UK aerospace to benefit from ‘Made in UK’ prestige

The UK’s aerospace industry is expected to continue to flourish thanks to increasing global demand for high-quality UK manufactured aerospace products, according to a new report from Santander and EEF.

Continued growth in air travel, particularly in emerging economies, as well as demand for hi-tech parts for spacecraft, rockets and satellites is set to fuel growth in the UK aerospace sector.

Stock UK Aerospace Clouds Aeroplane AviationThe UK is the second-largest aerospace manufacturer in the world, behind the US, and fourth-largest aerospace exporter. The industry specialises predominantly in engines and parts of aircraft, which account for almost 80% of all exports.

The sector is highly export-intensive with 53% of Gross Value Added travelling overseas – the highest of any UK manufacturing sector – worth £28.4bn in 2016, an increase of 114% since 2002.

Eight out of 10 of the UK’s top export markets are located outside of the EU, with the US the UK’s top market (worth £5.8bn in 2016). It employs 107,000 people in the UK and is made up of around 2,400 separate businesses (up four-fold since 2008).

Head of Business Development – Manufacturing, Santander Corporate & Commercial, Paul Brooks said: “The UK’s aerospace industry has thrived off the back of its competitive advantage in the production of high-value added technology-intensive products, and we forecast that this will continue given that the UK is hardwired into the global supply chain.

Senior economist at EEF, George Nikolaidis commented: “The aerospace sector highlights another great UK manufacturing success story. By staying at the forefront of cutting-edge technologies, aerospace manufacturers have managed to retain a high share of the global market despite fundamental changes in international value chains.

“There are risks ahead no doubt, but the sector looks well positioned to harness these challenges and remain a key player in the global aerospace industry going forward.”

Over the coming two decades, emerging markets represent the greatest source of growth for UK aerospace– and none more so than China. Rising incomes, a growing middle class and reduced visa requirements have resulted in air passenger numbers rising from 67 million in 2000 to 320 million in 2016 (up 378%).

The IATA forecasts that China will displace the US as the world’s largest aviation market (defined by traffic to, from and within the country) as early as 2024.

Additional key industry trends benefiting UK aerospace

Factory of the Future/ 3D printing – New designs and equipment are evolving at a rapid pace in the digital age, bringing with them improvements in performance, productivity and safety. The UK’s established, world-class leadership in design and innovation will be central to growth.

Use of composites – Over the coming decade, the use of composite materials in aircraft manufacturing is expected to rise significantly. The global composite materials market is expected to reach c. £27 billion by 2024.

Space tourism – Space tourism is a new, highly sought after sector globally. In the UK, this is underpinned by the government’s ambitions for the UK to capture a greater share of the market, worth an estimated £25bn over the next 20 years.

Santander’s Brooks added: “Another major trend is the demand for luxury goods and experiences. We expect air passengers will experience a transformed flying experience over the coming decade as advances in technology are implemented into new aircraft, improving passenger comfort and safety. The good news is that UK is at the centre of this market.”