www.sbac.co.uk
SBAC
salamanca square
9 albert embankment
london
SE1 7SP
tel: +44 (0)20 7091 4500
fax: +44 (0)20 7091 4545
e-mail: [email protected]
uk aerospace industry survey
2007representing companies supplying
civil air transport, aerospace defence & space
.01
contents
about SBAC 2
data and information 2
UK aerospace in 2006 -
a message from the
SBAC President 3
sustainable aviation 5
revenue 6
orders 16
financial 18
research and development 19
employment 27
SMEs 33
international trade 38
global trends 40
aerospace cross-holdings 43
Photographs reproduced with the kind permission of:
Airbus SAS
AgustaWestland
BAE Systems
EADS
Eurofighter GmbH
Gardner Aerospace
Rolls-Royce plc
SBAC’s UK Aerospace Industry Survey is the most comprehensive analysis of companies supplying the civil air transport, aerospace defence and space sectors. This year’s results show that the aerospace industry is enjoying a sustained period of growth and UK based companies are successfully winning business in an increasingly competitive global marketplace.
The survey shows aerospace is a UK success story and remains the largest aerospace industry outside the USA. In 2006 it directly employed 124,000 people, had a turnover of £19.81 billion and saw new orders increase by nearly 6 per cent to £26.2 billion.
UK aerospace manufacturing is globally competitive and exports 63 per cent of its total sales. UK companies also have a significant presence overseas, employing 48,780 people and generating sales of £7.9 billion.
More importantly aerospace is a growth business with demand for freight and passenger travel increasing year on year.
It is estimated that demand for new aircraft will exceed 22,000 units up to 2025, of these more than 68 per cent will be single aisle aircraft. These are the workhorses of international aviation fleets and the key products in fast growing markets like Brazil, Russia, India and China.
Aerospace manufacturing provides high value and highly skilled jobs. The latest data shows that 34 per cent of all employees in the sector hold a university degree or equivalent and is forecast to increase to 40 per cent by 2010.
.03.02
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.
data and informationThe information provided in this booklet is primarily the result of the UK aerospace industry (UKAI) Survey of 2006 undertaken by SBAC in 2007.
Data has been collected not only from SBAC member companies but also other aerospace companies (eg consortia, joint ventures, non-members 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), The AeroSpace and Defence Industries Association of Europe (ASD), SBAC member companies and respondents to the survey.
All the analyses and information about the aerospace industry survey 2007 are available separately from the SBAC website www.sbac.co.uk
Please note that some data for 2005 have been revised.
about SBAC UK aerospace in 2006
Average salaries in the sector are £35,168, 44 per cent higher than the UK average and 31 per cent above the manufacturing average. The industry is committed to improved training and skills development and employs 2,593 apprentices.
Research, development and new technology are incredibly important for long-term competitiveness in the aerospace industry. The sector is one of the most R&D intensive sectors in the UK economy and invested £2.5 billion in 2006, including £260 million in early stage research and technology acquisition.
The UK aerospace industry recognises its environmental responsibilities and is committed to helping to deliver a more sustainable aviation sector. In 2006 aerospace manufacturers, alongside its partner airlines, airports and air navigation service providers published a Sustainable Aviation progress report. This highlighted the wide range of activities being undertaken to reduce the sector’s impact on the environment.
a message from the SBAC President
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 world’s first sustainability strategy for the aviation sector, signals UK industry’s commitment to deliver environmental improvement, alongside continued economic growth and social responsibility.
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 6.3 per cent of total UK CO2 emissions in 2004.
• Total UK CO2 emissions are about 2 per cent of global emissions.
environmental track record• Industry has delivered a 50 per cent
improvement in fuel efficiency in the last 30 years.
• 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.
sustainable aviation‘Sustainable Aviation’ is a comprehensive programme for long-term reductions in
.05.04
Despite the continued strength of the UK aerospace industry we cannot afford to be complacent. The industry is now entering a critical period in its development. Increasing globalisation and intense cost pressures are bringing significant change. At home the Ministry of Defence is implementing its Defence Industrial Strategy, bringing the concepts of through life capability management and partnering to industry and the sector is starting to explore the possibilities for more co-operation in the security and resilience markets.
If the UK is to remain and prosper as a location for these activities and the intellectual
property associated with them, it is essential that Government and industry work together to provide the right environment for industrial success. SBAC is fully committed to playing its part in sustaining a globally competitive UK aerospace industry.
