ADS Says UK Aerospace Needs Urgent, Long-term Support

 - July 21, 2020, 7:00 AM
UK industry group ADS is calling for larger, longer-term public investment in research and development work at member companies such as Rolls-Royce. (Photo: Rolls-Royce)

ADS, the UK’s aerospace, defense, security, and space industry association, has called for the country's government to significantly increase long-term financial support for research and development. In response to the dual threats posed by the fallout from the Covid-19 pandemic and Britain’s departure from the European Union (EU), the group’s CEO, Paul Everitt, also urged the government to step up public procurement spending as part of a long-term defense and security strategic review now due to be concluded by the end of 2020.

“This is a very challenging period for aviation and aerospace and we are seeing major businesses reducing the number of employees and resizing their companies in a way that has a very dramatic impact and in anticipation that it will take time to restore confidence and for demand to return,” he said in an interview with AIN on the eve of the FIA Connect online event.

While acknowledging recent commitments to support initiatives such as the Aerospace Technology Institute, ADS expressed concern that the support could prove to be no more than a short-term response to the crisis. “The supply chain will need additional financial support and it needs to be long-term and more patient,” Everitt insisted.

“France, Germany and the U.S. have responded in a big way [to support their aerospace industries]. If we aren’t able to match their ambition, the UK risks falling behind and not having the right technology available when it’s needed,” he said. “This is even more important now because many companies are cash-strapped and so public support is critical.”

Underlining the fact that other major aerospace nations have seen billions of dollars of new government funding announced in recent weeks while the UK government has largely focused on helping sectors such as retail and hospitality, Everitt said that more support for the entire industry supply chain is imperative. In March, before anyone could predict the full effects of Covid, ADS supported calls for public investment in research and development to increase from 1.7 percent of GDP to 2.4 percent by around the 2024-25 financial year.

According to ADS, the challenge posed by the need to decarbonize aviation to reduce the industry’s environmental footprint presents an opportunity for UK expertise to shine. Given that, Everitt welcomed Prime Minister Boris Johnson’s public support for the so-called JetZero plan to introduce an electric-powered widebody airliner into commercial service by 2050.

Before Covid struck, ADS’s biggest concern centered on the looming effect of the end of the Brexit transition period for the UK’s departure from the EU on Dec. 31, 2020. Everitt confessed to feeling anxious about the apparent failure of ongoing negotiations to agree on the terms for future trade relations. He said he most worries about the possibility that the UK and EU will not manage to settle the Bilateral Aviation Safety Agreement (BASA) intended to set the framework for future aviation regulation when the UK leaves EASA at the end of this year.

“The priority is to see an ambitious agreement to create certainty,” explained Everitt. “We would have preferred for the UK to remain part of EASA because it has served everyone very well. Our concern is for what would happen if we don’t get an agreement and so [at this point] we would prefer to see the Bilateral Aviation Safety Agreement lifted out of the wider negotiations. [Aviation regulation] would not traditionally be part of a free trade agreement, and we feel that safety and competitiveness is more important than the political issues around the free trade agreement.”

From ADS’s perspective, the continued uncertainty over Britain’s post-Brexit position in the world economy makes it harder for its member companies to forge partnerships and attract investors. According to Everitt, the wider tensions between the U.S, the UK, and China and between the U.S. and Europe have not helped the situation at all.

“It is not the easiest time to sell investment into the UK,” he told AIN. “We have tremendous experience and capability and so there are always opportunities here, but some who have traditionally invested in the country over the long term are now less enthusiastic about making big commitments until they have a clearer view. That’s why we need a quick and a good deal.”

While acknowledging the real hardship the air transport sector now endures, Everitt feels the fundamental drivers for demand to return remain in the background. “We expect to see demand accelerating through 2021 and beyond,” he stated. “Airlines need to rebuild their finances before they can generate demand for new aircraft, but we are seeing patches of blue sky ahead.”

So far, the civil aviation and aerospace side of ADS’s membership has endured the most pain from Covid. While defense, security, and space companies have all endured the wider disruption, their sectors have felt less of an effect to date and there has even been some increase in demand for technology associated with cybersecurity.

Earlier this month, the UK government surprised many in the industry when it suddenly made around $500 million available to buy a stake in struggling satellite technology group OneWeb. Critics characterized the deal as an ill-conceived move to provide cover for the controversial circumstances under which the UK has been forced out of the Galileo global navigation satellite system as part of the Brexit settlement. It has been criticized as another example of the UK having to needlessly reinvent the wheel to hold a stake in established technology for reasons driven by politics rather than business expediency.

“We welcome the investment but what we want to see now is how it impacts the shape of the UK’s National Space Programme, where it fits in with GPS, our existing commitments, and what we are expecting to see invested in defense and national security capability,” Everitt responded.

A key feature of the FIA Connect online event that ADS will co-host with its Farnborough International subsidiary from July 20 to 24 is Farnborough Friday, through which the association seeks to engage with young people about the career opportunities available in the industry. Despite all the anxieties that 2020 has brought so far, Everitt said he still relishes the chance to convince the next generation to join him and his colleagues. “I am absolutely confident and convinced about the strong future of this industry,” he concluded. “Opportunities like the JetZero challenge will bring really important new products, programs, and activities that will be very exciting for young engineers. The last 20 years have been about the industry moving from being a niche to a large global industry. The next phase is about how we embrace much more agile and fast program development and for that we need a pipeline of new talent.”