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ADS President Lays Out Important Challenges for UK Aerospace and Defence Industries By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

 

 

 

 

Having recently taken over the presidency of the aerospace, defence and security trade organization ADS Tony Wood who is the highly respected CEO of aerospace, defence and electronic product engineering company Meggitt gave a very interesting address to members and guests at the annual dinner of the trade organization on Wednesday of this week.

While full of unknowns and possible opportunities, given that we are shortly to leave the European Union and that this year will also witness a full review of defence, security and foreign policy, industry knows that there are many challenges ahead. Trade organisations play a very important role helping small and medium size companies develop, play their part in delivering prosperity and in coping with legislative changes that affect them. They also play an important role representing the wider industry and often in being not only its voice but also its balance of reason.  

Having known and respected Tony Wood for many years, I know that as President of ADS he will work hard on behalf of ADS members ensuring not only that the aerospace, defence and security industry voice is properly heard by government but also,  from an economic standpoint, he will ensure that in the post Brexit arena these hugely important industries are given the priority that they deserve from government.

While the next few years present uncertainties so do they also present opportunities. Technology, research and development and investment are all hugely important aspects for our industry but it is equally important that we work with government to achieve greater success. For that to occur we need to ensure that government is behind engineering and manufacturing industries just as much as it is clearly behind service industries. ADS will play an important role ensuring that it does.

Although I was not myself present at the ADS Annual Dinner, with the permission of the President, I thought that it might be useful to reproduce the speech delivered by Tony Wood to ADS members and guests:

ADS PRESIDENT SPEECH TO 2020 ADS ANNUAL DINNER

Good evening everyone, and a very warm welcome to the eleventh ADS Annual Dinner where we’re joined by more than 1000 members and honoured guests, including Parliamentarians, civil servants and members of the Armed Forces. Welcome to you all.

This dinner is one of the highlights of the year for ADS and for me, as my first formal duty as your new President, at a time when our industries face many challenges but also several huge opportunities. More of which in a moment.

Before I proceed further, I’d like to thank our outgoing President, Colin Smith, for all his work. Colin has a bespoke, inimitable way of working with his direct, no nonsense style.

Just by way of example, when asked by a past Minister for Business what he thought of the apprenticeship levy, Colin replied that it was bonkers, a complete disaster. “That’s interesting”, the Minister replied, “it was my idea”. This caused one or two in the room some discomfort but it also prompted an excellent and honest discussion. Colin, again, thank you for your very significant contribution, wise counsel and great stewardship of ADS.

During the past year we’ve seen the Future Flight Challenge open and Airbus celebrate its 50th anniversary; we saw the first launch of the F-35 from the deck of HMS Queen Elizabeth as the carrier’s entry into front line service draws closer; and we saw the launch of a new Security & Export Strategy and a rising UK commitment to European Space Agency programs worth £1.8bn over the next five years.

2019 was also a great year for Team Tempest with the relationship between industry and the RAF growing stronger and the excitement around this iconic programme now spreading to Italy and Sweden. Congratulations to all those involved – we’re all supporting you.

And importantly, in Paris last June, a UK team of students from North Halifax Grammar School, supported by ADS, saw off competition from around the world to win the International Final of the 2019 Youth Rocketry Challenge!

New Government

As these achievements and others from the last 12 months show, we enjoy a close and productive partnership with the Government. We look forward to working closely with the new government to ensure the UK Aerospace, Defence, Security and Space industries remain global leaders at a time of significant change.

There are three points from the Conservative manifesto that are of particular importance to our industries:

Firstly, a commitment to “build on Britain’s pioneering work in electric and low carbon flight”.  

Secondly, a plan to increase the R&D tax credit to 13% (up from 12%).

Thirdly, a commitment to support the “UK’s world-class Defence industry” by investing in global programmes (including both the Type 31 frigate and armoured vehicles).

I also hope the new Government will also retain the previous administration’s commitment to raising R&D investment to 2.4 per cent of GDP ( up from 1.7%% in 2017), and we look forward to hearing more of Governments reported plans for a UK advanced research projects agency modelled on DARPA in the USA.

Priorities

As ADS President I’ll be focusing on three key issues that we face as an industry, and I’ll outline these to you tonight:

  1. Industrial Strategy & Innovation

Firstly, Industrial Strategy & Innovation – 2020 is the time to step up to new challenges. We need Government to continue working with us, building on the achievements of the Aerospace Industrial Strategy, putting in place a new Defence and Security Industrial Strategy that delivers rising prosperity and developing a new National Space Programme.

Government must ensure its industrial strategy is yet more ambitious to ensure our economy continues to attract investment, our supply chains continue to compete with the best in the world and that we retain our pool of highly skilled engineering and manufacturing employees.

To do this, we want to see:

A doubling of funding for the Aerospace Technology Institute – which delivers a fantastic return on investment to the UK of up to £12 for every £1 invested – enabling the delivery of critical carbon reduction technologies for sustainable aviation;

We want to see an expanded SC21 Competitiveness and Growth programme to support more aerospace and defence companies to become globally competitive;

We want to see support for the UK Defence Solutions Centre and Joint Security & Resilience Centre;

We want to see even greater co-ordination to ensure we are doing everything we can to win new export business, including the use of Government to Government arrangements to level the playing field with our main competitors.

We must use every opportunity to champion the successes of our industries and every one of us in this room today has a role to play in making this a reality. The Government has announced plans to strengthen its powers to scrutinise and intervene in business transactions. We as a nation must maintain our SOVEREIGN CAPABILITY and protect the technologies that are critical to the UK.  We fully support the Government in this and will work with them to create a regime that encourages investment in UK capability, protects our national security and ensures technologies funded and developed in the UK generate prosperity and tax receipts for the UK.

