Aerospace Industry Survey 2007

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.


.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.


(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%


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


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


UKAI in UK sales (£bn): 19.82


global UKAIsales (£bn): 29.28


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

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figure 36 major world engine cross holdings

.44

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ch G

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Sou

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AC

, Com

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%

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Aerospace Industry Survey 2007

Documents