A350XWB_wing_3 (1).jpg Airbus

Research Risk To UK Aerospace

The British aerospace sector will continue to thrive despite the risks posed by Brexit, a new report suggests.

Research by Santander and EEF puts the UK as the second-largest aerospace manufacturer in the world, and the fourth-largest exporter.

The UK supply chain is worth about £12 billion ($15 billion) per year, the biggest share of which is the manufacture of high-tech components such as wings and engines. The MRO sector is also significant: in 2014 it was worth £2.1billion, according to the Office of National Statistics.

Aircraft demand from emerging markets should underpin further growth of UK aerospace, although the report does acknowledge some of the dangers posed by Brexit.

Risks include political pressure on Airbus to repatriate work to the EU; regulatory de-harmonisation; reduced access to skilled foreign labour; and a rise in price of raw manufacturing inputs due to weak sterling and yet-to-be-struck deals.

Nonetheless, the report’s authors remain optimistic.

“The UK’s aerospace industry has thrived off the back of its competitive advantage in the production of high-value added technology-intensive products, and we forecast that this will continue given that the UK is hardwired into the global supply chain,” says Paul Brooks, head of business development – manufacturing, Santander Corporate & Commercial.

George Nikolaidis, senior economist at EEF, adds: “By staying at the forefront of cutting-edge technologies, aerospace manufacturers have managed to retain a high share of the global market despite fundamental changes in international value chains.”

Yet the competitive advantage of UK aerospace is also a potential weakness.

Both Nikolaidis and Brooks praise the country’s technological prowess, but one risk of Brexit not identified in their report is UK participation in the latest research.

British aerospace companies receive about £30m per year in EU R&D grants, and while this is small beer, collaboration in Europe-wide programs – by business and universities – tends to yield faster results than work done alone.

There is also the chilling effect Brexit is already having on the recruitment and retention of European academics, who form a significant cohort in UK aerospace research centres.

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