The chances are, says Jaques Smal, that if you have ever flown in an aeroplane, you have been the beneficiary of one of Techspace Aero’s products. Now the company’s general manager, Mr Smal has spent 30 years at Techspace Aero, which makes extremely complex, highly engineered, innovative and critical components of jet engines. Though a member of senior management, it is evident that Mr Smal is well-liked on the factory floor; and he understands absolutely what his workers are doing and their importance. He is showing investors complex calibrating instruments, cutting tools and intricately crafted, vast pieces of titanium, light but capable of withstanding enormous pressure – the tour seems to go on and on, each part seemingly more intricate than the last.

Techspace Aero is one of the key players in the Belgian aeronautical industry – justly proud of its roots in the rich industrial history of Liège. It is majority-owned by the French Safran group (its other shareholders include the Walloon government and the US aeronautics company Pratt & Whitney) and specialises in the production of propulsion equipment, in particular low-pressure compressors, complex discs and castings for Boeing and Airbus – and for the F16 fighter engines. On the general equipment side, Techspace Aero manufactures oil system and liquid rocket engine flow control equipment – and also offers turnkey engine testing facilities and equipment.


These are sophisticated operations; even some of the simplest-looking testing equipment is well outside of the budget of potential rivals in Asia or elsewhere, and the absolute mechanical perfection of parts is critical. Techspace Aero boasts a track record spanning six decades which, in a safety-obsessed industry, is highly reassuring to end users, whose ­passengers’ lives rely on meticulous attention to detail, and certainly cannot be easily ­duplicated.


Wallonia’s strength

Aerospace is one of the key industry clusters being promoted by the government of Wallonia as a means to energise the regional economy, boost skills and reduce a high rate of unemployment. The Walloon government arguably goes beyond the call of duty in the extent to which it is prepared to help, creating a particular model of public encouragement which not all regional or indeed national governments are prepared to entertain – socialistic even, with a small ‘s’. But the purpose is very much to prime the pump of the private sector.

At the forefront of this effort is Skywin. A government creation but very much in the hands of industry insiders, Skywin describes itself as a “pôle de compétitivité”, which attempts to create synergies between private companies, research centres and government departments to help the industry maintain critical mass in a global industry. But despite its local focus, it is by no means parochial. Among its 100 members are BASF, the European Space Centre and Thales, all of which have operations in Wallonia. Other entities are less well known but, in an industry that thrives on innovation, size is seen as no barrier to entry – even the smallest component might have an invaluable role to play.

Awex, the Wallonia foreign trade and investment agency, is another player. With offices around the world, its mission statement is to promote trade and attract foreign investment, and it has set itself the task of increasing the profile of Walloon businesses, increasing exports by 10% a year, and creating financial incentives for companies to export (including export credit, country risk cover and assistance with finance outside of Belgium).

Mr Smal has a good story to tell – these are difficult times for the aerospace industry – and he readily admits that while the Techspace Aero factory floor looks busy, when compared with May 2008 or the year before, business is only just staying aloft.

Like the Techspace Aero factory, Sonaca is a fascinating place for anyone that ever made model planes – here the jigs, struts and geometries are all the same as those of a tabletop scale model, but vastly more impressive in size. They are, after all, building components for some of the largest aircraft in the world. Sonaca specialises in building aeronautical structures, primarily for Airbus, producing all the slats (leading-edge wing pieces) for the entire Airbus family, a commitment which represents 45% of the company’s turnover. It also builds components for Embraer, accounting for some 40% of income.

In some respects, Sonaca is a Belgian success story, running plants in the US, Canada and Brazil, but 2008 was a very difficult year. A big drop off in demand for new aircraft (not least the private jet market) has hit the company hard. Recovery will not be straightforward and the company is operating at much less than full capacity. Strong labour protection laws make it hard to make workers redundant in Belgium – but a significant percentage of the factory floor is now not working, with the state coughing up their salaries. (Unions are strong in Belgium, and labour unrest a fact of industrial life.) There is a possibility Sonaca will need to close the factory for two two-week periods before the end of the year, simply to save overheads.

The appointment of a new CEO, Bernard Delvaux, will, it is hoped, knock on the head some of the endemic issues which Sonaca has grappled with for years, not least absenteeism, and he has vowed to introduce new bonus schemes to encourage attendance and productivity. However, Mr Delvaux admits it will be difficult in the current climate to turn the business around. This is a tough industry at the best of times – companies typically produce first products on a loss-leader basis and make back their money on subsequent orders. Heavy spend on innovation and R&D carries cost risks, and even a small number of cancelled orders can have devastating effects on the bottom line.