Chris Geoghegan
President SBAC & Chief Operating Officer BAE Systems
sustainable aviation
aviation’s impact on the environment and was developed by the UK’s 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:
• Limiting climate change impact by improving fuel efficiency and CO2 emissions by 50 per cent per seat kilometre by 2020 compared with 2000 levels.
• 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 aviation’s 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.
Further information on the Sustainable Aviation strategy can be found at www.sustainableaviation.co.uk
a message from the SBAC President continued
2005 2006 change (in real terms)
turnover in UK £bn 18.78 19.82 5.5%
turnover in rest of world £bn 8.50 7.94 -6.5%
new order intake £bn 24.74 26.18 5.8%
employment 124,237 124,234 0.0%
R&D expenditure £bn 2.73 2.53 -7.5%
export expenditure £bn 11.69 12.43 6.3%
export percentage 62% 63%
trade balance* £bn 2.25 1.54 -31.6%
source SBAC except * DTI
.07.06
revenue
figure 1 UK aerospace industry sales and employment 1980 – 2006
sale
s (2
00
6 £
bn
)
em
plo
yme
nt
(00
0’s
)
year
total sales £19.82 bn
employment 2006: 124.234
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
30
25
20
15
10
5
0
• ∑ Since 1980, the civil sector has been the engine of growth and this year it continued the trend with an 8 per cent increase, above the long term trend rates of 2.5 per cent per annum.
• ∑ Defence sector grew 2 per cent in real terms 2006.
figure 2 UK aerospace industry real growth of sales civil and defence 1980 – 2006
198
0 =
10
0
year
250
200
150
100
50
0
civil defence baseline
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
• Sales increased by 5.5 per cent in real terms in 2006 to £19.82 bn, driven mainly by increases in the civil sector.
• Aerospace employment remained at 2005 level and was 124,234.
source: SBAC source: SBAC
.09.08
figure 3 UK aerospace industry sales by activity 1980 – 2006
% o
f tu
rno
ver
year
civil defence
civil sales 2006: 52%
defence sales 2006: 48%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
• Sales to the UK government decreased by 5 per cent to £3.62 bn.
• The UK aerospace industry (UKAI) remains less dependent on sales to their national government at 18 per cent compared to USA at 51 per cent and the EU average of 26 per cent (2005 figure).
figure 4 UK, EU and USA aerospace industries sales to their own governments 1980 – 2006
% o
f tu
rno
ver
year
sales to Government - EU averagesales to US Governmentsales to the UK Government
70%
60%
50%
40%
30%
20%
10%
0%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
• In 2006 civil sales increased to £10.27 bn.
• Defence sales were £9.55 bn.
source: SBAC source: ASD, AIA, SBAC
.11.10
figure 5 UK aerospace industry growth from 2005 to 2006
turn
ove
r (2
00
6 £
bn
)
2005 2006
0
total civil domestic civil exports defencedomestic
defenceexports
5
10
15
20
25
total sales 2005: £18.78total sales 2006: £19.82(in real terms)
+ 5.5%
+ 13.8%
+ 6.6%
+ 0.1%+ 6.0%
• The figure below shows the relative contribution of the civil and military markets to the UKAI. 63 per cent of sales were exported, continuing the long term trend of dependence on exports.
figure 6 UK aerospace industry sales by type and region
civil exports
40%
defence domestic
25%
defence exports
23%
civildomestic
12%
total turnover 2006:£19.82 bn
exports: 63%civil: 52%
• Sales increased by 5.5 per cent in real terms in 2006 to £19.82 bn, however different areas had different patterns;
- Civil domestic sales increased by 13.8 per cent while defence domestic remain at almost the same level.
- Export sales grew by around 6 per cent both for civil and defence markets.
source: SBAC source: SBAC
.13.12
figure 7 UK aerospace industry sales by product group
• The global aerospace industry is relatively unusual in having only a few possible end users of whom almost all are either airlines or governments.
