Over your head? Review of the Farnborough International Airshow

Posted on 29 Aug 2012

With all the noise around OEM success at FIA 2012, Tom Moore holds up a megaphone to the UK SME to explore how much of the $72bn worth of orders placed at the show trickled down past the bulging pockets of Airbus, Boeing and other jumbo-sized multinationals.

Lord Green, Minister of State for Trade and Investment, (left) congratulates Group Rhodes' managing director, Mark Ridgway OBE, on the company’s recent export orders at Farnborough

FIA produced the goods once again as a swashbuckling $72bn flowed through the Hampshire town of Farnborough for its biggest event of the year.

But once the dust had settled at the ringside of the 2012 Airbus versus Boeing bout (with Airbus nursing a rather bruised right wing from the encounter), what was left for the UK’s SMEs attempting to snatch their 15 minutes of fame with an OEM?

Farnborough International Limited (FIL), the organiser for Farnborough International Airshow and a subsiduary of trade orgnaisation ADS, sought to build a bridge between the supply chain and the OEMs by setting up the Meet the Buyer scheme at Farnborough in 2008.

This year the speedating concept for supplier and buyer connected over 140 companies with international heavyweights such as BAE Systems, Thales, Boeing, Russian Technologies, Korean Air and Fuji Industries, for one of two prices under £200 (depending on when you book).

Out of this, 94 British suppliers took part, making the most of having one of the world’s greatest airshows on British soil and the £75,000 that FIL spent on organising the scheme. It seems that getting the men and women holding the order books to the table does not come cheap.

A Boeing 787 takes to the skies as commercial aircraft sales skyrocketed during FIA 2012.

Meet the Buyer meant that companies such as Corex- Honeycomb, which makes the aluminium honeycomb core used for doors, floors and panels and forms part of the Cambridgeshirebased Encocam group, could capitalise on the event with firm meetings rather than play the waiting game in the trade hall.

Petros Goutas, business development manager at Corex-Honeycomb, explains, “It was our first time exhibiting at Farnborough and Meet the Buyer gave us an opportunity for extra exposure where we wanted it the most.”

Stood up but not put off

Unfortunately for Mr Goutas, some of these meetings were not as firm as he had hoped, with two buyers out of the six it had arranged meetings with failing to turn up. Despite his obvious disappointment he states that the company is still negotiating with the other four companies and remains confident of winning new business through introductions made at Meet the Buyer.

It was a feeling shared by 80% of the suppliers involved in the scheme, which positively rated their chances of securing a deal from the day’s meetings. The buyers came out of the event with an open mind about doing business with the tool designers, sub-contractors, composite material manufacturers and other suppliers they had just met. Eighty five per cent said that they would probably or definitely do business.

Ben Moody, senior event manager at SME events firm Business to Business, which sourced the 36 buyers and 144 suppliers, comments: “It was an opportunity to get in front of up to ten of these large companies in one day. Everyone was under one roof. How long would it usually take to meet all of these international buyers? You would have to fly all around the world to achieve similar introductions.”

While a spokesperson for Boeing noted that the company found being inside the Meet the Buyer hall useful, business was also brisk outside of it. Firm orders and other commitments snowballed throughout the week and hit a grand total of $38bn by the final day, boosted by a mammoth $14.7bn order from United Airlines for 100 747 MAX 9 and 50 Next-Generation 737- 900ER aircraft.

Alongside Airbus, which registered $16.9bn worth of orders, the two goliaths of the sky racked up 75% of the sales confirmed at FIA 2012.

Their $55bn worth of business alone surpassed the $47bn recorded at the show in 2010. Fabrice Brégier, the new CEO at Airbus, commented that “the quality of orders at Farnborough has been high,” as the company benefitted from demand in the Far East to scoop $4.2bn worth of business with Hong Kongbased Cathay Pacific Airways.

But while a flurry of jets whizzed overhead the mood among the SME stands was a lot more pessimistic than in the chalets.

Unfortunately, that $72bn worth of orders didn’t include business conducted by SMEs, odd given that the number of exhibitors at FIA with less than 250 employees increased by 6% between 2010 and 2012, rising from 517 to 564.

SMEs flocked to Farnborough in 2012

Indeed not only is SME presence at the show climbing, the presence of large companies is declining – particularly with regards to large defence firms who are feeling the bite of government defence reviews and spending cuts. A spokesperson for BAE Systems confirmed that it had spent “considerably less [on the show] than in previous years, reducing its exhibition budget for FIA 2012 by a third.”

Keeping tabs

The task of tracking SME success would be a difficult one to carry out but would demonstrate the worth of attending the show and encourage confidence in UK supply chains.

Tommy Harrison, marketing analyst at warehousing company Air and Ground, was unsure how successful Farnborough been for the company.

“There were deals done that we already knew about. It was just a matter of going and sitting in a room with certain people and getting it finalised. There has been the odd new thing [to come from the show] but there weren’t many new companies there,” he says.

Mr Harrison doubted whether Air and Ground would be making a return in 2014. It spent close to £1,500 this year but attracted more people trying to sell it advertising, promotion and stand design than it did aerospace companies. “For the first time since we started attending in 2002, we are now contemplating either scaling down our activity or not attending next time” he reveals. But others were more positive. Despite the number of trade visitors falling from 120,000 in 2010 to 109,000 in 2012, B-Tech Engineering, a subcontract CNC machining company employing 20 people, secured two orders it hopes to grow in volume over the coming months. Mark Turner, a partner at B-Tech Engineering, comments that its first time as an exhibitor was a massive success.

“We’ve attended subcontract shows before but we had more enquiries at Farnborough and have found it easier to turn meetings into deals. We have already delivered on a £5,000 contract that could turn out to be worth a lot more.”

The company has just spent £550,000 moving to a bigger site and Turner certainly doesn’t lack ambition. “We’re trying to get in with EADS, which owns Airbus. If you don’t go to the shows you don’t get the work, why should anyone come to you.”

B-Tech Engineering paid £5,500 for its stand and has already registered for Farnborough 2014. Joseph Rhodes, the hydraulic power press making arm of Group Rhodes, also looks set to return after clinching a £2.2m order during the show. Chinese aerospace firm Long March purchased a Rhodes 1200 tonne super plastic forming and diffusion bonding press, which will be used to produce equipment and components for new civil aircraft.

Farnborough supports one of the few sectors where the UK has a strong supply chain. But even for a successful sector, pressing times mean the expense of attending trade shows must be justified, especially for SMEs.

More needs to be done to ensure that UK SMEs connect with opportunities to cash in on international business at FIA and other sector trade fairs. In addition, the room for improvement in recognising SME business as an important aspect of these shows is vast.