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Lancashire has a dynamic and outward-looking world-class aerospace industry which develops, manufactures and exports globally competitive products and services. It has a capability in high technology engineering that is unsurpassed. Employing directly and indirectly as many as 25,000 people in over 100 companies the local industry represents the largest single concentration of aerospace manufacturing and production in the UK and has long been recognised as a global centre of excellence for the industry. It forms the backbone of the Lancashire economy and encompasses all aspects of aerospace activity in engine, airframe, avionics, missiles and ground support equipment; from research and development to a wide-ranging design, manufacturing, servicing and testing capability. The County's unique aerospace 'know-how' and skills base has an enviable record extending over more than 90 years and has played a major part in developing and producing some of the industry's most advanced and innovative products and processes (see Lancashire's Aerospace Heritage ).
The aerospace industry is one of the largest and most strategically important industries in the UK. It is one of the country's most globally competitive industries with a significant presence in all of the major civil and defence programmes and has world leading companies across a range of products and technologies. Its critical role in terms of job opportunities and wealth creation, in developing and applying advanced technologies and its importance to national defence is reflected in the high profile it enjoys in not just the policies but also the priorities of central government. According to the (External) Society of British Aerospace Companies (SBAC) the aerospace industry's national trade association, in 2006 the UK industry enjoyed an exceptionally buoyant year winning business in an increasingly competitive global market place; it attained turnover of £19.8bn, second in size only to the USA, whilst UK-owned manufacturing assets in the rest of the world generated a further £7.9bn. New orders won over the course of the year increased by nearly 6% to £26.2bn. In the same year the UK aerospace industry contributed a net £1.5bn to the nation's balance of trade. Directly employing about 124,000 people and indirectly sustaining as many as 152,000 other jobs in companies supplying goods and services, aerospace is one of the few leading-edge and high value added industries in which the UK can still justifiably claim to have a near total capability in design, manufacture and in-service support.
The employment impact associated with aerospace activity in Lancashire over the past 60+ years is illustrated in Figure 1. After the exceptional circumstances occasioned by the Second World War when several aircraft and aero-engine plants were established locally the number of aerospace jobs in Lancashire fell dramatically as the economy reverted to civilian production: by 1946 the number of people employed in aerospace production had fallen to only a quarter of the war-time peak. However, by this time the industry was firmly established and most of the core war-time plants and infrastructure remained in place and aircraft manufacturing and repair became a highly successful post-war industry, employment fluctuating in tandem with particular aircraft programmes. Over much of the 1950s the local industry was buoyant and employment expanded rapidly, only to fall off again over the 1960s when the TSR2 aircraft project was scrapped. The introduction of the Tornado programme fuelled another period of extended expansion over much of the 1970s and 1980s.
Figure 1 Employment in the Lancashire Aerospace Industry, 1943-2006 Source Ministry of Labour/ONS - ERII Records/Annual Business Inquiry Typhoon Final Assembly Facility - BAE Systems, Warton Photo courtesy of BAE Systems (Copyright © 2005 BAE Systems)Post-1990 the fortunes of the industry changed again as it entered into an era of enforced rationalisation linked with the unprecedented combination of falling real defence equipment expenditure, a recession in the world-wide civil aircraft market and greatly increased global competition in manufacture. The result was considerable over capacity and the deepest recession ever felt by the post-war aircraft industry that was reflected not only in Lancashire but also across the whole of the UK. Locally, there were a number of large plant closures, including the large BAe Strand Road engineering works in Preston within the Central Lancashire sub-region. In excess of 8,000 direct aerospace jobs were shed with further indirect losses amongst the large base of supplier and service companies. There was some consolation for Lancashire in that restructuring and closures elsewhere in the UK, led in some cases, to residual work being relocated and consolidated in the county.
