set to make its first flight in 2012. The opening of the North Factory at Broughton secures some 6,000 UK skilled aerospace jobs at the site and is the biggest factory to be opened in the UK for around five years. With a glittering ceremony that involved singers, acrobats and a brass band – as well as a surprise appearance from the PM David Cameron, it highlighted the manufacturing skills base that makes the UK Europe’s wing technology ‘centre of excellence’ and contributes to wealth generation. Indeed, the opening of a new factory, making things (as opposed to dealing in intangible ‘derivatives’ or toxic loans) matches perfectly the Coalition Government’s stated intention to help rebalance the economy and provide for export-led growth. The company also is neatly ‘on message’ about the value of apprenticeships – with Tom Williams, head of programmes, Airbus, in a briefing to journalists, pointing out that some 70% of senior managers at Airbus started their careers as apprentices. So with a predicted market for around 27,000 airliners over the next 20 years the future for guaranteed work for the UK from Airbus seems rosy. Just sit back, make wings and the money will come rolling in, right? But is it?  

Resting on past glories?

[caption id="attachment_5682" align="alignnone" width="403" caption="The A380 wing is made possible by decades of research."][/caption] Yet underneath the opening ceremony and razzmatazz there was an underlying warning for politicians from Airbus (and, by extension, its wider supply chain and the rest of the UK aerospace industry). This position, in which the UK has the second biggest aerospace sector in the world, cannot be taken for granted. The industry in the UK employs over 100,000 people and is worth about £29bn to the British economy. But aerospace is a long-term business, with results dependent on research put in decades before. Products such as airliners have a 30-40 year lifecycle and, indeed, Tom Williams noted at the event, that the highly popular A320s have wings derived from crucial wind-tunnel research carried out some 30 years earlier at the RAE at Farnborough. This early research was converted into design expertise and then into manufacturing – making the Britain the natural home for Europe’s airliner wings. Yet most worryingly in recent years aerospace R&D (or its related area - R&T (Research and Technology)) funding has fallen dramatically to ‘dangerously low’ levels according to some experts, running the risk of eating away at the UK’s aerospace (and defence) sector in the future. There is potential shortfall identified in R&D funding of some £500m by 2015. Industry group ADS has aleady warned that Government spending in defence R&T has declined heavily (20%) over three years. Without a doubling of this Goverment funded defence R&T, ADS predicts that UK industry could contract by as much as a third. This year's grim job losses from BAE Systems seems to be bearing that prediction out. Yet while the current finincial crisis and austerity measures are playing their part,  it is important to note that in some senses the 'reliance on past glories' actually pre-dates the current economic maliase. For example the past decade has seen the UK’s national aerospace and defence research centre, Defence Evaluation and Research Agency DERA (which formerly included the RAE Royal Aircraft Establishment) divided up and sold off in 2001 – with QinetiQ now a private entity – and chasing commercial returns and shareholders dividends with much of its work now overseas. Partly this reduction in real terms in R&T has been part of the post-Cold War peace dividend that saw a reduced need for cutting edge military R&D with the peer competitor removed. However, in another sense it has also been because the UK aerospace sector has been so successful, it is now perceived by decision makers that it doesn’t need any support whatsoever and will continue to innovate and be self-funded. Another reason for the decline in national R&D is that many programmes have moved up the ladder to the EU’s remit, under initiatives like its Framework (FP) programmes, Clean Sky (green aviation tech), or SESAR (future ATM). Some might argue that given limited funds and to avoid duplication, the European level is now the preferred way to make the R&D spend go further and compete globally. Finally, for some politicians there is the ideological distaste of backing failing national champions to the hilt – who shudder in horror at names like British Leyland. The story of Concorde, too, for all its technological marvels, yet was a commercial flop, will also be in the back of some politicians’ minds when being promised  ‘game-changing’ aerospace technology with hefty price tags.    

Sharpening competition

[caption id="attachment_5688" align="alignnone" width="333" caption="Inside the North Factory - but other countries are desperate for the hi-tech work that aerospace brings."][/caption] Yet national aerospace R&T funding is still critical. At the Airbus North Factory opening Airbus chief Tom Enders was at pains to urge the British Government to invest in its ‘intellectual infrastructure’ if the UK wants to keep its lucrative slice of the pie. Other, more hungry nations, are investing heavily and Spain for example, had already won a slice of wing work – cutting the UK’s share of work on the A350 to 15% from 20% on the A380.  (Interestingly noted during the day was that the UK’s interest in Airbus could have been at one point a one-third stake, had not Britain at that time run lukewarm over a deeper aerospace collaboration with Germany and France). Further in the future, with India and China churning out engineers in the thousands, other high-end work could potentially disappear overseas as Airbus moves from being a European company to a global manufacturer. In such a globally competitive environment, the UK (or any country for that matter) cannot afford to continue to live on past hard-won glories.  

Why not R&D for sustainable aviation?