• Sales to all destinations showed growth, apart from sales to the UK government. The growth of sales was mainly driven by sales to the UK industry (18 per cent increase) and by sales to the USA (15 per cent increase).
figure 8 UK aerospace industry sales by customer(1)
sales to the restof the world
sales tothe USA
sales tothe EU
other salesin the UK
sales to theUK Government
£3.63 bn£2.77 bn
+ 5%
£4.03 bn
+ 15%£3.76 bn
+ 18%£5.63 bn
+ 2%
-7%UK aerospaceindustry
• Aircraft engine sales increased by 11 per cent to £5.91 bn, showing the biggest single sector increase.
• Aircraft equipment rose by 4 per cent to 5.68 bn.
• Missiles sales dropped by 16 per cent to £1.2 bn.
• Space had its third consecutive year of growth, increasing to £689 million, up 14 per cent on last year.
• Aircraft systems and frames increased by 2.4 per cent to £8.21 bn from last year.
source: SBAC source: SBAC
(1)Sales to UK Government: This includes national authorities like government, ministries, UK public research institutes,
national space agency.
aircraft equipment
28%aircraft systems
& frames
31%
large civil aircraft
8%
regional jets
2%
other andbusiness jets
0.6%
aircraft maintenance
8%
aircraft engines
24%
missiles
6%
space
3%defence aircraft
14.4%
helicopters
6%
.15.14
figure 9 UK aerospace industry maintenance turnover by company 1996 - 2006
turn
ove
r (2
00
6 £
bn
)
year
service providers
maintenance companies
aerospace manufacturers
0
1
2
3
4
5
6
7
total maintenance turnover 2006: £6.13 bn
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
• Maintenance, repair and overhaul (MRO) sales increased by 7.9 per cent to £6.13 bn.
• Aerospace manufacturers’ MRO increased by 11 per cent in 2006 to £3.90 bn.
• Service providers and maintenance specialists increased by 2.9 per cent to £2.23 bn.
source: SBAC
.17.16
• Growth was driven by UK orders, which grew by 17 per cent and orders from the Rest of The World, which were up 23 per cent to £4.71 bn.
• Orders from European Union saw a 1.4 per cent increase to £5.5 bn.
• Orders from the USA decreased by 18 per cent and were worth £4.98 bn.
figure 11 UK aerospace order intake by destination in 2006
source: SBAC
ord
er
inta
ke (
20
06
£b
n)
year
from rest of world
from USA
from outside EU
from other EU
from UK
0
5
10
15
20
25
30
35
total order intake 2006: £26.18 bn
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
orders
• Total orders increased by 5.8 per cent to £26.18 bn. The equipment sector saw the biggest increase in the order intake of 23 per cent.
• Systems and frames orders increased by 10 per cent, and engine sector orders decreased by 11 per cent.
• New orders were evenly split between civil and defence sectors with £13.3 bn for civil and £12.8 bn for defence.
• New orders represented 132.1 per cent of sales in 2006.
figure 10 UK aerospace order intake by type and sector 1997 - 2006
source: SBAC
ord
er
inta
ke (
20
06
£b
n)
year
systems & frames
equipment
engines
0
5
10
15
20
25
30 total order intake 2006: £26.18 bn
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
.19.18
• Aerospace is one of the most R&D intensive sectors in the UK economy. While the private return to aerospace R&D is rather low, the external return (spillover) is high.
• Research by Oxford Economic Forecasting shows the economy wide social return to aerospace R&D investment is around 70 per cent. This means a one time investment of £100 million in aerospace R&D raises UK GDP by £70 million per annum.
• These economy wide benefits are far greater than for manufacturing as a whole, where returns are around 50 per cent.
figure 13 private and social returns to R&D spend
source: Oxford Economic Forecasting (OEF), Assessing the Economic Impact of Aerospace Research
& Development, May 2006
• The increases in aerospace industry sales are reflected in the improved performance of selected UK companies with a 7.45 per cent real increase in sales and operating profit at a record level of 20 per cent.