This period of local downsizing ended in about 1994 and by the middle of the decade real confidence had again returned to the industry. Whilst many jobs were lost or "out-sourced" over the recession, capabilities were retained and competitiveness greatly enhanced. Many companies once again entered into new investment, recruitment and training as they participated in new military projects and a sustained recovery in civil aircraft markets that continued well into the new Millennium and until the events of September 11th 2001 in New York heralded another major setback in the fortunes of civil aviation and reduced new aircraft purchases. Civil aircraft production remained subdued for some while but over the past few of years has re-bounded with a vengeance and future prospects for growth in commercial aviation are extremely buoyant. An upturn in military work for both domestic and export markets has added to the optimism.
At the latest count the 2006 Annual Business Inquiry (ABI) estimated that there were over 16,700 employee jobs in Lancashire classified to the aerospace industry, making it by far the largest manufacturing sector in the sub-region. This employment base represented nearly 17% of the total manufacturing workforce or 2.7% of all employee jobs in Lancashire. In a national context its importance may be gauged from the fact that Lancashire accounted for about 18% of Great Britain's total employment allocated to aerospace. Major local work centre concentrations are to be found in the districts of Burnley, Fylde, Pendle, and Ribble Valley/South Ribble, but in practice the industry provides jobs for people living throughout the sub-region and beyond.
Aerospace in Lancashire has in many instances close linkages with aerospace activities elsewhere in the North West Region, particularly as there are many instances of plants in different locations under (or previously under) common ownership. For comparative purposes, the distribution of aerospace employee jobs across the North West by sub-regional areas is illustrated in Table 1. For this purpose, Flintshire in Wales is included within the "North West" as this area includes the Broughton Airbus Industrie plant close to Chester, which has seen a significant increase in the jobs headcount over recent years. In total, the North West is estimated to have nearly 26,000 employee jobs classified to aerospace representing over 28% of the Great Britain total.
However, a footnote to these estimates is necessary. On the one hand it appears that the ABI may be artificially inflating the Lancashire employee figures by including many employees nominally based at BAE Systems in Lancashire but who in practice are working overseas (e.g. on the Al Yamamah Agreement with Saudi Arabia). Against this, the official Standard Industrial Classification (SIC,2003) definition of the aerospace industry is not a market-based one and in many respects grossly under-states the importance of the industry as a core generator of jobs. In particular over the past decade and more, many large and medium-sized aerospace companies have increasingly taken to out-sourcing "non-core" services which were previously undertaken in-house. These activities – ranging from information technology and technical design, testing and documentation to industrial cleaning, catering, security and logistics, and all previously part of the "aerospace" job headcount – are now classified to other industrial or service headings within official statistics even though they continue to provide aerospace related services. Similarly, primes and OEMs have greatly boosted the amount of direct aerospace work that is sub-contracted through the supply chain. The jobs which accompany this process are often classified under a non-aerospace activity heading such as "treatment and coating of metals", "manufacture of turbines", or ""general mechanical engineering" (which includes many sub-contract precision engineers) for example – sectors which have seen employment levels locally stand up well over recent years.
The Society of British Aerospace Companies (SBAC) reckons that the aerospace industry nationally supports an additional one-to-two times the number of directly reported employees. According to figures quoted by BAE Systems, for every production job directly provided within the Company, two others are dependent elsewhere in the aerospace industry and six others are dependent in support industries and services. In the case of Lancashire it is probably a not unreasonable assumption to state that for every direct job provided by companies classified to the local aerospace industry at least another is indirectly dependent. Conservatively, this might imply an aerospace dependent workforce in the County of between 24-28,000. Similar calculations for the wider North West Region would conservatively suggest a figure for total aerospace employment of 45,000-50,000, approximately 1.7% of the regional employment figure.
The result of the long association with aircraft production is today a huge industry, not only within Lancashire itself, but extending throughout the wider North West Region. It includes the major design, manufacturing, assembly, systems engineering capability and flight testing facilities of BAE Systems' Military Air Solutions Business Group at Warton and Samlesbury sites in Lancashire together with other BAE Systems operations at Chadderton and Woodford in Greater Manchester and the Airbus UK site Broughton at Chester manufacturing aircraft wings. The Rolls Royce aero-engine plant at Barnoldswick in East Lancashire, where Whittle's first jet engines were developed and produced, has for many years now led the development and manufacture of the wide chord fan blade for engines such as the RB211 and Trent. Rolls Royce is now market leader in powering widebody aircraft and again uses the very latest leading edge technology.
