A new government study exploring the UK aerospace supply chain has found that the sector is growing, but it’s not keeping pace with global growth.
According to the study, procurement spend growth in the UK supply chain was 3.8% lower than the rest of the world in 2013 – 2014, indicating that the UK is losing market share to overseas suppliers.
New aircraft programmes and technologies were highlighted as presenting major opportunities to increase UK content, particularly in the areas of advanced systems and advanced materials.
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Balaji Srimoolanathan, strategy manager at the Aerospace Technology Institute (ATI), commented: “The aerospace market offers significant revenue growth opportunities over the next 20 years with several upgrades and new aircraft programs.
“To capitalise on this growth, the UK supply chain needs to offer the right technologies at the right time. The Institute supports the finding that there is a need to grow UK capabilities in advanced systems as well as in composite materials.”
UK aerospace skills
The study also found that there is a shortage of manufacturing engineering skills in the UK, along with lack of advanced manufacturing and lean supply chain management processes, to the detriment of global competitiveness.
Chief strategy officer at the ATI, James McMicking said: “It is paramount that industry, academia and government continue to work closely together to ensure we have the right skills, tools and processes in the supply chain to be able to compete and achieve market share growth in the global market.
“Performance improvement programs such as Sharing in Growth and Supply Chain 21 have proven to be effective in equipping suppliers with the skills, knowledge, processes and tools needed to improve productivity and long term competitiveness.
“Enrolment into such improvement programs will greatly benefit supply chain companies. Investment in lean techniques and automation is essential in achieving further competitive advantage.”
The study also shows the cross-sector nature of the aerospace supply chain, providing significant opportunities for technology spill over and multi-sector exploitation.
Automotive, defence, and oil & gas were indicated to be the three sectors most commonly served by aerospace suppliers. There is also a positive perception of the availability of early-stage product research funding and the catapult network is seen as a UK strength.
McMicking noted: “The Institute is particularly interested in the spillover benefits associated with aerospace R&D, which is potentially substantial.
“These spill over benefits suggest returns accruing to the economy as a whole from investing in research are far greater than the returns accruing to the firms undertaking the work.”
The ATI conducted a study – Investing in UK Aerospace – with Fathom Consulting in 2015 explaining spillovers and the benefits of aerospace R&D on the UK’s productivity and GDP.
McMicking concluded: “Our own analysis of the sector indicates a weakened ‘middle’.
“Years of consolidation, global sourcing and relatively low investment in the UK aerospace supply chain has led to some hollowing out. We now have a sector consisting mainly of a few very large and many smaller companies.
“The ‘middle’ is important to securing UK market share and provides an important customer base to smaller and highly innovative companies to do business. We see this as a major opportunity, to re-define a globally competitive UK aerospace sector, collaboration within the supply chain leading to both product technology and process innovation is essential.”