Story ID: 
‘Global’ R-R keeps home fires burning
By: Charles Alcock
Caption: At face value, Rolls-Royce’s recent establishment of new facilities in Singapore, the U.S.
Word Count: 1071
At face value, Rolls-Royce’s recent establishment of new facilities in Singapore, the U.S. and Germany might be construed as the group’s snubbing its UK home and a possible indictment of successive British governments that some say have failed to nurture the country’s aerospace industry. But that’s not how Ian Godden, chief executive of the Society of British Aerospace Companies (SBAC), views the engine maker’s decision to move operations offshore. He told AIN he’d be more concerned if firms like Rolls-Royce failed to respond to market imperatives to have “a global footprint.”The continued weakness of the U.S. dollar on international currency markets has increased pressure on British companies to shift a greater proportion of their expenses to lower-cost economies. Historically, British governments–unlike some of their European counterparts–have had a laissez-faire attitude toward moving aerospace jobs overseas, which has meant UK firms have been expanding on other continents since the 1980s.“The [economic] crisis of the 1980s forced British firms to diversify outside the country. The UK has played a lead role in globalizing this industry,” said Godden. “What other industry is so international?” He pointed out that while Rolls-Royce has been moving production offshore since 1985, it has also invested some £700 million ($1.4 billion) in new UK facilities.SBAC still believes the London government could do more to back what it views as a key strategic industry. “The UK has been weak in terms of industrial policy; the mood is shifting a bit, but not enough,” said Godden. “At least there now is recognition that some investment is required.” As evidence of this, he pointed to the government’s Technology Strategy Board, which is under orders to be more proactive in supporting fresh investment, with companies such as Selex and Airbus UK having benefitted from this approach.SBAC has a direct and influential role in the allocation of government investment in the industry. In December, the Technology Strategy Board awarded it a contract to manage the new Aerospace and Defence Knowledge Transfer Network. This body is supposed to promote innovation and collaboration between industry, government agencies and universities, and it is funded with $2 billion to allocate to technology programs over the next three years.“One of our main challenges is to keep skills [in the UK] and to improve the work ethic here,” said Godden. In his view, the work ethic is very high in many Asian countries and the question is how long their lower labor rates will continue to provide a competitive advantage against Western industries. “It will be a race against the clock for the Far East as to how fast the labor rate gap closes and whether they [Asian aerospace firms] can use this decade to establish high-skilled manufacturing,” he added. From his perspective, while European industries still enjoy an edge in terms of skills, they could be held back by a perceived poor work ethic among their employees and insufficient capital investment.So where does this leave the UK as a country that has gradually jettisoned much of its role as a complete airframer with the closure or sale of programs such as BAE Systems’ regional airliner and business aircraft divisions? “We are still world leaders in aero engines and very significant in wings, and in the military market we have cockpits,” said Godden. “But we have lost out in civil aircraft cockpits, losing our prime contractor capability there, and I do worry about wings.” SBAC fears that the UK’s strength in wing manufacturing could be compromised by BAE’s decision to sell its stake in Airbus because the European group could be tempted to move future work away from UK factories in its increasingly desperate bid to reduce the cost structure of its manufacturing network. “Wings and tailplanes are soft targets,” said Godden, alluding to Airbus’ ongoing Power8 rationalization process and the fact that its French, German and Spanish shareholders will inevitably find it easier–at least politically–to shed British jobs than those closer to home. 
Meanwhile, SBAC has sponsored the industry-wide Supply Chain 21 initiative to improve supply chain efficiency. Just over 300 companies have signed up for this program; seven of them, prime UK manufacturers, are directing training resources for between 10 and 15 small- and medium-sized firms. SBAC is here at the Singapore Airshow this week as part of a concerted effort to boost the UK industry’s presence in the growing Asian markets. Godden indicated that the country has not been as effective as its rivals–France and Germany–at asserting its interests in key areas such as China and India. “The UK has a long way to go and we’ve had mixed results with investments in places like China, which were, to some extent, premature,” he said. With leading economists agreeing that 2008 promises great uncertainty in financial markets and the real prospect of downturn in key Western countries, the main question for SBAC and its members is to what extent this may curtail the boom conditions they have enjoyed. “We don’t believe business cycles are gone forever, but demand is more [geographically] diversified these days and if India and China continue their growth, a downturn in the UK economy would have a minor impact,” Godden concluded.

Next-gen Single-aisle Airliners a Boon for UK Aerospace
Programs to develop new single-aisle airliners to replace the Boeing 737 and Airbus A320 are both a huge commercial opportunity for the UK aerospace industry and essential tools in reducing the environmental impact of air transport, according to the Society of British Aerospace Companies (SBAC, Stand No. K77).Mark Watson, the SBAC’s senior adviser on environmental affairs, said in Milan last week that the single-aisle replacements would represent 40 percent of all new civil aircraft in the next 15 to 20 years.“The UK is well placed to play a leading role in such programs,” he said. And new engines and designs for these aircraft will also play a major part in meeting industry targets for cuts in noise, carbon dioxide (CO2) and nitrogen oxides (NOx).But in a fiercely competitive global marketplace, Watson warned, “We must ensure that we retain and build a world-class skills base and retain our competitive edge. That means government and industry must work together to create the economic conditions necessary to enable UK manufacturers and their suppliers to capitalize on the immense potential represented by single-aisle replacements.”