figure 12 selected financial UK aerospace financial results 2006
source: companies financial reports
company division
2006£m
2005£m
2004 £m
2006£m
2005£m
2004£m
BAE SYSTEMS Plc group 13,765 12,816 13,839 1,054 755 1,063
Rolls-Royce Plc civil aerospace, defence 5,344 5,015 4,620 748 692 390
GKN Plc aerospace 695 639 596 70 55 40
Smiths Group Plc group 3,523 3,073 2,803 520 428 366
Cobham Plc group 1,015 1,110 1,025 182 180 157
Meggitt Plc group 670 628 499 133 104 86
Ultra Electronics Plc group 377 348 325 58 52 42
25,389 23,629 23,707 2,764 2,286 2,144
turnover operating profit
financial
0%
10%
20%
30%
40%
50%
60%
70%
80%
man
ufac
turin
g
aero
spac
e
mac
hine
ry &
eq
uip
men
t
mo
tor
vehi
cles
rad
io a
nd t
v eq
uip
men
t
pre
cisi
on
equi
pm
ent
chem
ical
s (in
clud
ing
pha
rmac
eutic
les)
private return private and social returns to R&D spend, by sector (UK)external returnsocial return
research and development
.21.20
figure 15 UK aerospace industry R&D expenditure source in 2006
source: SBAC
• Research and development (R&D) intensity averaged 12.7 per cent of total sales, at £2.54 bn, down slightly on 2005.
• 37 per cent or £0.94 bn of the total R&D expenditure was spent in the civil sector and 63 per cent was spent in defence sector.
• For the purpose of this survey, R&D was defined to comprise:
- Development activities leading to series production.
- Research and technology (R&T) activities which may not be directly attributable to products, i.e. generic technologies that are designed to maintain or expand the technological base.
figure 14 UK aerospace R&D expenditure by type 1996 – 2006
source: SBAC
R&
D s
pe
nd
(2
00
6 £
bn
) civil
defence
0.0
0.5
1.0
1.5
2.0
2.5
total R&D spend 2006: £2.54 bn
total self-financed by UK by other by others R&T government alone
R&T alone
R&
D s
pe
nd
(2
00
6 £
bn
)
year
civil: 37%
defence: 63%
0
0.5
1.0
1.5
2.0
2.5
3.0
total R&D and R&T spend 2006: £2.54 bn
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 R&D +R&T
• Self financed R&D totalled £1.00 bn, 69.9 per cent of which was invested in the civil sector.
• However, HMG funded R&D has the inverted pattern with 95 per cent being invested in the defence sector. Overall the trend was for externally funded R&D to be heavily defence-focussed, i.e. 88 per cent or £1.17 bn.
.23.22
• 39 per cent or £991 million of the total UKAI R&D expenditure was undertaken by the aircraft and systems sector.
• The equipment and engine sectors R&D expenditure increased by 2 per cent each, to £662 and £883 million respectively.
figure 17 UK aerospace industry R&D expenditure 2000 – 2006
source: SBAC
• R&T expenditure saw a significant increase of 20 per cent to £259 million in 2006.
• Civil R&T accounted for 52 per cent or £135 million while defence R&T was 48 per cent or £123 million.
figure 16 UK aerospace R&T expenditure 2000 – 2006
source: SBAC
R&
D s
pend
(200
6 £b
n)
year
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 2001 2002 2003 2004 2005 2006
aircraft & systems 2006: 39%
engines 2006: 26%
equipment 2006: 35%total R&D and R&T spend 2006: £2.54 bn
R&
T s
pe
nd
(2
00
6 £
mill
ion
)
year
R&T
R&T civil
R&T defence
0
50
100
150
200
250
300
350
total R&T in 2006: £259 million
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
science base: universities, industries & other research bodiesR
&T
R&
D
selectionprocess
technologydemonstration
5+ years
technology taken up by industry
technologyvalidated
productlaunch
3-10 years 2-6 years 25+ years
technologyacquisition
technology selected forapplication by customer
contractnegotiation
Fundamentalresearch
design &development
product & processvalidation
pre-production
series production &product support
productcertification
tech
nolo
gy
read
ines
s
.25.24
• Aerospace R&D is a uniquely long term investment strategy. UK firms still benefit directly from investment in generic technologies made in the late 1950s and 1960s (e.g. wing aerodynamics and fundamental engine technology which fed into the complete range of Airbus and RB211/Trent engine families). The timescale between research and implementation of new products can be as long as 20 years.
figure 19 Technology and ‘first product application’ life cycle
source: AeIGT
• In the last few years there has been increasing interest in the levels of R&D in aerospace being undertaken outside the UK by UK companies, SBAC data indicates there is a long term increase from £0.14 bn in 1996 to £0.47 bn in 2006. However as the data below shows it does jump significantly from year to year.
