Canada has a competitive edge in terms of costs: overall aerospace production costs are 7.1% lower than in the US and 21% lower for R&D. Canada leads the world in the design and production of regional aircraft, landing gears, small engines, and simulators for aircraft and naval applications
The country is home to Bombardier Aerospace, known for its regional and business-class jets as well as its defence and amphibious aircraft. Bombardier maintains manufacturing sites in Montreal and Toronto (it also manufactures in Wichita and in Belfast, Northern Ireland). With corporate earnings of $15.8bn for fiscal year 2005, Bombardier is on solid financial footing. Its launch for a family of larger jets is expected to spark a global search for a new assembly site, possibly in the US, Canada, the UK or Japan.
Quebec’s aerospace industry, which achieves sales of $14bn and employs more than 40,000 people, accounts for almost half of high-tech jobs in Canada. Of the 250 companies in this sector, 240 are small and medium-sized enterprises (SMEs), which act as suppliers to big business. Together, the SMEs produce 10% of the total sales of Canada’s aerospace industry. The industry exports about 80% of its production, for a total annual value of nearly $11bn.
Ontario firms are actively involved with a diverse set of programmes, including the Airbus A380 and the US-led Joint Strike Fighter (F-35). Manitoba is home to a group of world-class aerospace firms, including Standard Aero, Boeing Technology Winnipeg and Magellan’s Bristol Aerospace.
UK market share
The UK captures more than 13% of the world aerospace market turnover and is second only to the US in its market share. The industry employs more than 150,000 people directly and more than 350,000 indirectly. It exports about 60% of what it produces, making it one of the UK’s biggest exporting industries. Turnover is £18bn annually, of which 58% is civil and the remainder military. Among the 3000 companies that have operations in the UK are BAE Systems, Airbus, Boeing, Raytheon, Bombardier, Rolls Royce and Thales.
North-west England, where Airbus, BAE Systems and Rolls-Royce have operations, is the hub of the UK aerospace industry. Rolls-Royce is spearheading aerospace research in combustion, materials, cooling systems, aerodynamics and manufacturing technology though a four-year £38.8m Advanced Technology Acquisition Programme being supported by the UK government’s Department of Trade and Industry.
Rolls-Royce is also investing more than £100m in new manufacturing facilities across the UK. One of its projects is a £28.9m, 14,000-square-metre facility near Nottingham, which will be the new headquarters for gas turbine combustion system components. Two £50m Rolls-Royce factories have also been built recently in Derby.
In August, Rolls-Royce decided to replace its aero repair and overhaul facility in East Kilbride, Lanarkshire, with a £45m state-of-the-art factory in the same city, securing more than 1000 Scottish jobs in the process. It had considered relocating the plant to a lower-cost location in eastern Europe, but the skills of the Lanarkshire workers and their commitment to introducing new working practices was key to retaining the location as was an £8m Scottish Executive regional grant.
“This investment will put Rolls-Royce in a strong position to compete with the best in the world in the repair and overhaul of major engine families such as the V2500,” says John Paterson, managing director of Rolls-Royce’s aero repair and overhaul business.
Last October, the company also opened a new £85m Rolls-Royce plant in Inchinnan in Renfrewshire. To stave off competition for the facility from around the world and safeguard up to 1000 Scottish jobs, Scottish Enterprise provided £15m in regional selective assistance.
Cluster in Wales
About 25% of Britain’s aerospace industry is concentrated in Wales, with more than 100 companies employing about 20,000 people there. Nordam Europe, a joint venture between the Nordam Group of Tulsa, Oklahoma, and GE Aircraft Engine Services, part of GE Engine Services, of Cincinnati, Ohio, expanded its aircraft overhaul and repair facility at Blackwood in Wales two years ago to the tune of $13.5m. Further expansion is expected.
“Our success has been due to our workforce and their dedication, enthusiasm and skills,” says Tom Wilson, managing director of Nordam Europe. “Since we opened in Wales, the staff turnover has been virtually nil. We have also benefited from the support of local colleges and institutions as well as collaboration with academia, which ensures we have access to the latest management and manufacturing processes, plus access to world-class facilities and expertise.”
Wales is playing a key role in manufacturing the Airbus 380. Wings for the new super jumbo are designed at Filton near Bristol and built at Broughton in Flintshire. Broughton is the ultimate destination for the 32,000 components that make up a set of A380 wings. Airbus will continue to invest in its facility there for the A380 until about 2009, when the last of the equipment to support the production build will be installed.
The GE Engine Services facility in Wales is also involved in the Airbus A380 programme. It is the first link in a worldwide network of service centres for the Engine Alliance’s GP7200 that will power the aircraft.
Among the defence contractors in Wales is Irvin-GQ, which designs and manufactures parachutes that are used in ejection seats of military jets and the recovery of space vehicles. The company operates from a 110,000-square-foot site in nearby Llangeinor where it employs 450 people, mostly women.
