As the slow and steady recovery of commercial aircraft build rates continues, MAA Chief Executive, Dr Andrew Mair, shares the latest update on the status of the aerospace industry in the Midlands region, which was recently delivered to policy makers at the West Midlands Combined Authority.
Short-term growth opportunities
The Covid pandemic saw global air travel reduced by over 90% and the revenues of aerospace supply chain companies typically impacted by 30-40%.
Global air travel is returning to pre-pandemic levels in various parts of the world over the course of 2023, with aircraft build rates projected to reach approximately 90% of pre-pandemic levels in 2025.
This is now creating short-term (2-4 years) growth opportunities across the aerospace supply chain. The focus is on recovering build rates on existing aircraft programmes, facilitating recovery/growth under existing contracts and potential opportunities to win business from competitors world-wide (especially in parts-manufacturing where the Midlands excels).
Long-term growth opportunities
The long term is all about investing to develop new (greener) aircraft technologies (product and process) through intensive R&D. This will enable long-term contracts to be secured on future, more efficient aircraft from 2030 and beyond.
Current cluster challenges
The regional business environment is faced with materials shortages and related inflation. There are also serious recruitment issues and skills shortages impacted by several factors including Brexit and the mass staff redundancies that many businesses implemented in 2020-21.
In addition, businesses across the region are experiencing financial pressures, particularly finding the cash to fuel the growth necessary to meet the needs of aircraft programmes as they ramp up. Some businesses have been unable to survive without financial restructuring, either earlier in the pandemic or now during the production recovery phrase. Some were already owned by financial institutions – private equity especially - that are now reluctant to invest.
British aerospace companies are up against competitors in other countries with more favourable economic environments. The risk is that these could take market share from the UK as the big aircraft and engine makers demand supply chains that can support growth without production disruption.
Long-term cluster risks
The key longer-term risk centres around investment in R&D to secure positions on future aircraft. Already-low levels of investment to develop new technologies in much of the Midlands aerospace cluster are exacerbated by the institutional failure of the UK’s publicly-funded aerospace R&D ecosystem to support most Midlands Tier 1s and lower tier supply chain companies to innovate on the scale required.
At the same time, there are other aerospace countries and regions that are investing in public-private collaborative R&D, such as the US, Canada, France, Germany and the Netherlands. Naturally, these countries will be seeking to displace the UK from its areas of traditional strength in global aerospace.