We do however, operate in industries where international consolidation continues at pace; we must remain open for business and able to sustain the high value design capabilities essential for future freedom of action. We encourage Government to consider existing arrangements in the USA and other European nations as they shape UK policy in this area. 

  1. Sustainability

Secondly, Sustainability – Air travel is a central part of the interconnected world in which we live, underpinning the global economy and providing commercial opportunities for all nations.

Today, global aviation contributes around 2% of annual CO2 emissions. The industry has made real progress in improving efficiency, but with demand for air travel growing, we require urgent solutions.

Achieving sustainable aviation will be THE defining challenge of the next decade and probably decades to come and we’re driving the solution.

As an industry, there are three elements to our strategy: continued improvement of the planes that we fly and the way that we fly them; accelerating the commercial availability of sustainable aviation fuel; and the development of radically new and efficient aircraft.

Delivering sustainable technology offers huge opportunities to UK industry and our wider economy, especially if Government and industry work together to lead the world in addressing this challenge.  We have an exceptional opportunity ahead of us.

In the UK we are already leading the way in all three areas with successful partnerships between industry, government and academia developing the next generation of engines and wings. UltraFan engines for example that are 25% more efficient than their predecessors and wings of the future that may well look very different to what we have today.

The UK is championing the development of sustainable aviation fuels but there’s a long way to go and we need to find more ways to collaborate with the fuel suppliers: oil and gas companies today and possibly new entrants in the future. We also have advanced demonstrator programmes that are exploring the possibilities of hybrid‐electric systems, hydrogen, and batteries with demonstrator aircraft flying next year.

It’s not just in the development of future technologies where we can make a difference though: we can all act responsibly and reduce our environmental impact in areas such as single use plastics, energy and water consumption. Everyone here tonight has a role to play and must act now to be the most responsible employers we can be.

We’re putting this responsibility at the centre of our plans for this year’s Farnborough International Airshow, showcasing new green technology and taking steps to reduce our environmental impact.

  1. Skills

And thirdly, Skills – We work in amazing and inspiring sectors and ADS represents four high tech, high value industries that enable travel, keeps our citizens safe, and explores the potential of space.

It’s imperative that we attract the very best of the next generation of talent through being the best companies to work for in terms of training and development, working environment, social responsibility and equality of opportunity.

Earlier today we held our first ADS Women in Aerospace and Defence Summit, with a fantastic line-up of speakers and an audience drawn from across our membership. Our industries are committed to improving the representation of women at all levels of our workforces, through the Women in Aviation & Aerospace Charter, and the Women in Defence Charter launched four months ago at DSEI. I urge any companies here who have not yet joined these impactful initiatives to do so.

In addition, today we opened public registration for Farnborough Friday. We hope that the showcase on the day will inspire a new generation of talent, reflecting the dynamic and growing opportunities in our industries. Thank you to all those who are supporting us in this.

Let’s also demonstrate our social purpose; improve the all-round diversity of our workforce to the benefit of both our companies and society in general. For example, a recent study by the London School of Economics found that those born into the richest families stay amongst the highest earners and generally those born into the lowest earnings brackets tend to stay there. As a country we have some of the lowest social mobility in Europe.

Our industries have a proud record of supporting young people from all social backgrounds to achieve great things. Many of us in the room found our feet and our futures through internships and apprenticeships and across our industries we offer thousands of PAID internships each year.

But we need to do more, to encourage diversity of thought and talent in our businesses. Whether it is through paid internships, apprenticeships or graduate programmes, we need to demonstrate our confidence in the future of our companies by investing in our workforce.

My challenge to the room tonight is to think about how you and your business can do more to support the employability of the next generation of talent and to provide AT LEAST ONE additional paid internship in 2020.

  1. Brexit

And so to Brexit – Our industries have benefited hugely from UK membership of the European Union, free trade with our European partners, and participation in pan‐European regulatory regimes like EASA and REACH.

Well done to all of you for the preparations you have made so far. Encouragingly, by the end of last year, around seven hundred EASA third country approvals had been granted to UK companies allowing them to continue to operate and supply their products & services with EASA approval in the event of a no deal exit.

On the future relationship, we have been consistent in preferring to remain within the European Aviation Safety Agency’s regime, because it is effective and in our national interest. The safety regime is very detailed, it affects all aspects of our businesses and any changes need to be considered and carefully introduced.

To stay competitive, we must continue growing our exports to Europe as well as growing our business in the wider global marketplace. 

If the UK Government has a different ambition, it needs to work with us to make sure WE can deliver.

  1. Farnborough International Airshow

And finally, this is of course a Farnborough International Airshow year and our opportunity to showcase our fantastic capabilities to a global audience. We run the best air show in the world and this year will be better than ever. We already know it will be one of our busiest ever shows with over 90% of all exhibition space already sold.

It is our unique shop window to demonstrate how we’re tackling the challenge of sustainable aviation head-on; the strength of partnership between Government and our industry and how exciting and rewarding a career in our sectors can be.

Conclusion

In conclusion, I’d like to thank our four ADS Vice Presidents for their outstanding work in the service of our members – Katherine Bennett, Elizabeth Sheldon, Kevin Craven and Graham Peters.

(Tony Wood FRAeS was appointed as Chief Operating Officer from 1 December 2016 and Chief Executive Officer in January 2018. Prior to Meggitt he had been President Aerospace of Rolls-Royce plc and during a 15 year career at the aero engine company a number of other senior management positions. Previous to Rolls-Royce Tony Wood had spent 16 years at Messier-Dowty.)

(CHW London 24th January 2020)

Howard Wheeldon FRAeS 

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon

hwheeldon@wheeldonstrategic.com

@AirSeaRescue  

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