Mixed signals

In June, the industry descends en masse to the Bourget airshow near Paris – and everyone is anxious to know what their order books will have to show for it after the inevitable partying is over. At a press conference on May 19, fDi magazine and a mostly Belgian press was given a mixed assessment of the state of play. In 2008, soaring oil prices lost the world aviation industry $5bn. In 2009, the forecast is for $2.5bn worth of losses on the back of a massive reduction for air traffic.

Airbus and Boeing are predicted to be badly hit: many of their orders (now on hold) are from the Asia-Pacific and Middle Eastern airlines and as consequence are slowing down their production.

Nonetheless, by the end of 2008, seven foreign players had made serious investments into the Walloon aerospace industry, with the promise of creating 182 new skilled roles. A dozen other aeronautical and space companies, from Europe, the US and Asia, are also looking seriously at setting up shop in Wallonia, according to the organisers of the briefing.

The actual market for aeronautical products in Belgium is so small as to be almost non-­existent; the country is not equipped with a sizeable military or airforce, for example, which might otherwise constitute a valuable customer. But what the region does offer is expertise. The aeronautics department at the University of Liège is renowned – and accounts for a very high percentage of white-collar recruitment at companies such as Sonaca and Techspace – and there are very few companies in the world that are able to undertake the kind of specialist activities which these companies provide.


Amos aims for the stars

The clustering mentality and activities are designed to build on these intrinsic strengths. The premises of Amos are located in a pleasant science park (verdant, easily navigable, quiet) located on the outskirts of Liège. Amos creates mirrors and other telescope-related parts for observatories around the world and the satellites designed to orbit it, and its workshops combine old-fashioned mechanical engineering skills with state-of-the-art sophistication. Sales director Jean-Pierre Chisogne describes Amos as a “project company, not a product company”, also offering satellite and component testing components on behalf of space agencies and other space industry consumers around the world.

This, he points out, is expensive – many of the products Amos builds are first-time and one-off solutions to unique problems: both difficult to design and difficult to cost for. Amos, he says, delivers “black boxes” to its customers.

But the company thrives on the challenge. Turning out more conventional products may be more obviously profitable, but is not up Amos’s street. Mr Chisogne, like Mr Smal, is clearly passionate about the company – and not least, its uniqueness. In the workshop he greets the foreman with a Gallic peck on the cheek and the rapport between team members appears strong and unforced. It is a good basis on which to build a business. Building a common cause appears to be evident throughout the industry: Chisogne is often on the road talking to potential clients – whether they be in India, South Korea or Chile; the cluster, he says, enables companies in the same space (almost none are competitors; each providing highly specialised products and services) to collaborate on their sales pitches and watch out for collective opportunities.

What is obvious even to the layman is that Wallonia’s collective technical expertise in its chosen aeronautical sectors is almost second to none. Personnel from the shop-floor, through to design teams, engineers and management, exude enthusiasm.

Amos was borne out of a project focused on high-tech mirror polishing at the University of Liège, which, as with Sonaca and Techspace Aero, provides the majority of the company’s skilled employees (it is after all the only French-speaking university to offer a degree in aeronautics). But Amos must train many of its workers itself – there is, says Mr Chisogne, “no university course in advanced mirror polishing”, and the company generally takes on craftsmen such as carpenters, and then hones their skills.


Start-up hatchery

Literally footsteps away from the Amos office sits the Walloon Space Logistics (WSL) high-tech incubator – a ‘hatchery’ for spin-offs and start-ups which provides access to funding, office and laboratory space, and the benefits of a collegiate atmosphere in return for a small amount of equity. WSL’s mission statement was originally to foster space technology; many of the companies now emerging from the incubator have very different applications. fDi was introduced to the young management of companies working in the sphere of radio frequency identifier devices, glass etching, software development, medical devices and software development – many of which either have space-related applications or stemmed from a branch of space science. All have the potential to grow and succeed if they can be helped through the difficult early stages.

Safe in their incubators, these younger companies are arguably better shielded from the raging economic storms than their fully fledged counterparts. This is a sector which, like the jet engine parts produced by Techspace Aero, is facing an immense amount of pressure, and the next year will not be easy. Survival is going to require adaptability and innovation – both of which these very high-tech companies are capable of displaying.