This website uses cookies to facilitate navigation, registration and collection of statistics. The information stored in cookies is used exclusively by our website. When browsing with active cookies consents to its use.

Read more Accept

UK ASD Industry

 

Historically a strong global Defense market, the UK is also focusing on the Space sector, mainly due to low aircraft assembly capabilities

UK ASD industry overview

 

2012-17 CAGR

The British ASD industry grew by 7,8%/ year, reflecting an increase of 0,5 pp in % GDP (2012-17)

 

UK ASD revenues[€bn, 2012-17]

 

  • In 2012-17, the UK government increased its ESA(1)contribution to reach 25% in public spending, attracting FDI2from major players
  • UK Space sector represents 10% of the global Space turnover, and is one of the largest suppliers of global nanosatellites currently in orbit
Small satellites manufacturing and cybersecurity are the main drivers for continuing growth

 

Aeronautics

  • To meet global environmental targets, government is investing €106 million in the next years to develop new aircraft generations (e.g., electric aircraft solutions)
  • To improve manufacturing productivity, efficiency and spending in R&D, government invested €103 million in 2018

Space

  • Government ambitions for the sector include the growth of Space tourism, planning on investing €20 billion in the next 20 years
  • The UK’s Space sector has manufactured 40% of the total small satellites in orbit and forecasts a 10% capture of the global Space sector by 2030

Defense

  • Pressure to reach the NATO’s 2,0% of GDP and a forecast of more than €7 million security exports in 2022 (+30% than 2018) led to the increase of the 2017 Defense budget by 1,4% (reaching €42,6bn)
  • Due to more than €5,5million year of cyber offences in the UK (half of the total national crime), the government is investing €25 million in Defense R&D

Notes: (1) ESA -European Space Agency; 2) FDI –Foreign Direct Investment
Sources: ADS, MarketLine, UK Government, Mergent, Business Matters, World Finance, EY analysis

The UK aerospace industry lacks an industrial cluster structure, with Brexit meaning significant uncertainty in supply chain dynamics

UK ASD industry: SWOT

Internal Factors

Strengths

  • Strong capabilities in wings, propulsion systems and aero-structure parts manufacturing and integration
  • World leading players in engine manufacturing and integration
  • Best-in-class engineering schools
  • Strong apprenticeship and graduate programmes and public funding for up-skilling of staff

Weaknesses

  • Limited funding opportunities for later-stage product development
  • Lack of a nationwide cluster
  • Shortage of skilled manufacturing engineering skills
  • Lack of a true global UK-based OEM
  • Lacking certified capabilities in surface treatmentis a blottleneck for the entire supply chain
  • SMEs build around technical innovations, but lacking management, financial and supply chain expertise
External Factors

Opportunities

  • Increasing qualification levels by workforces in emerging countries represents an opportunity for outsourcing high-labour, low complexity product manufacturing
  • Future aircraft programmesrequiring capabilities aligned with new technologies (e.g., electric propulsion systems, composite materials)
  • Solid public support for early stage technological innovation and product development (e.g., Research Council grants)
  • Possible positive impact from Brexit to emerging UAV sector due to less stringent regulatory context

Threats

  • Post Brexit regulatory regime could result in dual certification requirements, increase costsand discourage investment in UK
  • Brexit to drive down supply chain efficiency, as the majority of parts manufactured in the UK are assembled in the EU
  • Brexit could reduce high skilled workforce mobility, a critical aspect of the industry
  • Lack of lean process capabilities hinders productivityand reduces global competitiveness versus low-cost markets

Sources: Ecorys, Marketline, ADS, UK Department for Business Innovation and Skills, EY analysis

Back