The government needs to support research and development if the UK aerospace and defense industry is to continue what has proved to be a recession-defying success story, maintains Ian Godden, chairman of national aerospace, defense and security trade organization ADS. The comments, made at a July 13 press conference in London, were an appeal for further funding from a new British government that is aiming to achieve spending overall cuts averaging 25 percent.

Results of the annual survey that ADS (Hall 1 Stand 15) has taken over from predecessor organization the Society of British Aerospace Companies show 2009 revenues for the sector up 5.4 percent to £22.2 billion ($33.3 billion), with defense accounting for 52 percent of the total and exports amounting to 70 percent. Overall, defense sales grew 10.7 percent to £11.6 billion ($17.4 billion), with domestic sales up 5.4 percent and the weakness of sterling helping defense exports increase by 15.1 percent.

Orders, predictably, were down, but the 10.4-percent fall to £32.2 billion ($48.3 billion) represented a slowing rate of decline, and Godden pointed to a “very good” 27-percent rise in system and airframe sales to £14 billion, which helped offset a 20-percent decrease in sales to the U.S., primarily in defense. The latter figure reflected a decline following a series of exceptionally good years and represented “the end of a decade of boom,” he said, while exports to European Union countries and the rest of the world grew 10 percent and 20 percent, respectively.

The industry has performed remarkably well during the recession, he said. “I think we’re in the middle of a trough in 2010,” Godden explained, predicting a boom in 2011-13 ahead of a new peak in 2014. But what he termed a black spot among the good news was the 7.4-percent decline in R&D spending to £1.74 billion ($2.61 billion) as both industry and government reduced expenditure, mainly in the defense field.

Productivity increases averaging 6.2 percent per employee meant the workforce in the sector held steady at just over 100,000. Although the government is hoping growth will lead to many new jobs in the sector, Godden said, that sort of productivity improvement will make significant increases in employment unlikely. However, in a country where the average age is 54, he said it is encouraging to record a 6-percent rise in the number of young people studying industry-related subjects.

The number of students taking specialized aerospace engineering degrees has risen by an annual average of nearly 7 percent since 2000, reaching 9,230 last year. The previous government’s attempts to rebalance the economy toward manufacturing and technology had helped, he said, “but it’s up to industry to capitalize on these young people. I’m not counting this as a victory, just a useful start.”

The real worry, Godden said, is that “the R&D trend is a lead indicator of a declining future.” Research spending tends to be driven by specific projects, so there can be one-year deviations, “but while it’s encouraging to see the industry attracting more young people, it is discouraging to see R&D declining. We can’t sustain both trends.”

In terms of programs, the UK content by value of a Rolls-Royce Trent-engined Airbus A350 or A380 is just over 50 percent, while a Trent-powered Boeing 787 will have a UK content of 25 percent. The Bombardier C Series is also important for the UK industry’s future.

The effects of the global recession on commercial sales have been less negative than feared, as airlines continue to find finance for new deliveries. But investment in the next five years will be crucial as the industry works to be ready for the anticipated upgrades of the Airbus and Boeing single-aisle families, said Graham Chisnall, ADS managing director commercial aerospace and operations.

There is already a worrying trend for large wing work–a field where the UK is “by far the world leader,” according to Godden–to leave the country. The composite covers for the A350’s wings, for example, will be made in Spain and Germany. “In metal days that work would have been done in the UK,” Chisnall said. “It is critical to invest in R&D to win that work back with the next program.”

Part of the reason for a decline in the UK’s share of Airbus airframe work from a historical 20 percent to 10- to 12 percent on the A350 is the result of under-investment 10 or 12 years ago, Godden said. “That was reversed, but our message to the new government is that this is country-to-country competition, not a free market, despite everybody pretending or wanting it to be one,” he said. The UK won the C Series wing work despite a U.S. bid with more government money behind it, he added, but future wins will need government support as well as competitive companies.

The same consideration applies to the Taranis unmanned combat air vehicle prototype that BAE Systems unveiled last week. “One thing is certain,” said Chisnall, “if you don’t invest you won’t get anything back. It’s an essential precursor to staying in the game.”

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