More importantly, these prime contractors at the pinnacle of the aerospace supply chain are reckoned to buy-in three-quarters or more of their requirements and are supported in depth by many other significant Original Equipment Manufacturers (OEMs). These include local players such as Ferranti Technologies, Aircelle, Smiths Aerospace and Ultra Electronics together with a whole infrastructure of small and medium sized companies supplying sub-contract products and services to the local primes and indeed, to both the wider civil and military aerospace markets world-wide. See our full listing of Lancashire companies working in the aerospace industry .
The activities of such companies (many of which are not officially classified to "aerospace" and which thus form part of a "hidden" aerospace infrastructure) are extraordinarily wide. They range from the design, manufacture, final assembly and testing of complete military and civil aircraft and major sub-assemblies (for example, Airbus wings) to missiles, aero-engines, avionics, ground support equipment, in-flight equipment and all manner of detailed fabrications and components for both airframes and engines as well as servicing the increasingly important after-market. These are backed up by sophisticated engineering and other services in tooling, treatments, materials, technical analysis and testing, information technology, technical documentation and a raft of other ancillary support activities. Such local capabilities are unsurpassed by any other region in the United Kingdom and effectively represents a world-class centre of excellence and a major regional, indeed national resource. For many of the smaller supplier companies in particular the demanding quality and cost standards of aerospace work often provides a key baseline activity enabling them to be successful in their own right competing for business in other demanding industries quite removed from aerospace.
In all senses aerospace can be regarded as a key industry in driving and transforming the industrial base of Lancashire. Over the 1980s and early 1990s and again over the second half of the 1990s it clearly held the baton of growth for the County in what would otherwise have been a lack-lustre out-turn.
As well as being a key employer aerospace is also big business in production and performance terms and its critical importance to the well-being of the local economy can scarcely be exaggerated. In 2005 the local industry achieved total turnover of close to £3.8bn, equivalent to about 28% of Lancashire's entire manufacturing turnover and representing over a fifth of total UK aerospace turnover. As a source of generated wealth aerospace has no equal in the County, in 2005 generating an estimated £1.8bn in gross value added, equivalent to nearly one-tenth of Lancashire's entire gross domestic product, even discounting the related output from the many "non-aerospace" supply sectors. Three quarters of the County's aerospace production is exported. The industry's performance in terms of other key economic indicators such as output growth, labour productivity, earnings and investment is second to none, exceeding the Lancashire manufacturing average by a substantial margin and in most instances also bettering that of the national aerospace industry.
The industry is also a high technology/high productivity sector making very significant purchases in the local economy. Aerospace jobs are typically highly skilled, including large numbers of advanced engineering, technical and craft workers of many disciplines. Indeed, it has among the largest ratio of highly skilled to non-skilled labour of any manufacturing industry. Nationally in 2006 some 34% of aerospace workers held a university degree or equivalent. Additionally, many of the 'manual' and 'other' categories of employment (including technicians, draughtsmen, etc.) are likely to have some sort of non-university specialist training, either within the industry itself or via external bodies. About 2,600 employees or 2% of the workforce were apprentices. Reflecting these skills and recent large productivity gains, according to the SBAC in 2006 average salaries in the UK aerospace industry of over £35,000 were 44% higher than the UK average and a third above the manufacturing average.
Aerospace is R&D intensive and over recent years there has been significant real growth in such expenditure. According to the SBAC, the industry nationally spent £2.5bn on R&D in 2006, equivalent to 12.7% of sales, up from 8.2% of sales in 2001. About £260m of this sum was spent in early stage research and technology acquisition. Nearly 18,000 people or 16% of the national aerospace headcount are engaged in R&D demonstrating the high commitment of the industry to stay at the forefront of high technology manufacture in the UK. Locally, the sector provides a major focus of sophisticated and pervasive technologies. Examples are computer aided design and manufacture, the development of new materials such as aluminium lithium and carbon fibre composites, and new production techniques such as diffusion bonding, superplastic forming and multi-axis machining. Overall, aerospace accounts for around 89% of all so-called "high technology" jobs in the county (against 40% in Great Britain) and supports a vital training infrastructure. The industry confers on Lancashire, far from its public image, the status of the most important centre of high technology in the UK outside the South East of England.