“A big benefit to our south Wales location is the workforce,” says David Hirst, engineering director. “They are highly committed to their jobs.”
The quality of workmanship and design are paramount for GQ’s products. “All R&D work is done here and in California,” says Mr Hirst. “No-one sews a parachute from start to finish except for R&D. Workers specialise in cutting, folding lines and sewing seams. We can give 400 different products in the pipeline at a time.”
Last year, Wales became home to a £21m investment in the UK’s UAV sector at ParcAberproth, a 50-acre high-tech park in Cardigan Bay on the country’s west coast. An important focus of the facility is the development of UAV systems and associated technologies. The project received Objective 1 funding, the highest level of grant available in Europe. Plans for the park include a business and incubation centre together with R&D facilities.
France offers Europe’s broadest aerospace capability from design and development to fabrication and final assembly. The Toulouse operations of Airbus have received much attention in recent years, but France remains a market leader in civil and military engines and avionics, weaponry, aero structures and other subcomponents. The civil sector is France’s largest, accounting for about two-thirds of sales. The dominant player is the European Aeronautic Defence & Space Company (EADS NV), which produces jetliners, helicopters, regional aircraft, and space systems and missiles.
Ile-de-France is France’s chief region for aerospace facilities, providing 35% of French jobs in aeronautics and space, followed by the Midi-Pyrenees region. Nearly 22% of French aerospace personnel work in the Midi-Pyrenees at companies such as Airbus and ATR, which is a world leader in 40-70-passenger turbo prop planes. The region also boasts more than 530 sub-contractors with 28,000 workers.
Aviation in Germany
The Hamburg metropolitan region ranks alongside Seattle and Toulouse as one of the world’s leading centres for civil aviation. Airbus Deutschland, Lufthansa Technik and Hamburg Airport are Hamburg’s biggest employers, in addition to about 300 SME suppliers and engineering services. In total, more than 30,000 people in the region are employed by this sector.
A380 fuselages and vertical tail units are manufactured and assembled at plants in Nordenham, Stade and Hamburg, and final assembly takes place in Hamburg. The A380 is assembled in a separate complex, where the whole aircraft can be worked on in one single-station site in north Germany.
Aerospace in Bavaria is also booming thanks to Airbus, Ariane and advanced GPS and space missions. Other aerospace activity can be found in the Aachen region, home to CAE Elektronik. With a staff of 530 in
Stolberg, CAE Elektronik is one of only four subsidiaries worldwide of the Canadian CAE, a leader in integrated training solutions and simulation technologies for the aerospace and aviation industry.
In Spain, EADS is about to launch a prototype Air Refuelling Boom System at the group’s R&D plant in Getafe, Madrid. The prototype has been designed and developed in Spain by the Military Transport Aircraft Division.
Eurocopter, the helicopter division of EADS, is looking for a site in Spain to build a new production site. The region of Andalucia has identified a plant in Seville for the project. EADS has opened a factory in Andalucia for which the region provided 21% of the E283m investment, the largest industrial subsidy in Andalusian history.
Movement in China
Analysts reckon that China offers a $144bn opportunity for aerospace/ aircraft manufacturing over the next 20 years. Companies are already on the move. Last year, Alcoa’s Mill Product unit opened a 3716-square-metre aerospace centre near Shanghai to supply aerospace material to aerospace customers in China and the Asia-Pacific region. The centre will provide just-in-time deliveries, exact quantities and value-added services such as cut-to-size, kitting and other processing services requested by customers.
Airbus and China Aviation Industry Corporation I recently agreed to enter into phase three of the A320 Family Wing Co-operation programme to make wing boxes. Airbus and China Aviation Industry Corporation II will set up a joint venture engineering centre in Beijing to perform aircraft-specific design work for the A350. Two hundred engineers will be needed by 2008.
Parts for Boeing 737, 757 and 747 aircraft, as well as assembly operations, are found in Shanghai, Xi’an, Chengdu and Shenyang. Boeing also operates a spare services centre in Beijing. A new major aeroplane modification, maintenance and repair business venture is planned for Shanghai/Pudong.
Boeing is expanding its industrial co-operation, with plans to increase production rates for model 737 airplane assemblies built in China at Xian, Shanghai and Shenyang. The Chinese regional jet, the ARJ21 is supported by Boeing technical contracts. The joint venture BHA Aero Composites will have additional opportunities as aeroplane production rates and support contracts increase.
No doubt, as China’s manufacturing base continues to expand and demand for aircraft rises, the aerospace and aviation industry will increasingly commit to expanding further in the Asian market. The landscape for consolidation and expansion elsewhere in the world will depend largely on the economic situation of the airlines and budgetary allocations from defence budgets.