representing companies supplying civil air transport, aerospace defence & space
sponsored by
SBAC salamanca square 9 albert embankment london se1 7sp tel: +44 (0)20 7091 4500 fax: +44 (0)20 7091 4545 e-mail: post@sbac.co.uk
www.sbac.co.uk
contents
about SBAC data and information UK aerospace in 2005 a message from the SBAC President sustainable aviation revenue orders financial research and development employment SMEs international trade global trends
2 2
3 5 6 16 18 20 26 32 38 40
Photographs reproduced with the kind permission of: Airbus SAS AgustaWestland BAE Systems EADS Eurofighter GmbH Gardner Aerospace Rolls-Royce plc
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about SBAC
SBAC is the national trade association representing suppliers to the civil air transport, aerospace defence and space markets operating in the UK economy. Together with its regional partners, it represents over 2,600 companies, assisting them to develop new business globally, facilitates innovation and competitiveness and provides regulatory services in technical standards and accreditation. SBAC members interests encompass aerospace manufacturing, maintenance and through life service, professional advice, academic research, training and education, the British Airports Group and UK Industrial Space Committee.
UK aerospace in 2005
data and information
The information provided in this booklet is primarily the result of the UK aerospace industry (UKAI) survey of 2005 undertaken by SBAC in 2006. In 2006 SBAC simplified the survey significantly following consultations with respondents. However SBAC does not believe that this has changed the overall patterns significantly. Data has been collected not only from SBAC member companies but also other aerospace companies (eg consortia, joint ventures, nonmembers and airline maintenance companies) both in the UK and the rest of the world. The results of the survey are used by a wide variety of stakeholders in the aerospace industry, including government ministers and departments (including Department of Trade and Industry, Ministry of Defence, Department of Transport, Defence Export Services Organisation and UK Trade and Investment), SBAC member companies and respondents to the survey. Additional analyses and background reports on the UK aerospace industry are available separately from the SBAC website www.sbac.co.uk
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sustainable aviation
a message from the SBAC President continued
companies overseas assets. In 2005 these generated 6.4 billion of sales and close to 43,000 jobs. The US continues to attract the substantial proportion of UK investment overseas, with employment increasing slightly on last year. The continued growth in demand for air travel worldwide presents major environmental challenges. The launch of Sustainable Aviation, the worlds first sustainability strategy for the aviation sector, signalled UK industrys commitment to delivering environmental improvement, alongside the economic and social benefits of air travel. The UK aerospace industry is a dynamic and globally successful sector, the intense efforts by industry and Government to address longterm competitiveness issues through the Aerospace Innovation and Growth Team process is beginning to pay dividends. There remains much still to do and during 2006 SBAC continues to focus on improving skills, raising productivity and increasing investment in R&D. Air travel is an integral part of modern life, vital to the global economy and valued by the travelling public. The continued growth in the demand for air travel worldwide presents major environmental challenges. The launch of the Sustainable Aviation strategy, the worlds first sustainability strategy for the aviation sector, signals UK industrys commitment to deliver environmental improvement, alongside continued economic growth and social responsibility. aviations impact on the environment and was developed by the UKs leading airlines, airports, aerospace manufacturers and air traffic controllers. This pioneering initiative, unique in global aviation, commits UK companies to a joint strategy to deliver radical cuts in carbon dioxide emissions, nitrogen oxide emissions and aircraft noise over the next 15 years. The Sustainable Aviation strategy establishes mechanisms for monitoring and regular reporting of progress toward a range of specific objectives. These include:
Chris Geoghegan President SBAC & Chief Operating Officer BAE Systems
air travel and climate change Globally, air travel represents about 2 per
cent of manmade carbon dioxide (CO2) emissions.
Total departing flights from UK airports represented 6 per cent of total UK CO2 emissions in 2004. Total UK CO2 emissions are about 2 per cent of global emissions.
Limiting climate change impact by improving fuel efficiency and CO2 emissions by 50 per cent per seat kilometre by 2020 compared with their 2000 equivalents. Improving air quality by reducing nitrogen oxide emissions by 80 per cent over the same period. Lowering the perceived external noise of new aircraft by 50 per cent by 2020 compared with their 2000 equivalents. Establishing a common system for the reporting of total CO2 emissions and fleet fuel efficiency by the end of 2005, and pressing for aviations inclusion in the EU emissions trading scheme at the earliest possible date. Airport plans for community-related noise limitations, including landing and take-off restrictions where necessary.
2004
turnover in UK bn turnover in rest of world bn new order intake bn employment R&D expenditure bn export sales bn export percentage operating prot margin trade balance* bn
source SBAC except * DTI
2005
22.67 6.47 30.79 124,237 2.70 15.17 67% 6% 2.25
change
(in real terms)
Industry has delivered a 75 per cent reduction in noise nuisance in the last 30 years. Through the introduction of quieter planes the noise contour area around Heathrow has shrunk - reducing the population exposed to significant disturbance by 85 per cent between 1974 and 2000.