[caption id="attachment_5685" align="alignnone" width="403" caption="A350XWB composite wing cover makes for a lighter, more fuel efficent aircraft. (Airbus)."][/caption] Even more important is that there seems to be a lack of recognition at the highest levels that while the end of the Cold War removed a major driving force to aerospace research – in its place we now have a new threat that requires a multifaceted approach – that of the environment and climate change. While the Government is keen to impose green taxes with APD and now with the Europe-wide ETS – there is no state-funded matching R&D effort to plough these taxes back into the sort of research and technology areas that would address sustainable aviation solutions. This long-term green aviation challenge, which may involve biofuels, blended-wing body airliners, open-rotor powerplants or solar-powered aircraft is precisely where targeted R&D support could pay massive dividends later and set the UK up to be a leader in sustainable aviation.  Rolls-Royce for example estimates that every new variant of Trent engine costs approximately £1bn to develop. For the ultra-efficient open-rotor engine technology (which may now see Rolls & Pratt & Whitney co-operate) this sum is likely to be even larger. The next big breakthrough in aerospace technology then, whether it involves new engine technology, new materials or new configurations is likely to come with a steep price tag. Yet these breakthroughs are critical in meeting goals of sustainable aviation.  

Lacking strategy?

Airbus is not the only one to warn about maintaining an 'intellectual infrastructure' and the importance of R&D in securing a long-term future. This week the IMechE published its own report, calling for a national aerospace strategy or vision, a boost in money for R&D and a formation of a national aviation research facility. Its first recommendation is that: “Industry and Government should agree a strategic vision for investing in the UK’s aerospace sector as this is vital to our recovering economy.” a view shared by other observers who bemoan the lack of a true national aerospace strategy – despite a multiplicity of talk and technology initiatives. At the RAeS Annual Conference earlier this year, ADS's Ian Godden echoed this view, noting that there was 'no longer a perceived need by some politicians for positive industrial policy, beyond technology strategy'. The UK’s shipbuilding industry has already benefited from such a strategic investment choice, with a 15-year ToBA (Terms of Business Agreement) agreement that provides security for the British shipbuilding industry, effectively guaranteeing the procurement of the Royal Navy’s CVF aircraft carriers. Though it is unlikely that any current government would like to be locked into such an agreement again – the yawning gap left by the absent Defence Industrial Strategy II is particularly missed by the aerospace and defence industry.  

More cash for R&D

Its second suggestion is to boost R&D funding to pre-recession levels – a proposal already put by others, including outgoing ADS chairman Ian Godden at the RAeS Annual Conference earlier this year who called for an increase in Government R&T spending at ‘the earliest opportunity’ and for it to be boosted from £430m to £600m. In the UK, aerospace R&D is mostly self-financing with the government providing around 24%. It also has to be remembered, that successive UK Governments benefit financially over the long term when repayable launch investment is used too. The bestselling A320, for example, still means the UK Government gets royalty payments on each aircraft sold thanks to the decision to invest some 30 years ago.  It may be long-term but the R&D and support pays off in a number of ways in the long term.  

Back to the future?

[caption id="attachment_5684" align="alignnone" width="333" caption="Canadian NRC (National Research Council) wind tunnel - does the UK need a government-run entity too?"][/caption] The IMechE’s final suggestion – is the establishment of a ‘UK Advanced Technologies Aerospace Research Centre’ to provide a “national, single focus for research”. A national aerospace research organisation in the style of NASA (US), ONERA, (France) DLR (Germany) sounds oddly familiar. Perhaps it might be called something like an ‘Aircraft Establishment’, conceivably even with a ‘Royal’ prefix and based somewhere close to London, that has a runway and space for wind tunnels? It may even be plausible that this centre of aviation excellence might lead to an aerospace exhibition or flying display. Reinventing the wheel aside, would a new ‘RAE Farnborough’ secure a bigger UK share of this £2trillion market over the next 20 years than the current arrangement – where aerospace industrial policy is left to drift in the hope that industry will always succeed? Possibly – but it would also constitute an embarrassing U-turn for the Government and an outright admission that the previous selling off the aerospace and defence  R&D ‘crown jewels’ that DERA was a shortsighted move. However, there should be grounds for optimism. The UK still has world-class manufacturing and in a number of fields it excels – such as wings, engines and advanced trainers. It is also uniquely placed to exploit and lead the world with next-generation technology in areas such as composites, ALM, autonomy, SSTO spaceplanes, open-rotor engines and integration of UAVs in civil airspace. The flipside, however, is that with R&D funding flatlining (or even declining) the UK may lose competiveness over time and the aviation industry eventually suffers the fate of the textiles, coal, shipbuilding or other sectors that have declined.  

Decline and fall?

[caption id="attachment_5681" align="alignnone" width="333" caption="Prime Minister David Cameron at Airbus factory opening, 13 October."][/caption] So do today's politicians, with focus groups, poll, and now instant feedback in terms of 24/7 media coverage  and social media, appreciate that these ‘crown jewels’ of UK aerospace, like diamonds, take time to form? Unlike diamonds they may not last forever – unless they are protected and nurtured beyond short-term election day horizons. Though financial restrictions means all sectors face a squeeze, lack of Government investment in a successful but research-intensive industry with long-term development cycles could eventually see skilled jobs disappear overseas.  As one industry source said at the factory opening when asked about the Government’s attitude to aerospace and its benefits to UK plc: "We think Cameron gets it, we’re just not sure whether his advisors do.”    

Tim Robinson
28 October 2011