We can remain an important part of a thriving aerospace industry

3 April 2019

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Living in the UK you’d be forgiven for thinking the aerospace industry is in dire straits. News footage of runways packed with grounded Boeing 737 Max aircraft running alongside reports of UK-based firms paralysed by indecision over Brexit can give the impression of a sector in crisis.

Black box data from the doomed Ethiopian Airlines flight suggests the crash was caused by a faulty sensor that erroneously activated an automated system on Boeing’s industry workhorse - a series of events suspected in an Indonesian disaster involving the same jet last year.

Meanwhile further reports have surfaced this week of firms holding back on investment decisions and, in some cases, considering moving parts of their operations out of the UK amid Parliament’s protracted indecision over leaving the European Union.

But, contrary to the impression created by these bad news stories, times are good for global aviation.

Aircraft deliveries at their strongest since 2015 - 183 delivered so far this year and while gross orders were down last month, the backlog of aircraft on order books remains high at 14,000.

Engines orders are also strong across the board, with a record backlog of 26,160 globally which has been led by growth in single-aisle engine orders. Year-to-date orders are up 134% with 358 in advance of anticipated widebody aircraft orders.

Only in the UK industry has there been a fall in the value of aerospace manufacturing, with the prospect of major disruption if a Brexit deal is not urgently agreed.

The UK has worked hard to build its reputation as home to one of the best aerospace industries in the world and industry bodies have repeatedly warned the Government of the dangers a no-deal Brexit would pose.

In January Tom Enders, the CEO of Airbus, which has 25 locations in the UK, warned the company could quit the country entirely if there was no deal. He said the Government’s handling of Brexit negotiations had been a “disgrace” because businesses could not plan properly two years after Britain voted to leave the EU.

“Please don’t listen to the Brexiteers’ madness which asserts that, because we have huge plants here, we will not move, and we will always be here. They are wrong,” he said.

The UK is well placed to benefit from a significant boon in the next 20 years when air traffic is forecasted to double, generating demand for more than 37,000 new passenger and cargo aircraft, worth £4.4trillion.

Few countries should benefit more from a prolonged global aerospace boom than the UK, with its world-class aerospace manufacturing sector and highly globalized business-friendly economy.

In 2017, the aerospace sector was a huge contributor to the UK’s economic output, generating £35billion of exports and directly employing 123,000 people.

Brexiteers have dismissed claims by Enders and other aerospace bosses as “scaremongering”. Conservative MEP David Bannerman described them as “super Project Fear”.

However, this week Jeegar Kakkad, chief economist and director of policy at the Aerospace, Defence, Security and Space (ADS) Group, warned that the effects of Brexit are already being felt.

“While global deliveries from Airbus and Boeing and others are up by 8%, the UK sector was looking pretty flat in terms of output for 2018,” he said.

“The first thing we’ll see [after Brexit] is stagnation rather than significant job losses or turnover. Making wings and engines – that activity doesn’t move very quickly. But what does happen is you stop investing in those sites, you stop placing contracts with UK suppliers and that slowly erodes the competitiveness of the sites in the sector over time.”

The aerospace industry globally remains in rude health and is expected to grow significantly over the next two decades. Britain is right at the heart of this thriving market but to remain there we need a Brexit outcome that works for us, not against us.

 

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