• In 2006 overseas R&D grew by 5.5% and accounts for 16% of total UK and overseas R&D.
figure 18 UK aerospace R&D undertaken in the UK and overseas
source: SBAC
R&
D s
pe
nd
(2
00
6 £
bn
)
year
overseas R&D, 2006: 16%
Uk based R&D, 2006: 84%
0.0
5.0
1.00
1.50
2.00
2.50
3.00
3.50
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
.27.26
• 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 2006 sustained at the very similar level of 124,234 and is 4 per cent higher then in France and 38 per cent higher then in Germany.
figure 21 European employment by country 2006
• The R&D process involves a number of public and private agencies, companies, national research organisations, academia, and increasingly, regional government. It also often requires sophisticated, complex and expensive research infrastructure, i.e. advanced aerodynamics may require wind tunnel test facilities and high-performance computing.
• Government support for aerospace research from all sources including the Regions is brigaded through the DTI Technology programme following implementation of the Innovation Review.
• Aerospace projects currently draw more support from the Technology Programme than any other sector.
figure 20 aeronautic research programme funding
source: DTI
em
plo
yme
nt
00
0’s
country
0
20
40
60
80
100
120
140
UKFr
ance
German
yIta
lySpain
Sweeden
Netherl
ands
Belguim
Irelan
d
Finlan
d
Greece
Portug
al
Austria
Denmark
Luxe
mbourg
total: 457,000 employees
20
06
£ m
illio
n
year
CARAD
technology programme
committed technology programme
0
5
10
15
20
25
30
35
40
45
50
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
government support in 2006: £43.3 million
employment
source: SBAC estimation
.29.28
• It is estimated that a further 151,600 people are indirectly supported by the aerospace industry. Total UK aerospace employment was, therefore, in the region of 276,000 in 2006.
• Aircraft and frames account for 42 per cent of the UKAI’s activity, in terms of employment. This is complemented by equipment at 30 per cent and engines at 28 per cent.
figure 23 UK aerospace employment by sector
source: SBAC
1Research by the OEF in ‘The economic contribution of BAE SYSTEMS to the UK’ has suggested an employment
multiplier for the aerospace industry of 1.22.
• Employment in the UK in 2006 remained at the level of 124,234, while sales increased by 5.5 per cent.
• Productivity went up 5.5 per cent to £159,500 per employee.
figure 22 aerospace sales per employee 1980 - 2006
aircraft & systems
42%
engines
28%
equipment
30%
total: 124,234 employees
turn
ove
r p
er
em
plo
yee
(2
00
6 £
'00
0s)
0
20
40
60
80
100
120
140
160
180
200
year
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
growth of the productivity per employee in 2006: 5%
source: SBAC
.31.30
• The UKAI has consistently maintained a range of long-term, highly skilled jobs. In 2006, 34 per cent of all UKAI employees held a university degree or equivalent.
• 31 per cent of employees or 38,822 employees were classified in the new class of technicians.
• 2,593 or 2 per cent of the workforce were apprentices.
• Production was the largest single group of employees (55 per cent or 68,743).
figure 24 UK aerospace industry employment by qualification and activity
em
plo
yee
s (0
00
's)
0
10
20
30
40
50
60
70
80
total: 124,234 employees
2%
32%
55%
13%
33%31% 34%
product segments
graduateengineers
& managerstechnicians
apprentices
others
R&D
production& maintenance
rest
by activity
valu
e ad
ded
£bn
year
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2006: £12.9 bn
2001 2002 2003 2004 2005 2006
• Aerospace and defence companies increased value added by 16 per cent to £12.9 bn in 2006.
• The main reason for the growth of value added is heavy investment in innovation, and increased cost reduction.
figure 25 aerospace and defence value added 2001 - 2006
source: DTI Value Added Scoreboard 2007source: SBAC
.33
• Small and Medium sized Enterprises (SMEs) saw their total sales increase by 20 per cent to £405 m.
• Defence sales have remained consistent at £133 million per annum, while civil sales increased by 34.5 per cent to £271.7 million.
• 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.
figure 26 UK SME aerospace sales 1997 - 2006
source: SBAC
sale
s (2
00
5 £
m)
0
100
200
300
400
500
600
700
800
total SME sales: £405 million
year
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
total defence
total civil
SMEs
.35.34
• In 2006 civil sales represented 67 per cent or £271 million of SME business, whilst defence sales were £133 million.