12% -33%
sustainable aviation
Sustainable Aviation is a comprehensive programme for long-term reductions in
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revenue
figure 1 UK aerospace industry sales and employment 1980 - 2005
Sales increased by 25 per cent real terms in 2005 to 22.67bn, driven by increases in the civil and defence sectors. Employment increased 9 per cent to 124,237.
figure 2 UK aerospace industry real growth of sales civil and defence 1980 - 2005
Since 1980, the civil sector has been the engine of growth and this year it continued the trend with an 18.3 per cent increase, well above the long term trend rates of 4.7 per cent per annum. Defence increased by 31.8 per cent, well above trend which has been static in real terms.
civil
sales (lhs) 22.67
defence
baseline
employment (000s)
year
1980 = 100
year
source: SBAC
source: SBAC
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figure 4 UK, EU and USA aerospace industries sales to their own governments 1980 2005
Sales to the UK government increased by 21 per cent to 4.1bn. However, the UK aerospace industry (UKAI) remains less dependent on sales to its national government at 17.8 per cent compared to USA at 54.3 per cent and the EU average of 27.2 per cent (2004 figure).
civil
defence
% of turnover
civil - 46%
% of turnover
defence - 54%
year
year
source: SBAC
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.09
30
25
defence domestic
24%
civil exports
37%
defence exports
15
30%
10
civil domestic
0
9%
total civil domestic civil exports defence domestic defence exports
source: SBAC
source: SBAC
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aircraft maintenance
helicopters
8%
3.1%
4.83bn
+ 33%
UK aerospace industry
5.66bn
+ 13%
4.08bn
+ 21%
aircraft equipment
30%
24%
aircraft engines
7.1%
sales to the USA
regional jets
sales to the EU
28%
2.0%
space
3%
missiles defence aircraft
0.3% 11.5%
7%
source: SBAC
source: SBAC
(1)
Sales to UK Government: This includes national authorities like government, ministries, UK public research institutes, national space agency.
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aerospace manufacturers
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
source: SBAC
year
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orders
figure 10 UK aerospace order intake by type and sector 1997 - 2005
Total orders increased by 33.5 per cent to a new record of 30.79bn. All three sectors saw significant increases in their orders. Orders were split evenly between civil and defence sectors with 49.7 per cent civil and 50.3 per cent defence. New orders represented 135.8 per cent of sales in 2005.
35
30
engines quipment
30
25
25
20
20
15
15
10
10
5
5
1997
1998
1999
2000
2001
2002
2003
2004
2005
1997
1998
1999
2000
2001
2002
2003
2004
2005
year
year
source: SBAC
source: SBAC
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financial
figure 12 selected financial UK aerospace financial results 2005
The increases in sales are reflected in the improved performance of selected UK companies with a 12.4 per cent real increase in sales and operating profit at 10.0 per cent.
company
division
2005 m
turnover
2004 m 13,222 4,414 569 2,678 979 477 311 2003 m 12,572 4,092 1,549 2,629 833 399 284
operating profit
2005 m 1,182 634 54 420 177 102 51 2004 m 1,016 373 38 350 150 82 40 2003 m 980 130 349 135 76 34
BAE SYSTEMS Plc Rolls-Royce Plc GKN Plc Smiths Group Plc Cobham Plc Meggitt Plc Ultra Electronics Plc
285
sample total
26,026
22,649
22,358
2,620
2,049
1,989
-1
year
source: SBAC
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.19
3.0
3.0
2.5
total R&D spend 2005: 2.49bn total R&T spend 2005: 0.21bn
civil
2.5
total R&D spend 2005: 2.49bn total R&T spend 2005: 0.21bn
civil
2.0
defence
2.0
defence
1.5
1.5
1.0
1.0
0.5
0.5
1996
1997
1998
1999
2000
2001
2002
2003
2004
year
source: SBAC
total
self-financed
by UK
by other government
by others
R&T alone
source: SBAC
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3.0
3.5
aircraft
2.5
engines
equipment
overseas R&D
3.0
UK based R&D
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
2000
2001
2002
2003
2004
2005
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
year
year
source: SBAC
source: SBAC
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technology validated
product certification
40
actual figures
35
projected figures
30
technology readiness
R&D
2005 million
contract negotiation selection process technology selected for application by customer technology demonstration technology acquisition Fundamental research
25
20
15
10
R&T
0 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08
year
source: AeIGT source: DTI, note CARAD payments have been included in these figures
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employment
figure 20 European employment by country 2005
The majority of the European aerospace industry is located in the UK which is highlighted by the fact that 26 per cent of all aerospace jobs in the EU are within the UK. Employment in the UK in 2005 increased by 9 per cent to 124,237 and is 4 per cent higher than in France and 38 per cent higher than in Germany.