The industry is also much to the fore in the adoption of new lean production and quality control procedures and is very active in the development of supply chain management and collaborative partnerships. As such it provides a considerable pool of local skill in high technology production and modern industrial organisation. These lessons are now being disseminated via "best practice" throughout the SME supply chain network thereby assisting in the advancement of other sectors. In a narrower sense, military aircraft technology is an important area of development for the success of the whole aircraft industry. It is in the advanced combat aircraft manufactured in Lancashire that some of the most advanced systems and production techniques are developed and deployed before finding their way, in many cases, into commercial programmes and indeed, via the SME community especially into the development of other sectors.
Regional Aerospace Business Park
In September 2005 BAE Systems and the North West Regional Development Agency (NWDA) launched a joint initiative aimed at sustaining and maximising the world-class aerospace cluster within Lancashire and the North West. The two organisations have signed a Memorandum of Understanding to work together in developing a strategy for the North West Aerospace Industry. The MoU will allow BAE Systems and other prime companies from the region to assist the NWDA in setting the North West Aerospace Strategy and its priorities for the future in order to capitalise on a strong long-term global market and thus ensure that the region's leading science-based and high value added manufacturing and services sector continues to prosper.
A key element of this initiative is the development of the BAE Systems' Samlesbury site as a Regional Aerospace Business Park. This development will help to sustain/create thousands of jobs within the aerospace industry and potentially could see hundreds of millions of pounds invested into the facility over the next 10-15 years.
Samlesbury has 47 acres of undeveloped land available to it. Planning permission has been acquired in order to accommodate facilities for the F-35 Joint Strike Fighter production but development as a dedicated Aerospace Business Park will be much wider with the long-term aim of establishing it as a Centre of Excellence geared to competitiveness regionally, nationally and internationally and accommodating other new inward investment in a range of new and enhanced capabilities, including:
To be funded jointly by government and industry it is envisaged that the capabilities, capacities and workload of such a Business Park will extend well beyond those required to support BAE Systems alone, necessitating that its viability must also satisfy the requirements of other regional primes requirements, most notably Rolls Royce and Airbus.
The strength of the Lancashire and wider North West's aerospace industry to some extent lies in the concentration or strategic "cluster" of economic activity it provides which provides a critical mass of growth, technology, collaboration, competition and opportunities for investment. The region is a true world player on an international scale with a huge capacity in aerospace manufacturing and its size is quite the equivalent of the most notable of overseas concentrations such as Seattle in the United States and Toulouse in France. The Region, with over 600 companies associated with the industry, dominates UK aerospace output, particularly on the airframe side, with a stake in most current cutting edge programmes including Eurofighter-Typhoon, the Joint Strike Fighter, Airbus family and Rolls-Royce's Trent engine programmes. Future developments in aerospace technologies will also involve companies across the North West Region. These include the A400M Future Large Transport Aircraft and the Airbus A380 – for which a large part of the wing structure will be North West produced together with new high performance engines. Looking further ahead, pioneering work on the future of unmanned air vehicles (UAVs) has been centred on BAE Systems in Lancashire. Now officially launched as the Autonomous Systems and Future Capability (Air) business, the operation will focus on further developing experience in the design, manufacture and integration of UAV systems. Early work will focus on the development of a technology demonstrator "Taranis".