• Exports are still low, compared to the industry as a whole, with only 32 per cent compared to 63 per cent UK aerospace average.
figure 28 UK aerospace industry SME turnover by type and destination 2006
source: SBAC
• The UKAI is characterised by a significant proportion of SMEs, 45 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.
• SME’s had 2 per cent of the total aerospace sales, while 82 per cent of the total UKAI sales went to 20 per cent of surveyed companies.
figure 27 UK aerospace industry by company size 2006
source: SBAC
civil domestic
44%
civil export
23%
military domestic
24%
military export
9%
total turnover £405 m
0%
10%
20%
30%
40%
50%
60%
number of employees in company
<250 250-999 1,000-9,999 10,000+
SME's
45%
2%
35%
16%17%
32%
3%
50%
(%) of all companies
(%) of total sales
.37.36
• 5.7 per cent of sales, or £23 m, was sold directly to the UK government, below the UKAI average of 18 per cent. This is in part reflecting the nature of SMEs products as suppliers of components rather than complete pieces of equipment.
• 68 per cent of sales were within the UK.
figure 29 UK aerospace SME sales by destination
source: SBAC
sales in the UK
62.6%
sales to the EU
20.5%
sales to the USA
5%
sales to therest of world
6.2%sales to
UK Government
5.7%
total turnover: £405 m
tra
de
(2
00
6 £
bn
)
year
import 2006: £15.36 bn
export 2006: £16.90 bn
balance 2006: £1.54 bn
0
2
4
6
8
10
12
14
16
18
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
.39.38
• The EU accounted for the largest share of UK exports 42.7 per cent worth £7.2 bn. There was an increase of 10 per cent in the net trade balance to £3.37 bn.
• The Americas accounted for £4.8 bn of exports or 28 per cent of the total, the second largest export region. The trade balance deficit with the Americas increased by 143 per cent.
• The negative balance with other Europe stayed at the same level as last year.
figure 31 UK trade balance of aerospace by destination 2006
• In 2006, UKAI exported 62.7 per cent of its total sales, worth £12.43 bn. This was a 8 per cent increase.
• It is important to note that the trade balance figures, presented in the graph below, 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 £1.54 bn to the trade balance, representing a fall of 32 per cent on last year. However the long term average remains at £2.71 bn per annum positive balance.
figure 30 UK trade balance of aerospace 1996 – 2006
source: DTI
international trade
source: DTI
trad
e (£
bn)
7
6
5
4
3
2
1
0
-1
Americas Asia& Oceania
EuropeanUnion
Middle East& Africa
-2
imports
exports
balance
OtherEurope
-1.934
0.447
3.377
0.202
-0.529
.41.40
• The size of the UK aerospace industry presence overseas has increased significantly over recent years.
• The size of the overseas assets owned by the UK is now equivalent to the size of the rest of the world owned companies presence in UK.
figure 33 global location and sales in the UKAI 2006
• UK based companies have substantial overseas presence, which generated a further £7.94 bn of sales and £8.93 bn of orders, UK employed a further 48,785 people overseas.
• The majority of the overseas assets are in the USA which accounted for £4.58 bn of sales and 34,606 employees.
figure 32 global sales and employment of UKAI aerospace assets
source: SBAC
location
UK rest of the world total
employment
employment
owne
rshi
p
rest
of
the
wor
ldU
K
sales (£bn)
employment
sales (£bn)total
sales (£bn)
81,088
43,145
7.96
11.85
48,785
n/a
n/a
7.94
129,873
43,145
7.96
173,018
27.75
48,785
7.94
124,233
19.81
19.79
UKAI in USAsales (£bn): 4.58
orders (£bn): 5.09 employment: 34,606
UKAI in rest of world sales (£bn): 2.44 orders (£bn): 2.96
employment: 10,110
UKAI in rest of EUsales (£bn): 0.92
orders (£bn): 0.89 employment: 4,069
UKAI in UK sales (£bn): 19.82
orders (£bn): 26.18 employment: 124,234
global UKAIsales (£bn): 29.28
orders (£bn): 37.19 employment: 179,059
source: SBAC
global trends
.42
• There are a number of overseas companies which have directly invested or purchased and incorporated indigenous firms. In 2006, foreign owned UK located companies generated total sales of £7.96 bn and employed 43,145 people.