140
200
180
120
160
employment 000s
140
80
120
100
60
80
40
60
20
40
20 0
lg ui m
do m
ce
ic
ly
Ire la nd
nd
Sp ai
Fr an
Po la
Sw ee
Ki ng
th e
Be
er
Re
pu
rla
Ita
de
nd
an
bl
Ne
ec h
ite
Un
Cz
country
Lu
1980
1985
1990
1995
2000
2005
xe
year
source: SBAC
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Production was the largest single group of employees (55 per cent or 68,355 employees).
80
engines
27%
70
60
55%
42%
equipment
employees (000's)
50
31%
technicians others
rest
40
32%
30
20
34%
33%
31%
R&D
10
13% apprentices 2%
by product segments
by activity
source: SBAC
1
Research by Oxford Economic Forecasting in The economic contribution of BAE Systems to the UK has suggested an employment multiplier for the aerospace industry of 1.22.
source: SBAC
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50,000
43,003
annual earnings
33,645
30,000
20,000
10,000
whole economy
manufacturing
financial intermediation
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SMEs
figure 25 UK aerospace industry by company size 2005
Small and medium sized enterprises (SMEs) saw total sales fall by 28 per cent to 332m. The UKAI is characterised by a significant proportion of SMEs, 46 per cent of all companies surveyed by the SBAC were SMEs. However, estimates suggest that there may be up to 2,500 aerospace SMEs in the UK, of which only a small percentage were picked up in this survey. An SME is defined as a company having less than 250 employees, less than 30m turnover and less than 25 per cent external ownership (in terms of voting rights). SBAC only uses the employment criterion here. Of the companies surveyed by SBAC, 49 per cent were defined as SMEs by number of their employees.
50
700
SME's
600
40
30
sales (2005 m)
400
300
20
200
10
100
<250
250-999
1,000-9,999
10,000+
1997
1998
1999
2000
2001
2002
2003
2004
2005
year
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1999
250 - 1,000 employees 250 - 1,000 employees
2005
Exports are still low, compared to the industry as a whole, with only 38 per cent, compared with 67 per cent UK aerospace average.
19%
1,000 - 10,000 employees less than 250 employees
28%
10%
10,000+ employees
70%
civil exports
46%
23%
25%
1%
36%
defence domestic
999
250 - 1,000 employees
2005
26%
28%
less than 250 employees less than 250 employees
defence exports
70%
46%
13%
23%
source: SBAC
source: SBAC
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sales to EU
20%
12%
sales to rest of world
57%
6%
sales to UK Government
5%
source: SBAC
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international trade
figure 30 UK trade balance of aerospace 1996 - 2005
In 2005, UKAI exported over 67 per cent of its total sales, worth 15.17bn. This was a 29.0 per cent increase. It is important to note that the trade balance figures come from government and therefore represent the trade in all aerospace goods to and from the UK and not just the UKAI. They include the purchase of aircraft by UK airlines and the sale of second-hand aircraft to the rest of the world, and are therefore different to the SBAC survey figures. UKAI this year contributed net 2.25bn to the trade balance, representing a fall of 33.8 per cent on last year. However the long term average remains at 2.8bn per annum positive balance.
18 imports 16 exports balance 14
5 6 7 imports exports
balance
10
trade (bn)
12
0 Americas Asia & Oceania European Union Middle East & Africa
Other Europe
-1
0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-2
year
source: SBAC analysis of DTI data source: SBAC analysis of DTI data
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global trends
figure 32 global sales and employment of UKAI aerospace assets
UK based companies have substantial overseas presence, which generated a further 6.47bn of sales and employed a further 42,919 people. The majority of the overseas assets are in the USA which accounted for 5.22bn of sales and 33,699 employees.
UKAI in USA
sales (bn): employment: 5.22 33,699
UKAI in UK
sales (bn): employment: 22.67 124,237
location UK sales (bn) 14.83 77,099 7.84 47,138 22.67 124,237 rest of the world 6.47 42,919 n/a n/a 6.47 42,919 total 21.30 120,018 7.84 47,138 29.14 167,156
29.14 167,156
ownership
global UKAI
UKAI in rest of EU
sales (bn): employment: 0.38 3,888
total employment
source: SBAC
source: SBAC
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notes
figure 34 UK aerospace ownership of UK located companies turnover and employment
There are a number of overseas companies which have directly invested or purchased and incorporated indigenous firms. In 2005, foreign owned UK located companies generated total sales of 6.47bn and employed 42,919 people.
28
180
employment: 124.237
non UKAI turnover (Ihs)
foreign UK employment (rhs)
140 160
24
120 16
100
12
80
60 8 40 4
20
1998
1999
2000
2001
2002
2003
2004
2005
year
source: SBAC
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employment (000s)
notes