Not only does this major cluster help to provide a pool of expert labour, it has also created some mutually self-supporting institutions of co-operation and expertise (of which the North West Aerospace Alliance is a notable example (see below), often of an informal nature in which ideas are swapped and developed. The network creates both rivalries and co-operation between neighbouring firms, encourages linkages between primes and the SMEs and between these and universities and generates locally supportive services and activities. Indeed, some economist argue that such networks or clusters are the ultimate source of competitive advantage for an economy as it is hard for a competitor from elsewhere to replicate single-handedly the combination of skills and incentives that exist in such a cluster.
Lancashire County Council is an active member of the North West Aerospace Alliance (NWAA). The Alliance (formerly the Consortium of Lancashire Aerospace) was founded in 1993 to provide a voice and focus for the industry and the individual businesses that depend on it. The Consortium underwent a formal re-launch as the NWAA in March 1999, a re-branding intended to more accurately reflect the interests of its member companies and the geographical area it represented.
Aerospace Innovation Centre (AIC)
A key strategic project of the NWAA is the development of a multi-million pound Aerospace Innovation Centre. A centre of excellence, the AIC is intended to provide access to technology and innovation across the supply chain, combining the talents of the region's eight key universities and industry, together with other stakeholders, in a permanent facility to support companies in aerospace and related sectors, of all sizes, both within and outside the region. An initiative focused on strengthening the industry's competitive position, the AIC will act as a catalyst for developing and disseminating new technology, will promote the required changes in the supply chain and address the demanding issues for skills and training for the new technology. It will seek to deliver key services related to innovation; industry workforce development/skills and productivity; funding aggregation; product process and design; consortium development, support and management; entrepreneur support; and intellectual property management and exploitation.
The Alliance's mission is to promote and expand the North West region's innovative aerospace and high technology engineering base to sustain a centre of excellence in the area and to provide a fully integrated support structure for aerospace companies. It encourages investment in the region and markets internationally the advanced infrastructure, in particular the region's outstanding technology and skills base. Today, it represents over 600 member companies across the North West who are prime contractors and sub-contractors in the aerospace and high technology engineering industries. These companies cover every facet of the industry, from small component manufacture through to complete systems integration and end product capability. The organisation is further supported by other associate and educational members who have an interest in the prosperity of the aerospace industry in this part of the country.
The success of the North West Aerospace Alliance is unique in the UK. Through harnessing the knowledge and expertise of local companies the Alliance has increased the national and international profile of the Lancashire and North West aerospace industry, and also by inference, the County of Lancashire tremendously. It has reinforced the reputation of the North West of England as the premier aerospace region in the UK. Through promoting networking opportunities, participation in international exhibitions, visits, presentations, seminars and technical studies its activities have assisted member companies in increasing their competitiveness by adopting more progressive ways of working and towards improving collaboration and supply chain relationships and promoting continuous innovation in leading edge technologies and the adoption of new, non-metallic materials and processes. Multi-million pound spin-offs for local companies have been achieved through joint participation in International Air Shows. The Alliance has been equally progressive in developing linkages with like-minded aerospace consortia elsewhere in the UK, in Europe and the United States and in lending its support to many community initiatives promoted by local authorities and other public organisations.
For further details on the NWAA contact:
The Chief Executive, North West Aerospace Alliance, Pendle Business Centre, Trafalgar Court, Commercial Road, Nelson, Lancashire, BB9 9BT, England
Tel 01282 604444 Fax 01282 604000 Email
info@aerospace.co.uk
Web (External)
www.aerospace.co.uk
Lancashire is the largest single centre of the UK aerospace industry and on a par with world class centres like Seattle and Toulouse. The sub-region:
Aerospace is by far the largest and most important industrial sector in Lancashire:
Aerospace is the most efficient and productive sector in the Lancashire economy. In 2005 the industry:
Aerospace is a key driver for other sectors of the economy. In Lancashire the aerospace industry:
This page was compiled by Peter Kivell .
All enquiries from the media should be sent to Corporate.Communications@lancashire.gov.uk .
Any other questions about the content of this page may be sent to EconInfo@lancashire.gov.uk .
For all enquiries about the county council's services , contact the Customer Service Centre on 0845 0530000 (01772 530000) or at Enquiries@css.lancscc.gov.uk .
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