«Europe must maintain its leadership in technical capability and intellectual property»
The Executive Director of the WEAF (West of England Aerospace Forum), the cluster that groups together the main aerospace companies in the West of the UK, highlights in this interview the keys that, in its opinion, will allow the European aerospace industry to maintain its leadership against competition from emerging markets.
The future of the aerospace business is very encouraging. The outlook for the civil aerospace sector is very buoyant. Over the next 10 years, high-growth markets such as China, India, Southeast Asia and Brazil will be the drivers of momentum. As their economies continue to grow, and families see their incomes rise, air transport will continue to boom. Even in Europe, air traffic is expected to double in the next 15 years. If we also add what the latest reports published on trends over the next 20 years reflect, which speak of the need for 57,000 aircraft (equivalent to $5.3 trillion)... there is undoubtedly reason to conclude that the opportunities in the aerospace sector for the future are many and very good.
The challenge for the European aerospace industry. Will European companies be able to seize these opportunities? As I've said before, a great deal of future growth will be driven by distant economies, by countries that are also very keen to create and expand their own aerospace industries. So, since European industries are part of the supply chains for Airbus, Boeing or Embraer, the challenge will be to retain that privileged position in the face of growing competition from these emerging economies. Having a technological advantage will no longer be enough. Controlling costs, delivering the highest quality, and having the ability to deliver on time are increasingly important elements for companies at all levels of the supply chain. Lastly, and especially in the UK, there is a significant challenge in ensuring that the workforce is properly trained to deliver the best technologies, services, and products of the future.
Internationalisation of European industry and partners in emerging markets. I believe the European aerospace industry is on the right path to internationalisation. Certainly, the major “players” in the sector have made considerable efforts to establish manufacturing capabilities in other countries, either through partnership or by setting up their own infrastructure.
Without a doubt, emerging markets will define the challenges. They will see large amounts of their own consumers“ money flowing, boosting air transport, and they will do everything possible to keep it circulating within their economies. One ”tool" available to governments to achieve this is the investment of industrial offsets in any major acquisition of a European product or service. This is why it is becoming increasingly important for the European supply chain to understand how to find partners in emerging markets with whom to reach value-added agreements on these industrial offsets – and this is where Europe can transfer technologies and capabilities that are very attractive to emerging markets, while retaining their high differentiating value. It is a kind of win-win, although achieving it is logically not easy.
Europe's advantage will be in remaining at the forefront of creating and implementing new technologies and processes. The European aerospace industry possesses enormous capacity across the entire lifecycle of aircraft and services: from conceptual design, through manufacturing and systems integration, to final maintenance, repair, and overhaul. I believe that where Europe must maintain leadership is in its great technical capacity and by retaining intellectual property rights at any stage of the aircraft lifecycle, including technologies, services, and processes. This is where the most highly skilled jobs are found, which will continue to give the European industry a great competitive advantage. We must remain at the forefront of cutting-edge technologies and processes, such as Additive Layer Manufacturing (ALM). It is not that our competitive advantage depends on mastering the technique; it is also the way in which technology and processes are implemented at all levels of the supply chain that will provide us with a substantial difference compared to our competitors. For example, by applying ALM, costs and time are reduced, while the strict safety standards required by the industry are met.
Never before has there been so much investment in R&D: the public and private sectors are willing to invest. Both the public and private sectors fully understand the importance of R&D and are therefore willing to invest. I agree with many industry experts that there are currently unprecedented amounts of European funding available for the financing of research and technology development. In fact, it could be argued that there are so many funding opportunities that it can be quite confusing for many small and medium-sized enterprises to identify the right funding stream for them. In the UK, the WEAF has taken on this task to help its members – and other aerospace companies – identify the right funding opportunity.
A good example of this is the National Aerospace Technology Exploitation Programme (NATEP), a four-year national programme with a budget of 40 million pounds, funded on a 50:1 basis between the UK Government and the private SMEs participating in this initiative. It is implemented at regional level, and WEAF is responsible for submitting viable project proposals with a commitment to success involving SMEs in the south-west of the UK. Our government is firmly committed to promoting growth and employment in the aerospace sector, not only through the launch of NATEP but also through its own operating “rules”: projects must be carried out in collaboration with other partners (universities, for example), and must involve an end-user as a means of validating the project idea. Technology experts pragmatically guide SMEs through the tendering and execution process of the project, allowing them to focus on key technology development goals and job creation, rather than becoming entangled in bureaucracy.
Associationalism and cooperation versus protection of one's own commercial interests: is a win-win possible? Nowadays there are so many possibilities for cooperation and partnership that any company, or even industrial sector, that decides to grow in its environment in isolation is surely missing out on a large number of emerging opportunities, whether for securing new contracts, innovating with other potential partners, or entering new markets hand-in-hand with others... But it is true that there are some significant barriers to association and collaboration, which depend to a large extent on the prevailing culture in each country, each continent, or even within a sector. However, it is surprising how this resistance can be overcome when organisations and their leaders open up and are able to find win-win solutions for everyone. I am not saying it is easy, but I believe it is possible to achieve open and collaborative dialogue, while also protecting commercial interests.
The concept of a cluster For just over a year, the UK Government and the aerospace industry have been collaborating on the Lifting Off strategy within the programme Aerospace Growth Partnership (AGP), which is driving growth in the sector through significant funding over a seven-year period. Aerospace companies in the South West have been identified by an independent study (McKinsey) as the most representative of the UK cluster and those experiencing the strongest growth. However, we recognise that our future will be much brighter if we design it for collective success. In this regard, WEAF is acting as the cluster’s lead coordinator, spearheading a strategy for the future called Aerospace Innovation, o iAero. Our objective is to provide three strategic roadmaps in technology, supply chain development, and skills enhancement to optimise the region’s capacity and its contribution to the national AGP strategy. These roadmaps include existing public and private investments, enabling efforts to be pooled. In this way, the future benefit will be much greater.
And what does the future hold for European engineering firms? It is likely to be intellectual capital that makes the difference… but not only that.- Europe must not be ‘inward-looking’ when it comes to tackling the economic challenges facing the eurozone that still lie ahead. And what affects the eurozone undoubtedly has a major impact on us in the United Kingdom; we are therefore not immune. European aerospace companies must remain at the forefront of new ideas, technological differentiation and the development of a highly skilled and motivated workforce, as it is ‘intellectual capital’ that is likely to make the difference. We must achieve all this despite new pressures to cut costs, whilst maintaining key investments in the areas that will truly help Europe retain its technological leadership. And as if that were not enough, emerging markets are queuing up to “take over” our leadership.
All in all, I believe this sector has a bright future. And I believe that our business and government leaders must not be afraid to take the necessary decisions to maintain investment, and that they must create the economic conditions needed to promote cooperation and innovation. After all, I believe that 57,000 new aircraft represent a truly fantastic and rewarding future that is well worth fighting for.