figure 34 UK located aerospace companies turnover and employment
source: SBAC
turn
ove
r (2
00
6 £
bn
)
em
plo
yme
nt
(00
0’s
)
year
0
4
8
12
16
20
24
28
0
20
40
60
80
100
120
140
160
180
1998 1999 2000 2001 2002 2003 2004 2005 2006
UK turnover (Ihs)
UK owned employment (rhs)
non UKAI turnover (Ihs)
total turnover: £19.81 bn employment: 124,234
foreign UK employment (rhs)
aerospace cross holdings
figure 35 major European aerospace and defence cross holdings
.43
11%
Eur
ocop
ter
Saa
bA
BP
anav
ia
Rhe
inm
etal
l AG RG
RA
rmam
ent
BA
E S
YS
TEM
SN
orth
Am
eric
a
SE
LEX
S
iste
mi
Aer
mac
chi
Die
hl A
vion
ikS
yste
me
Gm
bH
JSA
Ele
ttro
nica
Das
saul
tA
viat
ion
Tha
les
Ho
ldin
gs
Thal
es A
leni
aS
pac
eG
iat
EA
DS
33.3
%
50%
33%
50%50%
66.6%
100%
46.2
%
5.7%
31.3%
31.3
%
Finc
antie
ri 83%
Airb
us
Eur
ofig
hter
ATR
Dai
mle
rC
hrys
ler
A.G
.
100%
50%
25%
66%
33%
80%
20.5
%
42.5%
43%
19.5%
15%
37.5
%
42.5
%
MB
DA
37.5
%
37.5%
IRI
31.1
%
Fren
chG
over
nmen
t
Cel
sius
100%
DC
NA
rmar
is50
%
BG
T
100%
Fran
ce, G
erm
any,
Ital
y, S
pai
n, S
wed
enUK
US
A, C
anad
a
Inte
rnat
iona
l JV
/ C
onso
rtia
Grip
enIn
tern
atio
nal
50%
50.01%
Ast
rium
Agu
staW
estla
nd 100%
SE
LEX
Com
mun
icat
ions
100%
Sel
exS
enso
rs&
Airb
orne
Sys
tem
s
100%
100%
TDA
A
rman
ens
GIM
D
100%
100%
20.9
4%
67%
Am
per
100%
49%
Die
hl51
%
49%
Ale
nia
100%
100%
33%
CTA
Intl
100%
LFK
100%
Sp
anis
h G
over
nmen
t
5.5%
Laga
dar
e 33.3%
66.6%
100%
Italia
n G
over
nmen
t32.28%
20%
Sog
ead
e
100%
Thal
es
Finm
ecca
nica
Sp
AA
lcat
el
Fren
ch
Gov
ernm
ent
Atla
sE
lect
roni
cs BA
E S
YS
TE
MS
Inte
grat
i
UK
plc
Eur
osam
22.3
%
50%
50%
Pro
gram
as
figure 36 major world engine cross holdings
.44
Ro
lls-R
oyc
e p
lc
Eur
ojet
Turb
o
Eur
o P
rop
ulsi
on
ITP
MTR
Rol
ls/T
urb
omec
a
CFM
In
tern
atio
nal
EM
A
KK
R
JSF
Pro
gram
me
Lift
Sys
tem
Cin
ven
Inte
rnat
iona
lA
ero
Eng
ines
Pra
tt &
Whi
tney
Jap
anes
e A
ero
Eng
ines
Cor
por
atio
n
Gen
eral
Ele
ctric
EP
I
JSF
Pro
gram
me
F13
6
Avi
oS
.p.A
MTU
SA
FRA
N S
.A (S
NE
CM
A)
Fran
ce, G
erm
any,
Ital
y, S
pai
n, S
wed
enUK
shar
e ow
ners
hip
wor
k sh
are
equi
ty
US
A, C
anad
a, J
apan
Inte
rnat
iona
l JV
/ C
onso
rtia
Turb
o 2
000
Turb
omec
a
Agu
staW
estla
nd
100%
100%
100%
49%
51%
47% 53%
50%
50%
50% 50%
33%
37%
33%
33%
50%
19%
50%
Fren
ch G
over
nmen
t
35.9
%
85%
30%
32.5
%
32.5%23%
12%10
0%
Sou
rce:
SB
AC
, Com
pany
Dat
a
Finm
ecca
nica
15%
28%
28%
28%
16%40
%
14%
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